80 Level Research Team has conducted a series of interviews to learn more about the mechanics of in-game loyalty programs as well as the interest in an external solution for building loyalty programs.
Loyalty programs are effective for F2P games, increasing the LTV of users, but are not recommended for premium games that attract a large flow of new users instead of doing retention activities.
A loyalty program should be aimed at a specific metric that is vital for the game. Developers should think about the loyalty program and things included in it from the stage of the concept of the game.
Combining several products into one ecosystem and building a mutual loyalty program for all games is beneficial for the developer due to the possibility of redistributing players to different games.
A mutual loyalty program can bring together different developers, but the system must be mutually beneficial for all participants.
To learn more about the mechanics of loyalty programs in games, effective practices for increasing engagement and retention, and the prospects for mutual loyalty programs for different game studios, 80 Level Research team conducted a series of interviews with in-game economy experts, directors, and heads of studios and asked them a series of burning questions related to the topic.
Here you can read some excerpts from this report and download the full PDF version of the document by clicking this link.
Loyalty programs are one of the significant tools for user retention. The more gamers play a certain game, the higher the chance that they will spend more money on in-game purchases. Loyalty programs are great for F2P games, increasing the LTV of users, but are not effective for premium games that attract a large flow of new users instead of doing retention activities.
The loyalty program increases the percentage of viewed ads. With the implementation of an effective player reward program, the ad view rate can increase up to 95%.
Product Director at Tilting Point Francisco Andrada, for example, had this to say about the primary goal of the loyalty program and stages of implementation in the game:
"One of the premises that is needed to be fulfilled while designing a new loyalty program is that a good loyalty program must bring something useful to users.
The developers should think about the loyalty program and things included in it from the start, in that case, the main goal of such programs – LTV increase, will be achieved. If you want to sell something a lot and you want to leverage it properly, you need to make it very scarce.
In loyalty systems where you manage tangible premium products, it makes sense to use in-game points. For example, if a user plays the game enough, at some point he will have something for free. So, this player has some insight into its value."
What about the mechanics of loyalty programs.
A loyalty program should be aimed at a specific metric that is vital for the game. If developers' primary source of income is the sale of in-game items, loyalty points can be granted for the purchase of bundles. If the developer's profit increases due to expanding players’ userbase, loyalty values can be distributed for reposts on social media or for inviting friends. Developers should think about the loyalty program and things included in it from the early stages of the game. Loyalty points are in-game values or a currency that cannot be taken out of the game account and should enhance players' satisfaction with the game.
Providing a new gaming experience as a feature of the loyalty program also increases player retention. One example is, granting users access to special events aimed at social interaction, like joining clans and participating in special clan events. VIP statuses and daily login chains are used in many popular games (e.g. PUBG, Genshin Impact) and are an essential tool for user retention. The Loyalty points earned by the player can be used to purchase in-game goods like cosmetics, which help the user express themself.
Products Director at Gameloft Igor Antonov says that the loyalty program should emphasize the game's monetization model:
"The main criteria for the distribution of loyalty points is a reward for increasing the developer's profit. If the profit of the product/service increases critically due to the growth in the number of players, loyalty points can be distributed, for example, for reposts on social networks or referring friends.
For games where the primary source of income is the sale of in-game items, loyalty points can be earned by purchasing bundles.
The loyalty program can look like items, resources etc. values. This is the basic scenario where, over time, the player receives some kind of gift. Gifts can also carry vanity value, helping the player to stand out and express themselves.
Loyalty points can be a currency that cannot be taken out of an account or wallet – this is hard currency. It doesn't matter whether it’s dollars or candy wrappers, as long as they cannot be withdrawn from the wallet."
The loyalty program can be implemented more widely within several games from the same developer, different developers, and/or mutual IPs. Combining several products into one ecosystem and building a common loyalty program for all games is beneficial for the developer due to the possibility of redistributing players to different games. Conducting crossover events between different developers is gaining popularity in the gaming industry. There is an exchange of audiences and an increase in user bases. A common loyalty program can bring together different developers, but the system must be mutually beneficial for all participants.
Products Director at Gameloft Igor Antonov:
"Retention is the base goal of any loyalty feature. You can keep the audience within the framework of the game, company, IP, etc.
Combining a network of your own products into one chain is beneficial because of the possibility of redistributing players to different games. Another popular and effective solution is bundling, for example when a car in one game comes with, say, a Christmas tree for another game as a gift.
