customer engagement research by building loyalty program within the mobile application

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RNG – A new way to
make loyalty programs
within mobile
applications more
effective.
2017
UNIVERSITY OF TECHNOLOGY, SYDNEY
MASTERS OF INFORMATION TECHNOLOGY

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Table of Contents
I Table of Contents.................................................................................... p.1
II Executive Summary .............................................................................. p.2
III Introduction......................................................................................... p.3
IV Aims & Objectives ............................................................................... p.4
V Background........................................................................................... p.6
VI Significance and Innovation................................................................. p.9
VI Research Methods.............................................................................. p.12
VII Conclusion........................................................................................ p.14
VIII Reference List ................................................................................. p.15

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Executive Summary
Loyalty programs within mobile applications are not as effective as they could be. This is
mainly because they do not differentiate enough from each-other whilst also not creating
enough perceived value for the customer. We propose that loyalty programs could be more
effective when combined with the video game system of a Random Number Generator (RNG).
Within this system, customers will be encouraged to play a game within the confines of the
loyalty program in order to receive a randomly generated reward. This customer will not always
receive a good reward, they will only have a chance at receiving a good reward. This will give
the customer a reason to come back to the mobile application daily or weekly so that they can
have more chances at receiving a good reward. Through our proposal, we will aim to prove
several things. Firstly, that RNG is more effective at retaining a userbase than its counterparts.
Secondly, that loyalty programs with an aspect of gamification are more effective than their
counterparts. Finally, we aim to implement a simple RNG based loyalty program with the help
of a small local business. The analysis of the gaming and mobile industries shown in the
background section of the report will emphasise the growth in these industries. This emphatic
growth correlates to the rise in public interest in applications that take advantage of the
technology within these industries, which could potentially lead to more sales opportunities for
any business. The Significance section outlines that RNG is a low-cost way to implement an
effective strategy for customer re-engagement. The methodology, a comprehensive
quantitative study has proven in the past to be an effective way to understand consumer
attitudes towards forms of online and mobile advertising. We recommend that businesses of all
sizes consider the strong application of RNG on customer re-engagement when creating their
loyalty programs.

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Introduction
A mobile application (or mobile app for short) is a piece of software that is designed to run on
a mobile device such as an iPhone or Android enabled phone. These applications take
advantage of mobile technologies such as LTE and Wi-Fi which enable mobile devices to
connect to the internet remotely. These mobile technologies allow users to shop online, check
the weather or play games regardless of where they are in the world. Mobile apps often provide
streamlined instances of a business’s product to make them more accessible to users who are
on the go. For example, the many different uses of the website YouTube are divided into several
different mobile applications such as YouTube, YouTube Music, YouTube Capture and
YouTube Creator Studio. Mobile apps are becoming more and more popular each year proven
by the 12% growth in market volume during 2016, to reach a total market volume of over 7.5
million mobile applications (MarketLine 2016). The popularity of mobile apps presents
opportunities for growth in the business industry.
Because of this popularity and accessibility, mobile applications offer an opportunity for the
business to remain consistently engaged with their userbase. Developing a strategy to keep a
userbase consistently engaged is one of the most important aspects of mobile app development.
Recent studies have shown that the average person checks their mobile device 85 times a day
with an average usage time of over 5 hours (Andrews et al. 2015). If you could develop an
effective strategy to keep your userbase revisiting your mobile app a couple of times throughout
those 85 average opportunities then it would lead to a massive increase in sales opportunities
for your business. If your userbase doesn’t feel the need to re-engage with the application
consistently then the application will die out as a result.
Many businesses choose to use a loyalty program so that they could encourage the user to
consistently re-engage with their product. Loyalty programs work by giving the user a certain
discount on a product each time the user revisits the application or buys something from the
business itself. However, these loyalty programs are often ineffective in consistently engaging
a customer as they are not very different from one another and fail to create perceived value
(Doppelt & Nadeau, 2013). Loyalty programs could be more effective as a strategy for
consistent engagement.
RNG stands for Random Number Generator and is an effective tool used in video games to
keep the userbase completing the same (or similar) tasks repeatedly for a random reward.
Massively successful video games such as World of Warcaft, Destiny and FIFA Ultimate Team
use clever RNG systems in order to drive sales of in-game items. Within this system the player
is encouraged to keep coming back to the game to complete new tasks (often daily or weekly)
in order to receive a random reward. This random reward is not always the particular item that
the player wishes to receive and they are thus encouraged to keep doing the same task over and
over again until they receive the item they want.
We propose that an RNG system could be applied to loyalty programs within mobile
applications to make them more effective in consistently engaging a userbase. The first part of
this proposal will be to outline our aims and objectives in proving that RNG is an effective
form of consistent engagement within mobile apps. This will be followed by an analysis of the
existing research with the areas of RNG and consistent engagement and a justification for our
proposal. We will then provide the significance of our research proposal, how it is new and

