Porsche, Latam Airlines and La Quinta Hotels Driving Customer Engagement Using Gamification

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PAULA: Hello and welcome to Let’s Talk Loyalty and Loyalty TV, a show for loyalty marketing professionals.

PAULA: I’m Paula Thomas, the founder and CEO of Let’s Talk Loyalty and Loyalty TV, where we feature insightful conversations with loyalty professionals from the world’s leading brands.

PAULA: Today’s episode is hosted by Amanda Cromhout, the founder of Truth, an international loyalty consultancy.

PAULA: She’s also the author of the book, Blind Loyalty, 101 Loyalty Concepts, Radically Simplified.

PAULA: Enjoy.

AMANDA: Hi, I’m Amanda Cromhout from Truth and the author of Blind Loyalty.

AMANDA: Today’s Loyalty TV interview is with Yu-Kai Chou.

AMANDA: He is the founding partner of the Octalysis Company Group, and he is the creator of the Octalysis Framework.

AMANDA: He is also the author of two books on gamification.

AMANDA: This interview talks about the eight core drivers within the Octalysis Framework, and he leaves us with amazing case studies.

AMANDA: Case studies from Porsche, from Latam Airlines, and from La Quinta Hotel Group, with clear metrics, clear change of behavior, and just a super, super engaging conversation.

AMANDA: He talks about the key advice for anyone trying to drive gamification, is to think about the experience and the engagement, rather than the business numbers and the seriousness of this approach.

AMANDA: This is a wonderful interview.

AMANDA: Well, welcome Yu-Kai.

AMANDA: Yu-Kai Chou, he’s been on Let’s Talk Loyalty before.

AMANDA: He is the founding partner at the Octalysis Group, and the founder of the Octalysis Framework.

AMANDA: So Yu-Kai, welcome back to Let’s Talk Loyalty, and welcome to Loyalty TV.

YU-KAI: It’s a great pleasure to be here.

AMANDA: So it’s wonderful to have you.

AMANDA: You’re in Taiwan, I’m in Cape Town, so we’re truly seeing global connections around the loyalty industry.

AMANDA: And you’ve been with us before, but I just think the world has moved on so much since your last interview with Paula, and the theme of gamification seems to be on everybody’s minds, everybody’s lips in the loyalty world.

AMANDA: So that’s what we’re going to spend a lot of time talking about today.

AMANDA: But I think, as you know, we start Loyalty TV with a traditional question, and this one is around what is your favorite loyalty or business book.

AMANDA: But you are a very well-renowned author yourself, so let us know a little bit about that.

AMANDA: But also, what’s your favorite book?

YU-KAI: Yeah, so I’m obviously very biased.

YU-KAI: My first book, Actionable Gamification, sold over 100,000 copies, and I literally just launched my second book, 10,000 Hours of Play.

YU-KAI: So obviously, I like those books a lot.

YU-KAI: But to give a proper answer and a more fair answer, I think my favorite book that helped me the most is actually Daniel Kahneman’s Thinking Fast and Slow, and it’s about behavioral economics where the first one-third, I thought it was okay, and the second third, I’m like, wow, this is really good.

YU-KAI: And the last third, it’s like, wow, my mind is blown.

YU-KAI: There are very few books that get better and better and better as you go on, it builds on the earlier foundation.

YU-KAI: Whereas a lot of books, you read the first one-third and that’s the thesis, that’s everything he wants to say, and then the rest is more like filling it up to become a book.

YU-KAI: So it’s like all these examples only and it doesn’t go deeper.

YU-KAI: So I can’t recommend enough Daniel Kahneman’s Thinking Fast and Slow.

AMANDA: That’s amazing that you actually stuck at it because I think a lot of us would have given up after that first third, but it’s brilliant to hear it progresses into better reading.

AMANDA: But also, don’t be shy about your own books.

AMANDA: I’m also an author, so a 10,000 distribution of your first book is an incredible achievement.

AMANDA: Did you say 10,000 or 100,000?

YU-KAI: 100,000.

AMANDA: Sorry, forgive me, forgive me, even better, tenfold, even better.

YU-KAI: It’s a little confusing because I said my first book sold over 100,000 copies, but my second book’s title is 10,000 Hours of Play.

YU-KAI: That’s why it’s easy to get it mixed up.

AMANDA: Yeah, wonderful.

AMANDA: Well, congratulations on your second book release.

AMANDA: So I look forward to seeing that and reading it as well.

AMANDA: So amazing.

AMANDA: Well, it’s great to have you as an expert in this field, but also as a renowned author in this field.

AMANDA: So you, as I said, you’re sitting in Taiwan, I’m sitting in Cape Town.

AMANDA: You have had a little bit of time in your own life in South Africa.

AMANDA: I was delighted to hear when we first met.

AMANDA: But tell us a little bit more about your journey, bringing you to where you’re at today, that you’re able to talk with such authority on gamification.

YU-KAI: Yeah, so I started my journey in gamification in 2003.

