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Loyalty Lift from Rewards Programs

Rewards programs are one half of the loyalty equation. Rewards programs let members earn points for their loyalty over time, then redeem them for benefits. In American Airlines's AAdvantage program, they're called "Miles," and they can be redeemed for free flights and more. With IHG One Rewards, members earn "Points" with each room night, which are valid for free stays in any of their thousands of hotels. Whatever they're called, and whatever the benefit, rewards programs are as common as they are popular.

In this section, we'll cover what makes rewards programs valuable, as well as highlight what technology is required to make these programs work in mobile games. We'll introduce the idea of partner rewards vs. owned & operated rewards, and survey what technology is needed to support both. We'll provide examples and discuss best practices.

Let's get started and be better together!

When Rewards Programs Provide Value...

The biggest value to rewards programs is when members feel invested. Members feel invested when (a) they value the points they've earned and (b) feel as if they've got a stake in and have amassed a balance toward rewards. When this happens:

They're more likely to continue to invest more, because they view spending money with you more as "investing" than "spending";
They'll be less likely to patronize your competition, because they'll view the switching costs as high, since they have "sunk cost" in your business but not in your competitor's.

The best part is members will feel this way even if they never use their points. That's because loyalty investment psychology isn't triggered by the consumption moment, but by the moment where they (a) realize they're earning toward something, and (b) they value what they're earning toward. So you don't have to wait months or years to start enjoying the value of member investment. It comes as soon as you can achieve (a) and (b).

Here are some of the ways a loyalty program changes consumer behavior, according to a study done by business consulting firm McKinsey & Company.

What's Important:

When loyalty members feel invested in your rewards program, they'll spend more and are less likely to switch.

How to Create a Valuable Rewards Program

In other words, you have two responsibilities:

Get your players valuing your rewards, and
Demonstrate to your players that they have amassed a currency of value

How can you achieve this in mobile games? In the sections below, we'll cover the following:

The basics to driving value (awareness, credibility, and value perception)
Offering a value spectrum of rewards, from achievable to aspirational
How to show the right member the right reward with merchandising and personalization
Offering your members partner rewards vs. owned rewards from your own assets
How the earning and burning of your loyalty currency plays a role

Let's get started!

The Basics: Awareness, Credibility, & Value Perception

Awareness

It may seem pretty intuitive that in order for your loyalty program to create value, your members be aware of it! Given this, you might be surprised how little awareness-driving campaigns mobile apps build and maintain in support of their loyalty programs.

The truth is just having a button that opens your loyalty hub is not enough. You must consciously and carefully introduce your players to your program, not once but several times, and at the right moment.

You can learn more about the best practices for this in the article Introducing Players to Loyalty.

Credibility

Most of the calls-to-action on your loyalty introductions will bring your players into your loyalty hub. So now you've got them. Now what?

If your program is mostly or entirely in-app benefit rewards or owned rewards – that is, rewards available for redemption right in your app, such as coins, level-ups, power-ups/boosters, cosmetics, etc. – then credibility likely won't be an issue for you. It will be pretty intuitive to your players that they can earn loyalty in your game, then go to your loyalty hub and redeem that loyalty for more stuff in your game. After all, that's how most loyalty programs work! We still recommend surveying your audience and ensuring your credibility score is high, or else you might have a merchandising/presentation problem that's causing skepticism.

However, if your loyalty program includes partner rewards – that is, rewards offered from strategic partners, not ones available for redemption right in your app (see more on this below) – then you'll likely need to convince your players that the program and the rewards are real.

Best Practices for Driving Credibility with Partner Rewards

Experiencing the End-to-End Flow: Seeing is believing. The strongest way to impact your credibility score is by having the player actually redeem a reward and experiencing the full flow.

In-app Benefit Rewards: It might sound obvious, but one of the strongest ways to drive credibility when your program has partner rewards is to also have in-app benefit rewards. Not only do they bring inherent credibility, but they become a nice jumping off point. Players who are skeptical can spend a small amount of loyalty currency on an in-app benefit and experience the end-to-end flow.