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how it may add value to the business sector as well as the public sector. Finally, this segment
will be followed by a research methodology which will be a comprehensive quantitative study.
Aims and Objectives
The research problem that we intend to solve is how to prove that an RNG based loyalty
program could be more effective than other loyalty programs. In order solve this problem, we
will need to make a set of aims which themselves will contain many objectives.
Aim (1):
To ascertain whether video games with an RNG aspect are more effective in retaining
their userbase in comparison to video games without an RNG aspect.
Objectives (1):
(a.) Compile a list of appropriate video games where an RNG element can be
switched on and off (For example EA Sports FIFA 2017)
(b.)Give one group of users the game with the RNG element turned on and another
group the same game with the RNG aspect turned off.
(c.) Conduct a comprehensive qualitative study to compare the results between the
two different groups.
Achieving this aim will be important in understanding how effective RNG can be as a tool for
re-engagement amongst a userbase. This is a realistic aim as there are several video games in
the mobile market where the RNG aspect can be turned on and off. Thus, we could ask our test
subjects to use their own devices for the study which will keep costs down.
Aim (2):
To determine whether loyalty programs with an aspect of gamification are more
appealing than loyalty programs without an element of gamification.
(a.) Compile a list of loyalty programs that have an element of gamification such as
American Airlines AAdvantage Passport Challenge program which encourage
users to complete tasks such as answering trivia questions in order to receive
rewards.
(b.)Compile a list of loyalty programs which are similar but which don’t use any form
of gamification and simply require users to keep using their app instead.
(c.) Ask a group of people to use both loyalty programs over an extended period of time.
(d.) Determine which program the group was more likely to continue using into the
future.

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This aim will be important in understanding whether people want more from their loyalty
program beyond simple actions such as signing in to purchase something at a discounted rate.
This aim is realistic as we could simply identify a group of people who use a certain loyalty
program and ask them to try a similar program that has an aspect of gamification.
Aim (3):
Develop a simple RNG based game in collaboration with a small business to test its
effectiveness
Objectives:
(a.) Identify a local small business (such as a coffee shop) that is looking to implement a
more effective loyalty program in a mobile application.
(b.)Approach them with the findings of our comprehensive quantitative study
(c.) Ask them to collaborate with us to modify their existing loyalty program with an aspect
of RNG based gamification.
(d.)Analyse whether the loyalty program has achieved a greater level of consistent
engagement
This aim will be definitive in finding out whether RNG based loyalty programs can be more
effective than regular loyalty programs. It will require significant more time and investment
than aims (1) and (2). However, it is still realistic as there are many local small businesses
looking to implement better forms of customer engagement. Furthermore, the game does not
have to be overly complex and we could ask local UTS students to develop something very
simple for us to keep costs down. A balloon popping game such as the one used as an
assessment in 42889 iOS Application Development would be perfect.
By deploying this very reasonable set of aims and objectives, we should be able to prove that
RNG based loyalty programs could be more effective than regular loyalty programs. Following
the research aims and objectives in the low-cost manner which we have outlined above should
make our research project feasible.

