The virtual reality (VR) and augmented reality (AR) industries will grow to $150 billion in revenue by 2020, according to recent studies.

If the recent craze surrounding some certain Japanese cartoon characters is any indication, the convergence of VR, AR, and games is resonating with people—30 million people, in fact. (And that's only a few weeks after Pokémon Go's initial launch, and prior to its much-awaited availability in Japan and several other countries.)

What can we learn from this phenomenon?

In the rewards and incentives space, we rely on the latest technology to make essential connections with reward recipients. To stay relevant and create that "a-ha" moment, we need to exceed savvy target audiences' expectations at every stage of the reward process. Technology innovations (such as a seamless delivery-to-redemption process on a mobile device or API technology to run a program smoothly from start to finish on the back end) play an important role.

In taking a closer look at the newest crazes (which are becoming notable trends), we can apply some lessons to our industry.

People like the chase

Hunting for a colorful little guy with big eyes and super powers? Millions of people are doing it.

My theory about this obsession is that people like the feeling of hunting for something—the thrill of the chase. "To get the best outcomes or products, people usually have to expend effort," states a study in the Journal of Consumer Research. "This relationship between effort and value is so closely associated in a consumer's mind that wanting the best outcomes automatically results in increased preference for any outcome associated with effort, even pointless effort."

That is an easy concept to apply to rewards. The reward can be more clearly associated with effort, making a linear relationship of the action-to-outcome process.

For example, there is already a "hunt" for some rewards—finding actions that earn points to result in a particular reward outcome:

  • Working out regularly as part of an employee fitness program to earn a bonus in the form of a virtual Visa or MasterCard
  • Completing a task, such as an online survey, to receive an online e-gift card

We can find ways to link the two together even more closely, creating a tiered approach where effort directly affects outcome and making the earning of rewards more like a game.

People like playing games

Gamification (the use of gaming concepts in a non-game setting) has been used in online marketing for decades. This approach helps to promote consumer engagement, retention, and desired behavior.

For example, you may remember the M&M's eye spy game from a couple years back; viewers needed to "find the pretzel" in a picture filled with colored M&M candies. This simple-to-execute, cheap game boosted the brand's Facebook followers by more than 25,000 and heightened awareness of the company's new pretzel product.

Add rewards and incentives that resonate to a model like this and boost engagement even more. For example, what if finding the pretzel led to a digital gift card to a retailer of choice?

Experts say that offering a reward can increase engagement exponentially. Whether for a general consumer promotion, a market research study, or an employee program, gamification can be an effective approach to catching the attention of a target audience.

Adding compelling rewards and incentives can create even more motivation to "win."

If you build an engaging model for loyalty and engagement, amazing things can happen. And they happen at the subconscious level.

The hunt, the game, the payoff—it's a winner: Pokémon Go is just one example of its power. The model is driven by body chemicals, endorphins and dopamine, which are responsible for feelings of pleasure and well-being. Adding a thoughtful incentive and reward program (giving people something that they actually want to earn) and making engagement into a game can make all the difference in outcomes.

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What Augmented Reality, Virtual Reality, and Gaming Mean for Reward Marketing

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Jonathan Price is CEO of Virtual Incentives, a provider of Visa and MasterCard virtual accounts and Physical Visa and MasterCard Reward Cards serving the incentives market.

LinkedIn: Jonathan Marc Price