Theme & Design: It also matters how your loyalty hub looks. It should feel like a natural extension of your game. It can certainly carry some of its own distinctive branding to create a brand for the loyalty program as well (which can be especially beneficial if you have a loyalty program that spans across multiple games), but it shouldn't be too much of a departure from the design language of your app or else players will think they've "left your app" and are in some kind of world of advertising/affiliate marketing/spam. When designing your loyalty hub, think about what elements are unique or distinctive about your app and try to pull those through. Bring colors, button treatments, fonts, and more from your app into your loyalty hub. (All of this can be done with the playAWARDS Loyalty Center.) Also, overall quality matters as well. Players can feel changes of quality, which can be another bad signal to them that perhaps the program isn't real.

The Right Catalog: Another important factor for credibility is showing your players the right rewards. Rewards in your catalog should feel "on brand" – to the degree that it's achievable, your partner rewards should feel less than an arms length from the genre of your game. If your game is themed after a popular TV show, perhaps there is a reward to see that show's film studio. That's why playAWARDS prides itself on focusing on entertainment and leisure rewards inventory – because these rewards have been shown to resonate the best with the majority of app genres, creating not just higher credibility scores, but higher synergy between partners.

Rewards Within Reach: Your rewards store should include some very achievable rewards, and these rewards should be front-and-center, at least for new members. Save the more aspirational rewards for later. Aspirational rewards will come into play as we explore driving value perception, but can actually have the opposite effect from their intention – they may actually hurt the value of your loyalty program by creating skepticism. (e.g. When players enter your app that they play for free, then are introduced to the loyalty center and see a reward that's an opportunity to meet the president, it'll be an immediate red flag.) Also, having easy-to-find achievable rewards invites the member to "try it out" – purchase their first reward and experience the end-to-end flow.

This may seem like a LOT to think about (and build), but we've got you! The playAWARDS Loyalty Center is capable of all of this. We can help push players through the consumption flow with FTUE, adjust the catalog and merchandising based on the player and where they are in their journey, and skin the loyalty center to match the look and feel of your game. And of course, we're here to be the experts to help you with all of this every step of the way.

Value Perception

Of course, the most important element to driving value for your app is whether or not your players find value in your rewards.

Ask them! The shortest explanation of strategy here is to ask your players which rewards they value, then offer them these rewards. Of course, it's not quite as easy as that. Sometimes what people say vs. what they truly want don't agree. It's also worth collecting player behavior data. With playAWARDS as your partner, we can help you work through it.

Richness. It's also about richness. With both owned and partner rewards, you'll want to strike a balance between rich enough to be really compelling to the player, but not too rich to where it's overly expensive for your business. This can be achieved through a combination of:

Conversion Rate from Loyalty Points to Currency/Reward: Our economists will work with you to design your ideal economy, including LP burn rates and conversion ratios.
Segmenting Rewards: Our rewards system is capable of segmenting on a number of attributes, which allows you to offer richer rewards to higher-valued players, ensuring you're offering the right reward to the right player.
Reward Restrictions: You'll also want to govern consumption by partner and by reward class. A mature rewards system can support restrictions such as only N consumed in X days, or only N consumed by Y partner within X days. These capabilities are out-of-the-box with the playAWARDS Loyalty Center.

This is just the tip of the iceberg. The next few sections will elaborate more on reaching high value perception of your rewards among your players, including:

Offering a value spectrum of rewards, from achievable to aspirational
How to show the right reward to the right member with merchandising and personalization
Offering your members partner rewards vs. owned rewards from your own assets

Measuring the Basics

When you partner with playAWARDS, we not only help you frame out this experience, we also help you measure it. The most effective way to learn how you're doing with regards to awareness and value perception is to ask your members! playAWARDS can work with you to structure and execute member surveys.

The Math of Loyalty Lift

Each loyalty member who meaningfully engages in your loyalty program can yield 50% higher lifetime value (LTV) than a member who does not. So why don't loyalty programs improve enterprise value by 50%? Because not every customer becomes an engaged member.

It's not reasonable to expect 100% of your players to be aware of, believe credible, and find value in your loyalty program. Based on what we've seen historically, you can use 75% as a benchmark for "gold standard" rates.

75% of your players are aware of your loyalty program.
75% of those aware believe in the legitimacy of your loyalty program.
75% of those who believe in the program value its offerings.
At those rates, 42% of your DAU would meet all three.
If 42% of players all yielded 50% more LTV, it would bring 20% more value to your app. In other words, EVERY INSTALL would be 20% more effective!

What's Important:

For a loyalty program to create value, your players must be aware of it, believe that it's real, and value its offerings. There are ways to measure and test your way into success (and playAWARDS can help), and if you do, it can mean 20% more value for every install you get FOR THE LIFE OF YOUR APP.

