IN-DEPTH: Understanding how the travel industry can attract, reward and increase loyalty via location-based social gaming

Published: 26 Jan 2011

IN-DEPTH: Understanding how the travel industry can attract, reward and increase loyalty via location-based social gaming

By Ritesh Gupta

SCVNGR, a location-based social game, started 2011 on a positive note. The company announced a $15 million round led by venture capital firm Balderton Capital. Existing investors, Google Ventures and Highland Capital Partners also participated.

SCVNGR is a fast-growing global game that users play on their iPhone or Android. For users, it is all about visiting places, checking in and completing challenges, earning points and gaining rewards -- like discounts and free stuff -- and sharing their gaming and rewards activity with SCVNGR, Facebook and Twitter friends. SCVNGR expects to have one million users by the end of January. The company hopes to take the game layer mainstream in 2011.

Balderton highlighted that SCVNGR is mashing up gaming, social and mobile in ways that are changing the way consumers live and businesses attract, reward and increase loyalty with their customers. For its part, the company says it continues to build “the game layer on top of the world”. It’s all about bringing game mechanics from virtual worlds into the real one.

“In the last decade, what we’ve seen has been building the social layer, a structure for connections and that framework is pretty much finished. It’s called Facebook,” the company’s CEO Seth Priebatsch told a TedX event in Boston last summer, according to a report filed by guardian.co.uk. “This next decade is all about the game layer, about influence. It’s about using dynamic and forces to influence behaviour and it’s going to be even more important than the social layer.”

Travel industry

Businesses and brands can ‘build’ on the game layer by adding challenges and creating rewards at their locations. The idea is to increase engagement and loyalty among customers by making locations more fun.

From the travel industry’s perspective, Evan Korzon, VP - Cities and Tourism, SCVNGR, told EyeforTravel’s Ritesh Gupta: “We’ve been proving out a pretty good model on how to work with cities, Destination Marketing Organisations (DMOs), and businesses that cater to travel consumers. Around 15 DMOs have been working with us, and we’ve worked in both large and small markets. We’re building some “super-secret” new tools that will probably have a broader, more mainstream impact.”

“So far, DMOs have embraced the idea of creating themed experiences for visitors, knowing that these experiences will be broadcast through the Facebook/Twitter social-stream. Businesses like the same idea, having patrons engage with something unique about their business and broadcast that story to the social-stream,” added Korzon, who is scheduled to speak at the forthcoming Social Media Strategies for Travel USA 2011 conference, to be held in San Francisco this year (March 2-3, 2011).

For an offering that is all about going places, completing challenges and earning points, it has also attracted hotels to make use of this application.

“There are a few hotels looking at our platform as a means to engage with different types of customers. Some use challenges as a cool way to interact with a patron, others consider building treks or multiple challenges for different events they might run. Till now, we haven’t pursued airline partnerships,” said Korzon.

RoI

It is acknowledged that a virtual check-in is an expression of loyalty and there is some value in that, but in order for the industry to move en masse toward offering LBS rewards, clear and measurable RoI is a must.

The companies in this arena are allowing partners to link their existing CRM system seamlessly to Facebook, and LBS services. This allows geolocation and social data to be tied to an existing guest profile and utilised to strengthen loyalty over time.

Korzon says, “The core idea is to use game mechanics to influence behaviour in the real world. I think the location-based services industry as a whole is still too nascent, and the consumers using these services are too much the “early adopter”, for the RoI to come from the actual product and consumer engagement.”

He added, “Right now, I think the RoI comes mostly from the press and marketing impact. Thankfully, everyone in the industry is coming up with new and awesome ways to actually deliver ROI in the form of loyalty, revenue, etc. We’re maturing quite quickly.”

Loyalty

Generally, there are two aspects to loyalty programmes – recognition and rewards.

Rewards are `price of entry’, recognition is how you can truly differentiate. In this sector, a company like Topguest has to date focused on creating a standard 'Rewards' layer for the travel industry on the geo-social web. It soon plans to move into 'Recognition' helping partners recognise their digital influencers in new and profitable ways.

Commenting on what should be considered when it comes to effectively recognising and rewarding customers according to their preferences, and ultimately keep their loyalty while reaching them out via real-time location-enabled web, Korzon said, all this new data should enable hotels, and others, to better serve their customers.

Korzon explained, “Consider a hotel for a moment. At the end of the day, I could be “rewarded” by a 10% off coupon, a complementary drink at the bar, or an upgrade to a king bed. The reality is, though, that 10% off is going to my company credit card, and I don’t drink. The king bed is the most valuable to me, and actually the least costly to the hotel, but the hotels doesn’t know that. Hopefully, some of the location and behaviour data that’s being produced by all these location-based services ends up being useful in those kinds of ways, with regards to loyalty.”

Social Media Strategies for Travel USA 2011

Evan Korzon, VP - Cities and Tourism, SCVNGR is scheduled to speak at the forthcoming Social Media Strategies for Travel USA 2011 conference, to be held in San Francisco (March 2-3, 2011).

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Gina Baillie
VP Global Marketing & Events
EyeforTravel
London, UK: +44 (0)207 375 7197
gina@eyefortravel.com