Alternative Sales Strategies for Digital Stores -- Loyalty Programs

Next on our look at alternative sales tactics available in the digital age, we come to the concept of loyalty programs. While this is a tactic that's been used heavily by retailers and supermarkets, its use is still fairly new for the Game Industry but can be viable to get more sales.

Loyalty Programs:

Loyalty programs are another simple concept: You're rewarding a consumer for using your product or store as opposed to somewhere else. Just like with grocery stores, the concept is that the person signs up for a card or service for free and gets exclusive coupons, discounts and other things for continuing to shop at that one store chain.

The point of a loyalty program is that the consumer feels that they are getting special treatment for signing up and will continue to make use of that store for as long as the deals are better than the regular priced items in another chain.

There are only a small number of examples of this type of program with the Game Industry. Going back to Green Man Gaming, they had two forms of loyalty programs. First was early in the store's lifetime, buying new games would usually give the buyer store credit that they can use on subsequent purchases. This program was replaced by their new service called "Playfire." Playfire tracks the person's achievements they've earned in games and rewards them with credit at the store to buy more games.

What's interesting about Playfire is that it doesn't matter where you bought the games from as it can be tied to your Steam account. The only caveat is that the games in question must have Steam achievements and be a part of the Playfire service for it to count.

Playfire's hook is about getting rewards for playing games and in return, use your credit to buy from the Green Man Gaming store.

The online store Gamersgate has had a loyalty program for a few years now. Buying games on the service would give you coins which could be used as an alternate payment method for titles.

Another example would be the Club Nintendo part of Nintendo's website. Club Nintendo was a loyalty program in Japan that made its way to the US a few years ago. Basically for every game you buy for a Nintendo platform, you can fill out a survey to be awarded coins. These coins can then be used on discounted games or unique items that can only be bought from the Club Nintendo store front. Every year Nintendo gives away one time rarer items for people who have bought enough products over the course of that year.

The use of loyalty programs may sound simple but they can be used to give your store or company a lot of value.

Advantages:

The allure is the same regardless of the store or site -- People are spending money and earning something back that they can continue to use at that store. There aren't any real negatives to this as long as you provide a suitable reward for continued use. It just takes a lot more planning and development to come up with an effective loyalty program compared to coupons or cross branded promotions.

Of the ones mentioned, Nintendo has the strongest loyalty program thanks to its setup and reward structure. It doesn't matter where you buy the games from as long as you're buying a Nintendo product and have an account. And the rewards cannot be bought anywhere else which lends exclusivity which is a great motivator.

The only catch with Club Nintendo is that the program is locked to a set number of changing rewards, while Green Man Gaming and Gamersgate have the majority of their products available.

What's interesting about the use of loyalty programs is that there aren't any real disadvantages in their use. Since the program has zero buy in by the consumer, it's meant to pay for itself quickly and convince them to keep buying your games or use your service. The only thing that could be a disadvantage is in its setup.

Disadvantages:

Loyalty programs are a tricky sales tactic to use as you need to set up something that gives enough value to convince someone to keep coming back without underselling your content or products.  As more digital stores look to use this, there will come a point where you'll have to compete with others.

It's also important in the planning stages to come up with a program that doesn't require a lot of upkeep on your part. You don't want to set up something that may be in danger of being terminated due to costs.

Exclusive items like these posters are what separates Club Nintendo from other stores and loyalty programs.

Because of how unique they are, this is a strategy that is mostly used by digital stores today as most game companies don't have the sheer number of games put out for them to use a loyalty program. The only obvious exception would by platform owners like Microsoft, Nintendo and Sony who can make use of their first and third party catalog for the program.

Giving Something Back:

Creating added value without adding cost is a great way to keep people invested in your store. For our final topic in this series, we're going to take a look at the biggest example of adding value -- marketing events.

(Reprinted from the Xsolla.com Blog)