Merchandising & Personalization

A store is a store. Just like having an in-app store for Fiat currency, having a loyalty store in your app will inevitably require some of the basics of e-commerce, like a SKU system, asset management, segmentation, sales and specials, and more.

Let's discuss some of the most important aspects of merchandising and personalization.

Dynamism

First, you must keep your rewards store fresh. Each time a member comes to browse, they should feel like the store is dynamic and ever-changing. If it feels static and stale, they won't see any need to come back and browse from day-to-day. If it feels fresh and dynamic, they'll want to keep coming back for FOMO. To change out the content and products of your store, you'll need a no-code way to administer it.

The Right Reward...

When members come to the rewards store to transact, they should first and foremost see the rewards that are most relevant to them in that moment. This pulls them in. It gets them excited about the program. It motivates them to want to more deeply invest in the program. Of course, surfacing the most relevant rewards to the top might be enough. In some cases, rewards may be filtered out of view/availability entirely.

...to the Right Person...

Achieving this means being able to segment rewards and offers based on attributes of the member. Some important factors might include where they live, what game they're playing, what they've shown interest in before, and their loyalty balance. For newer players, you could learn what they're interested in through a first time user experience, and encourage them to select some rewards that are interesting to them through a favoriting feature.

...at the Right Time.

Personalization isn't just about the person. It's also about where they are in their lifecycle with the loyalty program. If they're new, they might need to see some entry rewards so they see a goal that's within reach. If they've tiered up and are more valuable, they should start to see some premium, exclusive offerings. These are just two examples, but generally, the system should know what the player is experiencing and needs in the moment and be tailored to that.

This of course is something playAWARDS helps you with. Some aspects we build in close partnership with you. Other aspects we manage full-service as part of our Professional Services.

What's Important:

Your store should be dynamic and fresh, and always be showing the right reward to the right person at the right time. This requires knowing who they are, but also where they are in their lifecycle with your game and the program.

Partner vs. Owned Rewards

Owned Rewards are rewards you give your players for their loyalty that come from your own inventory. If you're a mobile game, this might mean coins, boosters, or ad-skipping.

Partner Rewards are rewards that are sourced from a strategic partner's inventory. An allegory in the brick-and-mortar space might be American Airlines letting their loyalty members trade in their points for a free hotel stay with their strategic hotel partner.

In another article, In-App Benefit Rewards vs. Partner Rewards, we'll discuss the basics of these two complementary reward strategies.

Owned and operated rewards might seem like it would cannibalize revenue, but we'll present some surprising data on the contrary.
We'll discuss the basics of reinvestment and how to arrive at the right reinvestment rate for your program.
Loyalty partnerships are becoming more and more common, and can benefit both sides.
That said, they're more difficult to operate successfully. playAWARDS can help you navigate the challenges of partner rewards.

Endless Chase: From Achievable to Aspirational

How do status programs differ from rewards programs? They motivate a different part of our brains.

Where status programs should have an element of intrinsic or emotional money-can't-buy kind of benefits, rewards programs tend to be FAR more transactional. Members feel like they have "earned" their rewards, then "buy" what they "deserve" using their points. This isn't always the case, such as with discretionary rewards/complimentaries, but is typically.
Where status programs are designed to make members feel special, rewards programs are designed to pull members into a economy and give them a vested interest in staying there. Once members view the rewards economy in this way, they will mentally store their loyalty point balance in the same part of their brain as where they put their bank account balance. In other words, once they value what they've accrued and what they can buy, their points become as real as real money.

Part of what makes real-money economies work so well is the endless chase. You can buy a candy bar for $1 or a luxury yacht for $200 million and everything in between. The dynamics of real-money economies are such that you can "never have enough" and there is something for every budget.

This psychology can be replicated in loyalty economies. Done right, this dynamic will inevitably create an urge for your members to amass an ever-growing amount of loyalty currency. In short, it will give them something to aspire towards!

So how do you do that? By having rewards that are both achievable and aspirational and everything in between. Once again, our economies team will work with you to define what "achievable" and "aspirational" mean in your loyalty economy, and how to arrive at a collection of rewards that achieve this. But in short, you should have rewards that players can buy (a) right away, (b) after a few months, and (c) after a few years. If your app has in-app purchases, you might also matrix on (a) no spend, (b) a little spend, and (c) a lot of spend.