YU-KAI: So that made me an early pioneer.

YU-KAI: And in 2003, I was a very heavy gamer and I spent thousands of hours mastering characters inside a game, getting more gear, more gold, leveling up my skills.

YU-KAI: But then, as most people do, they move on from one game to another.

YU-KAI: So I quit one game and I was in that transitional period between starting another.

YU-KAI: And I felt extremely empty.

YU-KAI: I’m like, wow, like all those things I’ve done in the game that made my character amazing, it’s all gone.

YU-KAI: I’m still the same loser in real life.

YU-KAI: And so I started becoming really interested in the topic of, how can we make games more productive, where the more hours you spend on the game, the better your real life is.

YU-KAI: And there are so many things in the real world where they’re important, we know we should do it, we just don’t want to do it.

YU-KAI: And I was thinking, how can we learn from games to turn those things into more fun and excitement?

YU-KAI: So that’s 2003.

YU-KAI: And then I started my first company in the game creation space in 2005.

YU-KAI: And in 2012, that was a big turning point because I published the Octalysis Framework, which we’ll talk about today, I think.

YU-KAI: That’s in 2012.

YU-KAI: And I put it on my blog, yukaichou.com.

YU-KAI: And that was instantly picked up very quickly.

YU-KAI: And it was organically translated into 16 different languages.

YU-KAI: And that’s when I started getting invited to do a lot of talks or consulting at a place like Harvard University, Stanford, Yale, Oxford, Tesla, Google IDEO.

YU-KAI: And that led to my TEDx talk and being rated the number one gamification career in the world.

YU-KAI: And from that point on, it’s just building that momentum, starting my consulting company Octalysis Group.

YU-KAI: And that’s when I published my first book, I think around 2015 and all the way to where I am today.

AMANDA: That’s incredible.

AMANDA: Well, congratulations on an amazing career, having started out not in the loyalty environment at all.

AMANDA: And obviously, you’re not sitting just in the loyalty environment.

AMANDA: We understand that.

AMANDA: And I think that’s why it’s so interesting that you’ve got deep, deep experience in one of the elements that makes customer engagement so exciting.

AMANDA: So after developing the framework, the Octalysis Framework, and obviously, as you say, that got enormous traction, translation to different languages.

AMANDA: You went into the Octalysis Group, founded the consulting firms.

AMANDA: Tell us a little bit about that, where you serve your customers, where you located, how do you actually serve your customers through the consultancy business?

YU-KAI: Yeah.

YU-KAI: And actually, what’s interesting is, before I published the Octalysis Framework, I was actually running a startup on loyalty programs.

YU-KAI: So I have been in that space, and that led to my creation of the Octalysis Framework.

YU-KAI: So before 2012, I actually was running a startup called Reward Me, which is a loyalty program for brick and mortar stores and franchises.

YU-KAI: You go in, and at the beginning, you scan a QR code.

YU-KAI: Later on, you tap your phone number on an iPad, and you accumulate loyalty points, and you go from there.

YU-KAI: So that’s why I said a lot of the things I work in gamification, which is why I’m talking today.

YU-KAI: A lot of those things involve loyalty program fundamentals.

YU-KAI: It also involves serious games that I did also prior, and also gamified career development.

YU-KAI: And also leaderboards for social media.

YU-KAI: So all those things accumulated into the creation of Octalysis Framework 2012.

YU-KAI: And those are great applications to it too, because loyalty is all about engagement, and game design is all about engagement and long-term retention also.

YU-KAI: So then to your actual question, so after 2012, I started the Octalysis Group, and we basically offer a variety of services from doing workshops, training companies to gamify their marketing program, their loyalty program, their employee motivation systems and whatnot, to doing instructional consulting.

YU-KAI: So it’s a monthly retainer where we’re just like the on-team experts, where they show us everything they’re doing, and we’re helping them fix onboarding, we’re helping them increase social appreciation from different other audience members, adding more unpredictability and curiosity, Easter eggs, and then all the way to fully designing a solution with our five-step process.

YU-KAI: So we work with all sorts of companies.

YU-KAI: Because of the brand I’ve built up, the majority of our clients just come with inbound.

YU-KAI: So, you know, Tesla or Coca-Cola or McDonald’s, Starbucks, they would just reach out to me from different countries, and they want me to help them gamify some aspect of their business.

YU-KAI: And, you know, we give a price, a proposal, and if it’s a yes, then we start working on it.

AMANDA: And where are you based?

AMANDA: Where is Octalysis Group based?

YU-KAI: Yeah, so I initially was based in the US, California, and during COVID, I relocated to Taiwan.

YU-KAI: And since most of our work is done remotely, I literally can be anywhere.

YU-KAI: Now, our team, our team of designers are all over the place, because the way we recruit people are through online design competitions.

YU-KAI: So we say, hey, how would you redesign eBay?

YU-KAI: You have 30 days to figure it out, and then people use their night and weekends to submit 30 pages of design analysis and documents.