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Background
First, global games software market grew by 4.3% in 2015 to reach a value of $42,110.5
million. The compound annual growth rate of the market was 5.1% from 2011 to 2015. Figure.1
shows the global games software market value in the period from 2011 to 2015. (MarketLine
2016, p.8)
Figure 1: Global games software market value: $ million, 2011–15 (MarketLine
2016b, p.8)
Second, the largest game software market is The United States (37.7%). Asia-Pacific and
Europe account for the further 26.1% and 24% of the global market respectively (MarketLine
2016b, p.9). Figure.2 shows the geography segmentation of game software market.
Figure.2: Global games software market geography segmentation: $ million,2015
(MarketLine 2016b, p.9)

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Thirdly, online retail is the leading distribution channel in the global games software market,
accounting for a 38.2% share of the total market's value (MarketLine 2016b, p.10).
Figure 3: Global games software market distribution: % share, by value, 2015
(MarketLine 2016b, p.10)
Fourthly, in 2020, the global games software market is forecast to earn a value of $52,883.9
million, an increase of 25.6% since 2015(MarketLine 2016b, p.11)
Figure 4: Global games software market value forecast: $ million, 2015–20(MarketLine
2016b, p.11)
Figures above illustrate game software have endless potential, especially in United States,
Asia-Pacific and Europe. The games software market analysis is necessary.
Various types of games on mobiles have different characteristics. First, the action design, the
camera angle and the hit sense audio are essential for action games. The best-selling Role
Player Game (RPG) has exhilarating and unpredictable plots and unique character
personalities such Final Fantasy VI. As for thrilling horror games, they should offer
challenging puzzles and scary enemies. Moreover, FPS appreciates realistic weapons and

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battlefields in the match. Finally, iPhone or Android exclusivity games must show the
performance capabilities of the mobiles. However, game interactivity is always the universal
standard of a good game. Some games settings usefully support game interactivity among all
kinds of games like Quick Time Event (QTE), control shock, the side mission and the item
collection. Among all of them, item collection saved some games without comparative
advantage by creating and providing virtual items and their enjoyable experience of the
collection.
RNG is the most important technology for item collection system in games because it improves
customer engagement and prolongs gaming experience with lowest cost and creativity.
Among tons of games, Pokémon series was special; they not only use RNG to generate items
like traditional RPG, but create 802 kinds of animals’ levels, abilities, and growths. Therefore,
even if most same types of Pokémon have the complete same appearance, each animal has
the unique ability. Moreover, players have little possibility to get some special Pokémon with
different appearances in their kinds named ‘Shiny Pokémon’, so they are precise. In fact, some
players who psychology and emotion play a major role in games are even willing to pay for
those special items or animals in the game. In May 2016, the Pokémon franchise has grossed
revenues of US$50.4 billion worldwide (Carless 2005), and Niantic, Inc, a US-based mobile
game development company, has secured $20 million funding from The Pokémon Company.
They show the success of Pokémon RNG system development and selling. Therefore, our
research question is how RNG attract loyalty program users repeatedly revisiting the mobile
application?
To meet customer needs, and boost sales, some key facts affect engagement between clients
and RNG must be found and analyzed. First, by examining virtual items, app companies can
understand what items RNG should offer. When the company gives the common attribute of
perceived value include emotional value, social value, price value for money and quality value
to its customer, client satisfaction will be fulfilled and would lead them to be a faithful
customer (Chang 2015). For example, perceived value like perceived usefulness and
entertainment of digital items enhanced user satisfaction (Kim 2012). Moreover, in auctions,
online game players bid on virtual items with real money (He 2017). For example, Blizzard's
Diablo 3 operates a real-money Auction House which could tax the virtual item transactions
to generate revenue directly (Altin Gumussoy 2016). So, sources above show rare virtual
items create profitable customers. Furthermore, Pokémon series did even better.
They make Pokémon be friends of players via animated TV series, movie and other products
(Raugust1999). As for sources about RNG itself, a random value generator determines the
type of move that a player can make (Siskin, 2013). Moreover, RNG can improve autistic
children’s ability of paying attention, memorizing, reacting to random processes, and
managing parallel information (Al-Hammadi & Abdelazim 2015). Moreover, an RNG may
be stopped or paused and then restarted, and determine the outcome of the games played only
by the assigned player (Tarantino 2014). Finally, Wells (1994) argued that RNG can act as
lottery games and can provide chance games to customers. Therefore, by analyzing various
sources, we find the combination of RNG and digital items drive deeper customer
engagement.