What's Important:

Your rewards catalog has offerings that are both highly achievable and highly aspirational, and everything in between. Members should feel both like there is something for their budget AND that there is something super appealing out of their reach that keeps them playing your game and earning more loyalty points.

A Note About Loyalty Economies

Determining whether your rewards are "achievable" or "aspirational" is ultimately decided by your loyalty economy. While we're on the topic of loyalty economies, let's cover just three of the most important considerations. We'll go into more detail in the article on Loyalty Economies.

Earn right away.

In most loyalty programs, you must opt in, sign up, or subscribe to start earning loyalty points. At playAWARDS, we think about that a little differently. We allow players in loyalty-enabled apps to start earning points right away. This is in part because mobile is simply a different space and experience, so opting EVERYONE into the loyalty program right from install is the "best practice." But this method also has the effect of letting 100% of your players feel the accumulation of the currency. The more they see themselves earning, the more invested they will naturally be.

Of course, there is some magic to the opt-in moment. Loyalty members who choose to participate in a program are going to feel a stronger sense of duty to be good stewards of their membership, earning, saving, and using. This is referred to as commitment and consistency. Because they consciously committed, psychology mandates that they try to remain consistent with their commitment. That said, we have determined the former to outweigh the latter.

Slow earning, big moments.

First and foremost, every mobile app should think of their loyalty points as their "grind currency." It should be doled out to their players slowly over a long period of time. One way to think about the earn rate is against the buying power of the rewards in your catalog. A typical earn rate should yield:

The most achievable rewards (category A) within the first few days after install
Materially better rewards (category B) within the first few months after install
The most aspirational rewards (category C) after the first 1-2 years after install

Of course, this is a gross oversimplification. Different player segments should have different earn rates based on how much they engage and monetize. Also, what percent of rewards you have in category A vs. category B should be a consideration as well. But it's a useful rule of thumb.

Loyalty point earning should also support two value drivers for apps:

Earn slow to drive long-term retention: This is the fundamental loyalty program model that 100% of loyalty programs adhere to. You award points slowly, then after N point-accruing interactions (and N is large), the loyalty member "cashes in."
Big moments to drive short-term engagement: That said, a portion of the anticipated earn rate should be reserved for "big moments." What's a big moment? It's an opportunity to grant the player a much larger amount of loyalty for a specific action. These should be behaviors that you really want to drive. Loyalty points can be a wonderful incentive for driving short-term engagement in those moments.

When it comes to what they can buy, more is better.

It's better if your loyalty members have more things they can buy with their loyalty points. For one, the same reward interactions will get stale with time. Secondly, not everyone is motivated by every offering. To catch more of your members, and to keep them engaged with loyalty longer, offer a variety of rewards (including both partner and O&O rewards mentioned above). Start with your monetizing currency, but move also into boosters, cosmetics, peacocking, event completions, and more. Loyalty burn doesn't necessarily need to be everywhere in your app, just enough places for your players to find value and continue to appreciate their loyalty points.

Of course, playAWARDS is here to help. Our loyalty economy team works closely with each of our partners to design, manage, and optimize the loyalty program in their app.

The playAWARDS Loyalty Center

When you partner with playAWARDS and integrate our SDK, you get a loyalty center and suite of supporting technologies that can handle everything needed for driving value with a loyalty hub.

Tools for driving awareness, such as the loyalty webhook, which pushes loyalty messages out to your players within your app, and our FTUE.
Tools for driving credibility, like dynamic homepage elements, including banners, cards, blockers, and more.
Tools you need to merchandise and personalize your store, like segmentation, advanced pricing elements, testing, and more.
Everything you need to support partner rewards, such as redemption information and advanced rewards restrictions.

Click here to learn more about the capabilities of the playAWARDS Loyalty Center.

Summary

In this article, we discussed how players and programs benefit when loyalty programs provide value. We learned the basics of how to create value in a rewards program, including how to drive awareness, credibility, and value perception. We learned the importance of properly merchandising rewards, including keeping the catalog fresh and showing the right reward to the right player at the right time. We learned some of the pros and cons of using partner rewards to bolster the value of your rewards program for your members, as well as how you should think about reinvestment with your owned & operated rewards. We talked about how to create chase with both achievable and aspirational rewards. We touched on how you should architect your loyalty economy to optimize for driving value.

And of course, when you partner with playAWARDS, you get access to the technology, platform, rewards, and expertise to get it done right.

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