YU-KAI: We interview the top people, and we hire the best.

YU-KAI: So it ended up being people who are the best are all over the place.

YU-KAI: So we have some from Bulgaria, from Switzerland, from Brazil, Colombia, US., all over the place.

YU-KAI: But our company is registered in Hong Kong, and we have two legal offices, Hong Kong and the US.

AMANDA: Great.

AMANDA: Yeah, absolutely.

AMANDA: I mean, you can serve the world from wherever you are.

AMANDA: That’s really clear.

AMANDA: So OK, so we’re going to get straight into the topic of gamification.

AMANDA: It was actually only a couple of months ago that I did a Let’s Talk Loyalty podcast on gamification with two amazing individuals, Glenn Gillis and Dr.

AMANDA: Jackie Norkia.

AMANDA: Jackie Norkia works for the Vitality Group, part of Discovery Group, who are doing some phenomenal behavioral change work using gamification and have been doing so for a long time.

AMANDA: So in that podcast, I had great dialogue with them around the definition of gamification, how they see it, how they see it applied around the world.

AMANDA: So I actually want to repeat that question to you, because I think it’s so fundamentally important that we understand what are we actually talking about, because everyone has a different view of it.

AMANDA: So what is your definition of gamification?

YU-KAI: I’m a purist.

YU-KAI: I like to stick with simple definitions.

YU-KAI: And so to gamify something is to make it more like a game, to make game like.

YU-KAI: And this is where people question, right, what does it mean to make more like a game?

YU-KAI: Is it points or badges, is it graphics and whatnot?

YU-KAI: And so you’ll see later from my framework, when it is more like a game, it means that everything exists to engage us, to create more motivation.

YU-KAI: It doesn’t assume you have motivation and gives you efficiency.

YU-KAI: It assumes that you don’t have motivation.

YU-KAI: Every step is to entertain the brain.

YU-KAI: So that’s when I say this is gamification.

AMANDA: I love that.

AMANDA: To entertain the brain, I think life is serious enough and loyalty doesn’t need to add more seriousness to the consumer’s mind.

AMANDA: It needs to entertain us.

AMANDA: So I love that.

AMANDA: So yes, the Octalysis Framework, so 2012.

AMANDA: So it’s not new, but obviously it’s had enormous impacts.

AMANDA: And I think it’s very important that we understand that.

AMANDA: Can you talk us through the framework?

AMANDA: Just take us through it step by step.

YU-KAI: Yeah, so it’s called the Octalysis because it’s a combination between the word octagon and analysis.

YU-KAI: So it’s a visual octagon and on the octagon, there are what we call the eight core drives that motivate all our behavior.

YU-KAI: So everything we do is based on one or more of these eight core drives, which means that if there’s none of these eight core drives there, there’s zero motivation.

YU-KAI: No behavior happens.

YU-KAI: And so each core drive will connect to a variety of what we call game design mechanics or elements, like core drive to development accomplishment connects to points, badges, status, trophies, things that make you feel accomplished.

YU-KAI: But core drive seven, unpredictability and curiosity will connect to things like Easter eggs, mystery box, lottery designs.

YU-KAI: And so those are things that make us feel like, hey, we don’t know what’s going to happen next.

YU-KAI: And it brings up that excitement and of anticipation, a bit like what you see in a casino.

YU-KAI: So so there’s these eight core drives.

YU-KAI: And what’s unique about it being an octagon is that where it’s placed on the octagon will connect to different consequence of nature.

YU-KAI: So the left side of the octagon, we call them left brain core drives.

YU-KAI: And it doesn’t necessarily mean it’s geographically on the left side of our brain.

YU-KAI: That’s been debated.

YU-KAI: But it symbolically represents our logical brain versus the right brain core drives that symbolically represents our emotional brain.

YU-KAI: Now, what’s actionable is that the left brain core drives deal with extrinsic motivation, things you do for a reward, a purpose or a goal, but you don’t necessarily enjoy the activity itself.

YU-KAI: So once you obtain the reward, you hit your goals or get used to the reward, it becomes stale, people stop doing this behavior.

YU-KAI: And this is traditional like, hey, you know, if you do something that’s boring, we’ll give you loyalty points, we’ll give you money, we’ll give you a cooler title, right?

YU-KAI: But once those become stale, then people leave.

YU-KAI: Then we have the right brain core drives that deal with intrinsic motivation, things that people do just because they enjoy doing it.

YU-KAI: They would even pay money to experience it.

YU-KAI: And even if they lose all their progress the next day, if they lose their loyalty points, their certificates, their diplomas, their NFTs, they would still want to do the activity today because that’s how we measure our quality of lives, how much time we just spend on things we enjoy doing.

YU-KAI: And then we look at the top versus bottom of the octagon, and there’s also different natures there.

YU-KAI: The top ones, we call them white hat motivation core drives.

YU-KAI: So it makes people feel powerful, in control, they feel good, but there’s no sense of urgency, so they procrastinate.

