Game Over For Gamification?
Date: October 24, 2012
Author: Esther Shein , Contributing Writer , CMO.com
It’s no secret that people love the thrill of a contest. Whether it’s scoring double rewards points for purchasing NFL-licensed apparel at Sports Authority, or being entered into a trip sweepstakes for liking the neighborhood grocery store on Facebook, game-based offers are seemingly everywhere consumers click.
Yes, gamification–using incentives to change behaviors–is still alive and well, even though the hype has died down, industry observers say. Applying gaming mechanics, like leader boards or badges, is even used in the workforce to incent salespeople or get employees to meet deadlines, said Charlene Li, partner and founder of the Altimeter Group.
“Where gamification comes in is it takes something that isn’t inherently a game and throws mechanics on top of that,’’ Li told CMO.com. “Because we make it fun and engaging, you actually learn something, and because of that you’re changing behavior.” The idea of using game mechanics has been around for a long time, but when it’s used to interact with people on Web sites, gamification takes on a very different look and feel, she said, because you can drive engagement in these areas.
“Gamification is really just the tip of iceberg; it’s the first widespread application of game mechanics, but by no means the last or most powerful,” said Michael Hugos, a former CIO and author of Using Game Mechanics to Build a Better Business (O’Reilly Media, October 2012). “We live in a world where everything changes all the time, and game-like models allow employees to play the game instead of waiting around and being told what to do.”
In a business context, Hugos believes gamification can be used to improve output and productivity with three characteristics: visibility, so that everyone can see what’s going on; the authority to take action, like in a game; and having a substantive stake in the outcome.
The concept received a lot of attention in 2010 and 2011, in particular, Li said, because that’s when marketers began to realize if they put points and leader boards on top of an ad or Web page, it would be easy to gamify their interactions with people. “The psychic rewards of gaining points or beating your best are where you can get intrinsic value, but it’s amplified if you can share that success with other people,” Li said. It’s no doubt a marketer’s dream to get people to spread the word and influence the advocacy side of things like ads and create loyalty, so they will come back and visit a site.
For example, a customer might buy a certain product from a retailer and receive points for writing a review. “You earn points based on your behavior with that company that can show you more and more layers of something inside the site you wouldn’t normally see,’’ Li said. “They might add up to a leader board that might show who has earned the most points in a day, and there’s that competition or personal benefit that I might get a discount at the end of day.”
Social media, not surprisingly, is a strong component of gamification, Hugo and Li both point out. “There’s a part of gamification that is not just game mechanics, but social mechanics, because of your ability to compete with someone,” Li said. “So, basically, you put leader boards on top of things that normally wouldn’t have a game component to it to encourage people and engage them to do something they wouldn’t normally do.
Gamification can be successful within any industry where educational awareness has to happen. For example, banking and gamification don’t sound synonymous, but a company called BankersLab has developed gamification software to deliver training for bankers. Typically bankers rely on historical data and economic trends to design lending strategies, such as mortgages, loans, or credit cards, said Gail Galuppo, chief operating officer at BankersLab, in an interview with CMO.com. The software, which costs $48,000 for an annual license for up to 90 people, uses scenarios to challenge players to develop strategies based on research and trends that may one day affect their businesses.
She said they use a complex calculation engine that allows players to test their knowledge of the credit lending market. The products contain four modules that require players to interact with data, interpret trends, understand changing market conditions, and build strategies that will be calculated and presented over a 24-month period, Galuppo said. Each player is given three test runs and one final strategy design per module. The winning team is the one that achieves the greatest improvement in financial and customer outcomes for their mock bank.
Hugos recalls that when he was CIO of a paper company, there was always stress around the holidays to deliver enough red cups with a holiday theme on them. “When we tried to run [the supply chain] through traditional methods when all these people had to be told what to do because they couldn’t see what was going on, it was a very sluggish, bureaucratic operation.”
One holiday season the company challenged by Starbucks, one of its largest customers, to cut excess holiday inventory by 50 percent. At the same time, the company was in the midst of renegotiating a three-year contract with the coffee chain. So Hugo set up an information system, pulled data out of his company’s inventory system, and posted it on an internal site so everyone in the external supply chain would have visibility ahead of time on what was needed. “When a large group of informed individuals had a stake in the outcome we could come to a consensus early,” Hugos said. By Starbucks’ admission, he said, they met the challenge and ultimately decided to continue the same approach year-round.
“A game can be described as something that has four traits: goal, rules, a feedback system, and. . .enthusiastic participation,’’ Hugos said. “If you have those four elements, you have a game. So I introduced those elements.” His company already had the goal of getting its contract renewed, and by introducing a feedback mechanism, it sparked people’s incentive to engage, and they interacted with other companies. Ultimately, he said, “Our interactions went from defensive to collaborative.”