The platform will transfer traffic from game to game using a loyalty program for maximum profit and optimization. The owner of the platform is the ultimate beneficiary and maximum profit recipient. Developers need to carefully evaluate the situation, determining whether the game will get more players or become a tool for gaining benefits for someone else.
Connecting all the games of the company into one loyalty chain (program) is not usually a priority for the development team, as each product would have its’ own roadmap, and types of in-game benefits, and this could bring risks and time constraints for mutual technical implementation.
As a separate tool, holding crossover events is gaining popularity in the gaming industry. That helps the exchange of the audience and, ideally, an increase in the user base. In the end, the loyalty platform should be mutually beneficial for all participants."
Interviewees note the challenges that developers need to work harder on. The developers agree that the user can earn platform loyalty points through their game which can be spent on other games. The third-party platform will transfer traffic from game to game using a loyalty program for maximum profit and optimization. For the developer, the risk is that the platform may pass traffic from their game to others. Every game ecosystem is different and it is hard to create a mutually beneficial system for everyone. The developer doesn't know if their game will get more players, or if it is more a tool for someone else's benefit. Developers need security guarantees, such as non-disclosure of user information and a ban on aggressive redistribution of traffic between games. Third-party loyalty platforms must have powerful analytics tools to provide customers with the data that would confirm the value of a mutual loyalty program for developers.
Products Director at Gameloft Igor Antonov:
"The ability to integrate with a third-party service for providing loyalty programs is very dependent on the specific game. By joining the loyalty program, the developer agrees that the user can earn platform points through their game. For the developer, the risk is that the platform can transfer traffic from their game to others. Their game can become a beneficiary or a benefit creator for someone else.
Developers need a guarantee of security. Competitive projects should not learn information about users. The platform should also promise developers not to aggressively transfer traffic from one game to another. Such a platform should have powerful analytics and provide customers with analytics that confirm the value for developers."
Product Director at Tilting Point Francisco Andrada:
"Loyalty programs cannot be done externally, all of their experiences failed, because every ecosystem is different and even if two games are similar, the audience and other stuff can be different, so the results will be different too. It could work for a company’s loyalty program, but benefits for every game should still be defined separately. That said, in a web 3 market this system becomes more achievable because now, you can have a common currency that can work as your loyalty points and it has value in itself, not just the value that is defined by the company, but a real value defined by the users and the free market."
Loyalty points could be not only in-game values or a currency that cannot be taken out of the game account. Loyalty points can rely on crypto. Values in the form of NFTs could be a user retention solution for a game that is in the last stages of its lifecycle, following the example of Ubisoft's Tom Clancy’s Ghost Recon. Some games reward users with cryptocurrency; the developers share the ad revenue with the gamers. Viker Games has implemented bitcoin rewards for players, which has led to an increase in the average revenue per user per day by 50%, and sometimes up to 500% in some countries. However, interviewees claim that crypto loyalty values should expand the player's ability to enjoy the game, and not just be a way to earn money (see also Games with Tokens Research). The earning aspect could completely override the fun aspect of the game, so the game shouldn't turn into a play-to-earn.
Head of Strategic Initiatives at ZEBEDEE Jure Grahek had this to say on the topic:
"Most of Zebedee's partner games work with what are essentially loyalty points, but it's real money. The game rewards users in Bitcoin. Developers share a piece of the ad revenue with the gamer because the games are monetized with ads. So, users watch some ads and receive a bit of the ad revenue back in the form of Bitcoin.
Zebedee doesn't do loyalty programs in an overly simplified way, like watching an ad and receiving some bitcoin. That would be very boring. Zebedee gamifies the process, so users get bitcoin for different stuff like completing a level, doing a cool combo, getting a reward randomly, etc."
Loyalty values in real life are like customer service in luxury brands; membership in an "elite club" where the developer takes care of the players, invites them to events and introduces them to other people. This kind of social experience is very exciting, but it is designed specifically for heavy spenders. This type of loyalty program is very expensive, but it is possible that such users will bring another billion in profit to the developer.
And here's what Founder and CEO of Cometh Jerome de Tychey thinks on the matter:
"It may differ on the size of the community that gets the loyalty award. If it’s a small community of10,000 hardcore players, developers may want to get them a life-sized sword and ship it to them. It might cost $1,000 dollars for every item, but these players might possibly make you your next billion.
Engaging the audience with real-life stuff looks similar to customer management in luxury brands. For instance, if you buy a McLaren, then you are in the McLaren club, and the company takes care of you, invites you to events, and introduces you to people as a result. This kind of social experience is very important and engaging, but this is mainly for heavy spenders."