YU-KAI: The bottom ones, we call them black hat motivation core drives.

YU-KAI: And so those make people feel urgent, obsessed, sometimes even addicted.

YU-KAI: But in the long run, if that was the only motivator, it could lead to people burning out, and they feel bad because they feel like they’re not in control of their own behavior.

YU-KAI: So white hat motivation is good for long-term things, things like loyalty programs, community management, employee innovative environments.

YU-KAI: And black hat motivation is good for short bursts of activities or one-time transactions, like getting people to sign up to a loyalty program or to redeem an offer.

YU-KAI: Having that black hat helps with getting people to act quickly.

YU-KAI: So based on where it’s on the octagon, and if we want, we can also go through what each of them are, you can see not only can we create behavior, but we can understand what the right type of behavior is, is a long-term, short-term, intrinsic, extrinsic.

YU-KAI: One really interesting example is, let’s say on the right bottom again, that’s Core Drive 7, Unpredictability and Curiosity that we mentioned.

YU-KAI: And so it’s on the right bottom, which means the right brain, our brain enjoys it, but it’s black hat, which means we fell out of control.

YU-KAI: That’s like someone wanting to go to bed at 10 p.m., but then they binge watch Netflix 2-2 in the morning, right?

YU-KAI: Their brain enjoyed it, it’s intrinsic, but they fell out of control, it’s black hat.

YU-KAI: And so just based on where it’s at, we could apply different design tools and mechanics to make sure it has the right type of effect.

AMANDA: I mean, listening to you, I could actually listen to you all day long, because it’s just fascinating.

AMANDA: And obviously the psychology behind it is so, so critical.

AMANDA: But I’m sure a lot of your consultancy work is spent working with the brands around that different life cycle of A, the brand, and B, the customer within the brand experience.

AMANDA: And depending on that, that’s where you apply the different drivers.

YU-KAI: Yeah, so it’s always boiling down to desire behavior.

YU-KAI: Like, if you need these people to do this type of activity, then remember, if there’s none of these A core drives, there’s just zero motivation, no behavior happens.

YU-KAI: So the first step is to think what among those A core drive is motivating the behavior right now, right?

YU-KAI: But then it’s to think about, okay, what other core drives can we implement on each step of the player’s journey, you know, onboard, scaffolding, end game, short-term, long-term retention?

YU-KAI: And so, should we add more core drive when Epic Media and Colleague or core drive to development accomplishment or core drive to the empowerment of creative feedback?

YU-KAI: And we go down the list to start making sure each step, the customers interact with your brand, they feel more delighted, they want to interact with even more, they’re building true loyalty, not just, hey, how much are you going to pay me?

AMANDA: Yeah, yeah, we’ll definitely put a link into the show notes, how everyone can access and see the framework so that they can actually work their way through the eight points themselves, but I think it’s fascinating as well when you talk about white hat versus black hat, a curious question from myself before we carry on in the loyalty environment, but are you saying the white hats at the top of the framework is a more positive experience versus black hat?

YU-KAI: I wouldn’t call it positive or negative.

YU-KAI: The very definition of white hat versus black hat is, white hat, you feel more in control, and black hat, you feel more out of control.

YU-KAI: A lot of people voluntarily put themselves in black hat motivation to go to the gym more often, to eat healthily, and so there are things that we just want to do, but we can’t get ourselves to do it, and this is where we use, for instance, Core Drive 6’s scarcity and patience, saying, oh, you’re only allowed to do this in the next two hours.

YU-KAI: If you don’t, you won’t be able to do it again.

YU-KAI: It’s like, oh, I’ve been procrastinating forever, but this is the last two hours, so I better go do it, right?

YU-KAI: And so if it’s a goal people want to do, that’s why you, for instance, pay your gym trainer.

YU-KAI: Some people pay their gym trainers who are very harsh and call them weak and losers when they’re doing pushups, right?

YU-KAI: It feels very uncomfortable, but later on you’re like, thank you so much for pushing harder than I could ever push myself.

YU-KAI: So what people don’t like is when marketers, employers, governments, educators, parents, use a lot of Black Hat motivation to get things to buy things they don’t need, to work overtime without proper compensation, get manipulated.

YU-KAI: And since, you know, this is tied to our survival instincts, a lot of people still do the activity, but the moment they can escape the system that we’ll want to, you know, as customers buy from others, employees leave the company.

YU-KAI: Sometimes children run away from home when the parenting strategy is too black hat.

YU-KAI: And like I said, the reason why we feel out of control, the black hat core drives are scarcity, unpredictability and loss and avoidance, right?

YU-KAI: So it’s really tied to our survival instincts.

YU-KAI: It’s avoiding danger.

YU-KAI: It’s going after scarce resources.

YU-KAI: It’s exploring new land.

YU-KAI: And that’s why we feel out of control.

YU-KAI: We feel like we’re hardwired to respond to our environmental triggers like that.