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Significance and Innovation
Moses Samaha who is the general manager of “Veda” said that the biggest risk wasn’t the first
year, but the years they have to improve (Jones, 2014). It 's hard to stabilize a business if the
owner or the stakeholder will only follow the same idea or strategy to others. According to
Johnson et al. (2012), the majority of business failure is due to poor strategic management
while it follows by inadequate cash flow and trading loss due to unpredictable changes happen
in the business environment. If we could just focus more on our time creating an effective
strategic move in business, there is a high possibility that we could avoid business loss.
Observing bigger brands or tenured business in our society, we will notice that they are pouring
a lot of time and money in the advertising or promoting their product and services. Promotion
is a good strategic move to increases customer and also to advertise the product or the services
of the firm. It just does not target existing customer, but it can also attract a new customer to
the business. Increasing the number of new clients and keeping an existing customer means
good income.
Figure 5: Global Smartphone users 2016-2019 (Statista 2017)
In this modern time, old fashion promotion like spreading your business deal or promotion with
the use of pen and paper is no longer effective. Since the rise of technology has a significant
impact in our society, business should also learn to adapt to get the people’s attention.
According to the latest statistic (Statista, 2017), the number of individuals who are using a
smartphone in 2016 is in the 2.1 Billion. It is also expected to increase gradually thru out in the
succeeding years. The potential of business promotion in a smartphone is high. The mobile
application is a software that was developed to run on smartphones. The time consumption of
mobile application to the user is becoming a demand.
0
0.5
1
1.5
2
2.5
3
2016 2017 2018 2019
Global Smartphoneusers (Billion)

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Figure 6: Traditional vs Smartphone Promotion (Statista 2017)
Maintaining and increasing the customer equity could be the goal of promotion. Developing
an existing customer by being loyal to the firm and can be the best customer value or customer
equity promotion (Wang, 2001). According to Shao and Tang, there is four dimensions of
customer equity that was influenced by value driver, brand driver, relationship driver and
perception driver. Relationship driver is about the relationship of business and client. Chang
(2015) also mention that between the relationship between the perceived value to all positive
factor were link by mobile application and web applications. With the help of these requests,
the firms will have an access link reaching to every individual customer and have a possibility
to end up being a loyal client.
Johnson, Clark & Barczak (2012) also mention that a customer specific strategy is a link to
have a better business unit performance from pursuing customer loyalty equity by studying
different kinds of company. Perceived value influence loyalty and direct antecedent to
satisfaction, satisfaction will lead to customer loyalty. Perceived value is the result of the
positive effect of emotional value, social value, price value for money and quality value (Chang
2015). Perceive value is the customer's evaluation on how worthy an individual product for
themselves, this include the price value, quality or interest to a certain product.
The influence of Random Number Generator (RNG) to the gaming industry is very efficient.
Since the gaming industry uses it and becomes very useful, implementation of random number
generator to business promotion can also influence users to use it more often. Random Number
Generator (RNG) could make loyalty programs more dynamic encouraging the user to revisit
the mobile application daily or even perhaps hourly to receive a chance at getting fantastic
rewards. Furthermore, because of the “lottery” like a system of RNG, businesses would not
have to worry about the more substantial discounts/rewards having a significant impact on their
bottom end as they could just scale down the chances of receiving a high reward.
42
32
29
22
35
28
21
13
0 5 10 15 20 25 30 35 40 45
VISITED COMP STORE
MADE PURCHASE
BUSINESS INQUERY
CHANGE PRODUCT
Traditional vs Smartphone
Promotion
Traditional Smartphone

