Faced with navigating an entertainment industry that has seen a tremendous amount change, GameStop continues to standout among other brands that have been decimated by digital disruption. In this regard, GameStop not only maintains a firm presence within the video gaming industry, it actually continues to build an impressive amount of brand loyalty by offering a customer experience that resonates with a core audience.
GameStop, a multichannel video game and electronics retailer, currently operates more than 6,600 stores all across the world. Its goal is to make the most popular gaming consoles and products affordable and simple. But even beyond that, GameStop is also on a mission to build a tightknit community of passionate consumers and loyal advocates who enjoy supporting the brand.
In fact, its considerable success in this area is one of the main reasons GameStop’s rumored doom has been greatly exaggerated.
“We are in a business that, frankly, many people believe is destined for demise in the next two or three years,” Frank Hamlin, GameStop CMO, told Loyalty360. “But we factually know - we have the data to know - that that is an incorrect assumption. People always want to use the metaphor of the music business or the book business or the movie business as the appropriate analogy for what's happening in video gaming, and it is certainly not apples to apples. They are very different.”
It is tempting to make these immediate correlations. However, the same forces behind the digital disruption of other industries are simply not relatable. Music files, for example, exist as fairly low bandwidth file sizes. By comparison, video games are much larger. The unwieldy file size of a new 50-gigabyte video game would make download times approach 12 hours. Furthermore, games cannot be streamed in the same way as movies.
The majority of GameStop’s sales are actually still physical, and this is also a key consideration that informs that brand’s customer relationship building strategy.
“We are dealing with a customer base that has a high desire to collect games as trophies, to feature them on a shelf and to show their friends as a collectibles,” Hamlin said. “From a business standpoint, its something we’ve gotten into in a very meaningful way. It's because of the pattern behavior that we see.”
In addition to the collectability value, consumers can also trade in games, which both offers an additional incentive to buy a physical game and provides more reasons for the consumer to keep coming back.
Furthermore, GameStop also prioritizes a deep and insightful understanding of the attitudes and behaviors of core customers. Across the entire organization, there is a high level of attentiveness to the particular type of data it collects and leverages. GameStop is interested in providing a relevant customer experience through its ability to forecast the demand of upcoming titles, preorder quantities and more.
“Through the power of our rewards program, we are tracking 75% of our sales, and through that we also have a strong electronic relationship with most of our customers,” Hamlin explained. “That's also morphed into a smart phone app that has 6 million users and downloads. Across these channels, we are able to quickly pull together true quantitative studies around distinct characteristics, and the performing attributes of trackers, as they relate to various attitudes. This is very much the heartbeat around new sales and the health of the industry.”
GameStop’s loyalty program is called “PowerUp Rewards,” and it offers points for purchasing games and making trades. The basic membership is available for free, but the “Pro” level requires a membership fee and comes with a wide range of exclusive benefits.
And because GameStop has worked hard to figure out exactly what its customers find meaningful and relevant, it has seen a tremendous amount of success with the Pro level. In fact, Pro members on average are 50% higher in annual spend, demonstrate higher frequency, and participate more heavily in what the brand calls its “core circle of life activity.”
In the particular ecosystem that GameStop dominates, this system creates an overall more profitable customer. It also creates a much more engaged customer. And one of GameStop’s great strengths is that it recognizes the need to specifically nurture these relationships. Far too many brands still feel the need to be all things to all people, but GameStop keenly resists this temptation.
“We've decided that we were only going to look at the data and technologies that fundamentally affect and drive a physical store experience because that's where our investments are,” said Hamlin. “There are plenty of cool technologies out there that can drive all sorts of e-commerce behaviors. But we want to focus on the in-store experience. So that requires a discipline in decision-making, otherwise it becomes an endless string of exploration that you can never take action on.”
In that respect, GameStop is fully committed to building relationships with customers and store associates, who are often extremely knowledgeable video game players themselves. This cultivates an air of authenticity that connects the brand to the entire gaming culture. It also creates a genuine sense of reciprocity, which both builds value for the brand and fosters respect among consumers.
Not many brands have been able to so successfully leverage actual interpersonal relationships among such an enthusiastic group of people. For a specialty retailer like GameStop, it presents a tremendous opportunity, and it’s an area the online and digital world has been unable to replicate.
“Our stores create a place where people can react in a real human way with each other, and with other people who are passionate about the same thing,” Hamlin said. “You can do it online. But if you actually want to talk to other human beings about gaming, there aren't many third places to do that.”
That’s what GameStop is, and it is where it will continue to excel at going forward.
“Instead of trying to replace our strengths with technology, we use technology to augment and amplify our strengths,” said Hamlin. “It all goes back to not trying to be all things to everybody. We remain true to who we are.”
About the Author: Mark Johnson
Mark is CEO & CMO of Loyalty360. He has significant experience in selling, designing and administering prepaid, loyalty/CRM programs, as well as data-driven marketing communication programs.
Callout:
GameStop is fully committed to building relationships with customers and store associates, who are often extremely knowledgeable video game players themselves. This cultivates an air of authenticity that connects the brand to the entire gaming culture.
Summary:
GameStop successfully engages a passionate core group of consumers to create an authentic customer experience built on in store relationships.
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