YU-KAI: But if we’re always in this black hat environment, we don’t necessarily feel happy because, you know, we’re always just trying to survive.

YU-KAI: So that’s why when you go to the white hat motivation side, it becomes more about, oh, you know, how do I use my creativity and uniqueness?

YU-KAI: And how do I find purpose and meaning in my life?

YU-KAI: So that’s the differentiation between white hat and black hat.

AMANDA: It really is a one on one in psychology, right?

YU-KAI: So yeah, I’ve been very blessed because when I first created the Octalysis Framework, I just wanted a tool to help companies solve problems.

YU-KAI: I didn’t have any ambitions to academia in mind.

YU-KAI: But now if you go to Google Scholar and you search Octalysis, you’ll find I think around 3,500 PhD thesis academic journals referencing the framework to apply to different things.

YU-KAI: And there has been people who have PhD in psychology.

YU-KAI: They told me that my firm actually answered some questions the psychology world couldn’t answer yet.

YU-KAI: So I was just very, very lucky and blessed that my tool not only stands strong in the commercial world, but also seems to create value in the academic world.

AMANDA: Yeah, it’s wonderful.

AMANDA: Well, good.

AMANDA: It shows the solidity of what you’ve created.

AMANDA: It’s wonderful.

AMANDA: So it’s a super obvious question, but I’d love you to explain it.

AMANDA: I mean, those of us in the loyalty world can immediately see how this fits into loyalty, how it drives behavioral change, how operators of loyalty programs need to understand this.

AMANDA: But let’s hear it from you.

AMANDA: How does this fit into the loyalty environment?

YU-KAI: Well, loyalty is all about engagement, especially long-term engagement with a brand.

YU-KAI: What I really like about the word loyalty is that the whole name of this industry or methodology is results driven.

YU-KAI: We want loyalty because you could call it a process.

YU-KAI: You can say we have membership programs, right?

YU-KAI: We have subscription programs, we have reward programs, but these are just how.

YU-KAI: But what you actually are trying to do is trying to create loyalty.

YU-KAI: But in effect, you want customers to have loyalty towards the brand, to love the brand, to defend the brand’s reputation, to come back all the time and tell their friends.

YU-KAI: And I think all of those things are what Gamification aims to do, drive engagement, get them to care.

YU-KAI: And make them passionate about what they’re interacting with and bring all their friends into the system.

YU-KAI: And so that’s why I think sometimes I do my work and some people say, hey, you know, that is like a loyalty program.

YU-KAI: So yeah, because they’re basically the same thing.

YU-KAI: It’s just in Gamification, we would expand that to, you know, add more things that traditional loyalty programs don’t think about like the Easter egg, the unpredictability, right?

YU-KAI: We would add sometimes the social group quests.

YU-KAI: We would add ways for people to express their creativity and freedom.

YU-KAI: So it’s a little more playful and fun, where I think it’s really taking traditional loyalty, which is most of the time a linear path, like do 10 things and get one free to having more gameplay strategy, a game loop and whatnot.

AMANDA: Yeah, stunning.

AMANDA: Absolutely stunning.

AMANDA: Well, let’s bring this to life, because I think what you’re saying makes complete sense.

AMANDA: And we theoretically understand it.

AMANDA: And in practice, we’ve seen some great work around the world in how brands and loyalty brands have used gamification.

AMANDA: But from your experience, can you share with us your favorite case studies of how your framework, the work you do, has helped brands really make a difference?

YU-KAI: Yeah, so I have three in mind.

YU-KAI: See if we can get to cover all three of them.

YU-KAI: But the first one is a case study that we did as the Octalysis Group, which is for Porsche and we deployed that in Austria.

YU-KAI: So basically, Porsche has an issue in that the parent company is Volkswagen, right?

YU-KAI: They have an issue.

YU-KAI: They actually don’t have a lot of touch points with their end customers.

YU-KAI: Because if you think about it, you don’t usually interact with your car company much, right?

YU-KAI: You interact with the dealership, with the car maintenance people, maybe go to some forum, and with a car company wants to interact with their customers, they do like big advertisements and whatnot, but they don’t know if this is going to hit or if people are watching or not.

YU-KAI: So what we help them design is something called Boneo, and basically, it’s a mobile app, and the first thing you need to do to play with this mobile app, this loyalty program is to have a Porsche, right?

YU-KAI: So there’s a little bit of a barrier right there.

YU-KAI: Based on how you drive your Porsche and how you interact with other Porsche drivers with the same loyalty program, you will get a variety of resources that make your app profile more interesting, you look more special to others, and also give you some perks and benefits for your coffee, for your donuts.

YU-KAI: But most importantly, it allows you to upgrade to your next car more efficiently, and not just a more expensive Porsche, but also cars in the Volkswagen family, so because they also own Bentley and Bugatti and all those other brands.

YU-KAI: So when they deployed this in Austria, what they saw is that drivers spend an average of more than five minutes every single day using the app.