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The majority of the firms are focusing their time and resource in product development so that
they can attain competitive advantage. Another way to look the problem is tackling or
empowering the business promotion using an innovative way can increase profit.
Implementation of Random Number Generator in customer equity promotion has a potential
to improve our current promotion. RNG implementation to promotion can be beneficial from
small to large business and can lower down the number of business loss due to poor strategic
management. Addition to that, increasing the customer engagement of the product or services
of the firm that can motivate users to keep using the mobile application.

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ResearchMethods
This research will be used the quantitative research methodology. Then the research design
will be ‘descriptive’. It’s widely used to gather information by the use of questionnaire,
personal interviews and observation. It enables researchers to better understanding to build
relationship with customer through app. Then ‘Primary data’ is the original data that has been
collected by the researchers themselves specifically for the purpose in mind. Questionnaire is
the most common method that used by most of the researchers, questionnaire survey method
taken as the primary data collection method in this study. It’s very faster and inexpensive
method to collect data directly from respondents. In order to yield some knowledge on the
whole population, the sampling method is employed ‘non-probability sampling’ for this
research. The significant target population for this study is those people who are the using
mobile app regardless of the races, ages, as well as occupations. Which included self-employed,
professional, housewife, students and staffs of colleges and universities and others. In this
research, convenience and snowball sampling is being chosen. Convenience sampling is where
the researchers choose the respondents that they are easiest to obtain the data. On the other
hand, Snowball sampling was designed to aim of estimating statistically social structure in
certain populations of interest. This sampling is based on individual and relations among
individual population. . In particular, the questionnaire will send out to friends as initial
respondents to start with. Afterwards, this questionnaire will continuously spread out to the
others by friends. This strategy will help to a reach large number of responses within a limited
time frame and finance resource. Furthermore, the sample size will be 100 respondents and 100
sets of questionnaires. Research instrument or strategy will be survey. The questionnaires are
delivered by online by Facebook and website to the respondents or hardcopy and collected
later. Lastly, when the data has been collected, analysis method has to be chosen for further
analysis. In this research, the software of ‘SPSS or excel’ will choose as a data analysis method.
Data can be analysed by descriptive analysis, reliability analysis, correlation analysis,
hypothesis testing and etc. Descriptive analysis is the most basic method of summarizing the
data. Reliability analysis is to test the reliability of the data that is consistency and stability of
the collected data from the respondents. The correlation analysis method would actually help
to increase the reliability and validity of the data which means that the samples properly
represent the population. Linear Regression Analysis is a statistical procedure to investigate
the relationship between two or more variables. It is used to determine if the hypothesis is
accepted or rejected.

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Conclusion
The RNG system used in popular video games could be applied to loyalty programs within
mobile applications to make them more effective in consistently engaging a userbase. The
background analysis of industry reports into the gaming and mobile markets clearly showed
that there are rising interest from the public in these industries. This rising interest from the
public carries a lot of potential sales opportunities for businesses. However, these sales
opportunities are dependent on the business implementing a successful strategy for customer
re-engagement. Through the background analysis of research conducted by others such as
Chang et al. 2015, we have seen that RNG can create a certain perceived value which could
create fulfillment in the customer which will thus encourage customer re-engagement. The
significance section of our report clearly shows the benefits of our proposal towards businesses
– that developing a modern mobile strategy for keeping an existing customer base means good
income. We await the results of our comprehensive quantitative study which should confirm
our what our research has suggested, that the RNG system can make loyalty programs within
mobile applications more effective.

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