YU-KAI: And they can’t do it even when they’re driving.

YU-KAI: So they have to finish the drive, get off, and they’re like, okay, let me check what’s going on with my loyalty program with Porsche.

YU-KAI: And so if you think about it, you usually don’t interact with a product company every day, right?

YU-KAI: You use your, maybe your social media app every day, right?

YU-KAI: Your Google, your Facebook, you may use your work apps, your email, your Slack, or Microsoft Teams, but you don’t really interact with your computer company every day, or your table, or your car company every day.

YU-KAI: So they were really excited about the results there, and they wanted to deploy it to the entire Europe.

YU-KAI: Unfortunately, that’s when something, I don’t know if it’s on your radar, something called COVID-19 happened, and it put everything into pause.

YU-KAI: And so now they’re still there internally, they’re seeing if they can build momentum to get it out again.

YU-KAI: But COVID-19 was a big disruptor, but that was seen as a very successful loyalty program that a lot of people were passionate about.

YU-KAI: And the second one, I think, a Gamification can be used to also help people sign up for loyalty programs and also redeem the rewards in the program.

YU-KAI: So this is a case study with Latam Airlines, which is the largest airline company in South America.

YU-KAI: And so their goal is actually, they wanted a 30-day campaign to get people to sign up to their loyalty programs.

YU-KAI: It also includes like a credit card system.

YU-KAI: They have a lot of things they want to build into that program.

YU-KAI: But they also wanted to increase redemption of those points, because when they’re just sitting there, they’re seen as a liability.

YU-KAI: They want people to use it.

YU-KAI: Also, another goal they wanted was to get people to redeem it with partner companies, because you can use your points on things that’s not the airline, etc.

YU-KAI: What they did is they utilize a lot of core drives to scare students and patients.

YU-KAI: It created a storytelling, digging treasure in the jungle story that engages people.

YU-KAI: There’s a countdown timers, like you’re only allowed to join within a certain time period.

YU-KAI: Also, there was a way for people to become the one person that’s selected to do this.

YU-KAI: It’s a more fun gamified way to get people to sign up.

YU-KAI: What they saw is, first of all, there were 160,000 unique visitors on their website that made 8 million interactions, and that actually crashed Latam Airlines’ website on the first day.

YU-KAI: They didn’t expect things to ramp up so quickly.

YU-KAI: Their miles of accumulation saw 123% increase compared to their historical averages.

YU-KAI: Their credit card acquisitions increased by 153% compared to the control group.

YU-KAI: Redemption for their alternative products, like the partner companies, that actually skyrocketed by 1,407%.

YU-KAI: Now, admittedly, that number was not super high before because they didn’t trigger this very well in their designs, but you can increase any important metrics by more than 1,000%.

YU-KAI: Everyone’s quite happy about it.

YU-KAI: So that is not the program itself.

YU-KAI: It’s to get people to sign up and to get people to spend, right, transactional so you’ll see more black hat there.

YU-KAI: And then the final interesting example I’ll share is with the La Quinta Hotels, which is a hotel group in, you know, Mexico, California, I think a few other places.

YU-KAI: And this hotel group wanted people to interact with the brand, even when they don’t need to buy a hotel room, right?

YU-KAI: So what they do is every day, when you’re just bored sitting on your couch, you know, and there’s a limit only once a day, you can play with a little spinning wheel game, they’re called it play and stay.

YU-KAI: And, you know, you’re just bored, so you spin, and then it’ll say, hey, you got, you know, either 2,000 loyalty points, 5,000, 10,000, whatever.

YU-KAI: And so once you’ve got to get this, then it’ll say, hey, did you know that if you answer a question about our marketing, our brand, our history, you can get 20% more?

YU-KAI: And people say, oh, okay, well, why not do that?

YU-KAI: So, you know, they’re registering some brand value there.

YU-KAI: And then after that, they say, hey, did you know that if you share it with your friend right now, you can get 50% more?

YU-KAI: And at that point, it’s like, wow, I already got so far, so I probably should do that.

YU-KAI: And so what they saw was that 34% of their users returned every single day for 3.75 minutes.

YU-KAI: Again, this is with a hotel group, right?

YU-KAI: Not that excited, not even like super high end, but like decently priced.

YU-KAI: The bookings per user during the period that we’re allowed to share was increased by 206%.

YU-KAI: So these are sales and purchases.

YU-KAI: Now, revenue per user went up by 132%, which is $157 against the control group.

YU-KAI: So again, bookings went up by 200%, and revenue per booking went up by 132%.

YU-KAI: So together, that adds up to be quite a big difference in revenue numbers.

YU-KAI: And then the viral coefficient was 530%.

YU-KAI: And what that means is, on average, they saw that a person who was in their system invited five friends to join and participate also.

YU-KAI: So they made this loyalty program fun, interesting, exciting, a lot of unpredictability, and then hitting those eight core psychological triggers, and they get results.

YU-KAI: So those three, we help with all of them, and they have a variety of, even their own loyalty program, they’re different industries and also different value add into loyalty programs.

AMANDA: Yeah, I could listen to you all day.

AMANDA: I mean, just listening to you talk about, we work with a lot of automobile companies and they, that’s their burning problem, right?

AMANDA: How do you interact with a brand when you only need to change your car, maybe every three to four years, and you’re getting that engagement at five minutes per day.

AMANDA: It’s just remarkable.

AMANDA: And then those last stats you’ve just shared on La Quinta, it’s just absolutely incredible.

AMANDA: And I love the measurability of it, which is one of the questions I’m actually wanting to ask you.

AMANDA: So let’s move into that.

AMANDA: Like you’ve shown some incredible statistical responses, like big numbers versus control groups.

AMANDA: So you’re hitting all the key words that loyalty metrics and loyalty folks will want to hear.

AMANDA: Are they the way, is that the way you measure gamification?

AMANDA: Or is there another way we need to be aware of?

YU-KAI: Yeah, so first of all, I think we’re lucky to be able to share a lot of these things we’ve done because most clients we work with, there’s always some kind of confidentiality clause.

YU-KAI: Some we can’t even say we work with them.

YU-KAI: Some we can say we work with them, but not on what.

YU-KAI: Some on what, not details, details, not numbers.

YU-KAI: And so over the past one, two decades, we’ve gathered a list of one or two dozen companies that allow us to share not only what was done, how we did it, but also the numbers.

YU-KAI: And usually the reason why we’re out to share is because of those eight core drive themselves, core drive two development accomplishment.

YU-KAI: They want to win some kind of innovation competition, have some public relations value.

YU-KAI: And so we have that.

YU-KAI: But then go into your question about measurement.

YU-KAI: So we have a five step design process.

YU-KAI: And step one is called the strategy dashboard, and it’s defined five things that lead to five others.

YU-KAI: And the first one we define as business metrics, which is what is the goal?

YU-KAI: How do you measure success in your project?

YU-KAI: And then so there’s business metrics, and then there’s the user, and then there’s desired actions that they need to do.

YU-KAI: There’s feedback mechanics and triggers, and there’s incentives and rewards.

YU-KAI: So those are the five things we have to gather at the beginning of every project and how we put them together.

YU-KAI: Basically players do desired actions, it impacts as metrics.

YU-KAI: The feedback mechanics tracks their progress towards the win state, and it triggers more desired actions, desired actions if they do it leads to win states and the rewards are embedded into the win state.

YU-KAI: I think I went through that really quickly, but it’s a visual process that we have there.

YU-KAI: The clients have to tell us what their ultimate business metrics are.

YU-KAI: If those business metrics go up, then we’re successful.

YU-KAI: If they don’t go up, even if they stay the same, it’s a failure because we spent all this energy and work and it didn’t really change.

YU-KAI: We usually want clients to stack rank their business metrics.

YU-KAI: What’s the number one importance?

YU-KAI: What’s number two?

YU-KAI: What’s number three?

YU-KAI: Because when you do this enough, you can increase behavior in any direction, but sometimes you increase the immediate thing, but you actually hurt your long-term prospects.

YU-KAI: Some clients will tell us, oh, well, we really need more users signing up.

YU-KAI: That’s our number of priority.

YU-KAI: That’s more important than anything else, and anything else could be sacrificed in this sense.

YU-KAI: Then we’re like, well, if we get you 100 million people to sign up, but they all leave in one week, does that accomplish your goals?

YU-KAI: They’re like, oh no, that’s actually worse than having zero people sign up because we burn our bridges for so many people.

YU-KAI: Then they’ll start to make it more sophisticated.

YU-KAI: We want monthly active users who has been around for more than nine months.

YU-KAI: If that number goes up, then surely we’re successful.

YU-KAI: We would craft that.

YU-KAI: One of the most interesting projects is I was working with a religious organization that’s trying to get Jewish people to be closer to their God.

YU-KAI: I asked them, hey, so what’s your top business metric?

YU-KAI: They said, Jewish people closer to God.

YU-KAI: I said, all right, so if no one goes on your website anymore, which means you get no more donation, you have to shut down, you’re obsolete, you have to lay off everyone, is that successful or not?

YU-KAI: And they had to think really, really hard about that.

YU-KAI: And because on a day to day, they’re thinking about search engine optimization, email marketing, video production.

YU-KAI: And they came back and they said, we agree.

YU-KAI: If one day we’re just obsolete, every Jewish person is at a synagogue learning from a rabbi, in which case we have to shut down, that’s very successful.

YU-KAI: And I can’t tell the client that.

YU-KAI: They have to tell me this and I can design with that.

YU-KAI: But then there’s another case where we work with a museum group and they first said their top business metric was created an engaging experience when people visit.

YU-KAI: But in the middle of the design project, I realized their top business metric was actually to attract donor money.

YU-KAI: And that would have been a different design because you can have maybe a very engaging experience, but the donors are not even aware of it.

YU-KAI: But for the donor ones, you would want to optimize for press-worthy things that donors can say, hey, you know that thing on TV?

YU-KAI: I’m one of their big donors.

YU-KAI: Or VIP programs where they can take their grandchildren to have a unique tour, all that stuff.

YU-KAI: So again, the client tells them what the business metrics are and then we design something that makes sure it follows those values.

AMANDA: But that’s plum, right?

AMANDA: I mean, one of the things we talk about a lot in the work we do at Truth is, the loyalty strategy can’t sit at juxtaposition to the business strategy.

AMANDA: It’s got to serve the business strategy.

AMANDA: Otherwise, it’s just going to be a project that the marketing team run off with in loyalty and no one takes it seriously.

AMANDA: So I love those examples of how you actually get the business.

AMANDA: You know, it’s not a separate gamification measurement.

AMANDA: It’s a business measurement.

AMANDA: Okay, so we’re coming to the end of our conversation, unfortunately.

AMANDA: But if you wanted to give advice to a loyalty professional out there who’s struggling to get traction in their organization, because some of the experiences our team has had is when you talk about gamification in the boardrooms of some of the maybe older generation or less aware of the impact it can have, it can be seen as that sort of buzzword.

AMANDA: And so what advice would you give to actually be able to say, look, this is a real game changer.

AMANDA: It can really help customer engagement.

YU-KAI: Yeah, I would say focus more on passion and engagement over bribing people.

YU-KAI: Because most loyalty programs, I actually don’t think they’re loyalty programs, they’re mercenary programs.

YU-KAI: Because if you go to whoever pays you the most, by definition, you have no loyalty.

YU-KAI: A lot of people say, yeah, I’m part of 12 loyalty programs, that means they don’t have loyalty.

YU-KAI: And it’s like, this one pays me the most, I’m going to go there.

YU-KAI: But when you see true loyal customers, they usually don’t get discounts, they pay a premium, right?

YU-KAI: You look at brands that have real loyal fans, you see Apple, you see Tesla.

YU-KAI: I know a lady who has In-N-Out, this is a burger chain, stickers on her purse.

YU-KAI: They charge a premium, they don’t discount, they don’t give a lot of perks.

YU-KAI: It’s because they create passion, Epic Media and Calling, that’s Core Drive One.

YU-KAI: They allow people to express themselves better, they allow people to connect with others and feel appreciated by the brand and by people.

YU-KAI: They create an unpredictable engagement where there’s a lot of delightful surprises.

YU-KAI: When people feel passion towards your mission, your purpose and they engage with your brand, they feel more like a human, they feel more like themselves, then they build true loyalty.

YU-KAI: Then obviously they say, well, because you have this loyalty, it’s good to reward you and make you feel like we’re valued.

YU-KAI: But don’t lean and rely on the money part, the rewards and the bribery part.

YU-KAI: Focus on the experience and the engagement.

YU-KAI: I think that’s the number one advice I’ll give people in the industry.

AMANDA: Lovely.

AMANDA: Beautiful.

AMANDA: Two very critical words, experience and engagement.

AMANDA: Great.

AMANDA: Well, Yu-Kai, we could carry on talking for a long time because I’m fascinated by this and you’ve got so much to share.

AMANDA: But is there anything else you’d like to leave the listeners of Let’s Talk Loyalty and the viewers of Loyalty TV?

YU-KAI: No, I think it’s just, I think it’s great.

YU-KAI: You guys are here listening and learning.

YU-KAI: I think that’s the most important thing.

YU-KAI: You want to continue to learn and expand.

YU-KAI: The world is changing very rapidly, as we know, more so than ever.

YU-KAI: And technology trends are different.

YU-KAI: Consumer behavior is different.

YU-KAI: We have new generations growing up in a different world than we are used to.

YU-KAI: So I think the fact that you’re here constantly learn about the latest things and most importantly applying it to your work, I think that’s how you stay ahead of the curve and build true loyalty in the world.

AMANDA: Yeah, wonderful, wonderful words.

AMANDA: Well, as you say, because everything is changing so rapidly, this is your second time on the show and I’m sure in the future there will be another time that will have equal relevance because the world will have moved on and we’ll look forward to your insights.

AMANDA: From everyone at Loyalty TV and the loyalty world at large, thank you for taking the time.

PAULA: This show is sponsored by Wise Marketeer Group, publisher of The Wise Marketeer, the premier digital customer loyalty marketing resource for industry relevant news, insights and research.

PAULA: Wise Marketeer Group also offers loyalty education and training globally through its Loyalty Academy, which has certified nearly 900 marketeers and executives in 49 countries as certified loyalty marketing professionals.

PAULA: For global coverage of customer engagement and loyalty, check out the wisemarketeer.com and become a wiser marketeer or subscriber.

PAULA: Learn more about global loyalty education for individuals or corporate training programs at loyaltyacademy.org.

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