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Insight/ Emerging Media

Game Over For Gamification?

by Esther Shein
Contributing Writer
CMO.com

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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.

Employee Motivation
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.”

Next Page: Not all fun and games.

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Lessons Learned
But no matter where applied--among customers or employees--game mechanics are not always a silver bullet. Li cautioned that not everyone cares about points or badging, and unless people have a relationship with a company, it’s difficult for gaming to take hold. “The biggest mistake marketers made was looking at the gaming aspect of [interactions] rather than taking a step back and seeing what type of relationship they wanted with customers, and how gaming mechanics and social help support that," she said. “So it was forced rather than cultivated or supported in terms of a plan or relationship.”

Marketers like to talk about how important customers are, Li noted, but when asked, “What does that relationship look like?” some have a hard time describing it. “They talk about campaigns and initiatives and product marketing, but they don’t think of it in terms of a relationship, and gamification was just another type of campaign thrown on top of an ad,” she said. “Games get boring unless they have that base level of understanding what that relationship is going to look like.”

Adobe Systems, which launched a gamification campaign with its flagship Photoshop product last year to teach people how it works, learned that lesson. The company (CMO.com's parent) found its game was “not a slam dunk,” said Petar Karafezov, senior manager, digital marketing EMEA. Adobe worked with game vendor Bunchball to build a game people would play and learn more about the product. The assumption was they would also buy it.

However, “We didn’t find the golden egg,’’ Karafezov recalled. “We found that gamification is indeed very useful to engage audiences, but it’s not necessarily the thing that drives the actual conversion and the actual revenue.”

A series of interviews Adobe conducted with people who interacted with the game revealed that “game activity is driving a different type of product use and helping us change behavior,’’ Karafezov said. “We were able to teach people how to use Photoshop in a different way and use it more successfully, but that didn’t result in an immediate increase in revenue.” 

Whether a game will be successful boils down to knowing who your audience is, Karafezov added. One game may work to help people learn Photoshop, but it might take a different type of game to help re-energize your sales force or increase employee morale, he noted. 

“What’s awfully important is to build the three different aspects that are fundamental: giving people autonomy to play the game however they want; help them develop mastery and give them an indication they are getting better; and. . .give them a sense of purpose,’’ Karafezov said. “To build a game like this that works from the start is very, very difficult.”

His advice to other companies looking to build gamification into a product or site is to make sure they are using a scalable platform that will allow them to get feedback and learn how to improve on it. “I can guarantee they won’t get it right the first time, and they can use this investment to drive incremental learning and refine this interaction with their customers,” he said, “because if you’re hoping you can design one game and score big. . .it doesn’t happen.”

For gamification to be successful, Li said marketers need to think about what happens when the points system gets old, as well as what type of relationship they currently have with their customers. “I saw lot of marketers say, ‘Let’s run a gamification campaign for six weeks and see what happens, and let’s see what short-term results we get.’ That’s fine, but because of the hype around it, people thought it would be the next phase of marketing,’’ she said. “But it has to be thought through for longer-term, more sustained results, rather than slapped on.”

Using Badges For Self Expression
Sneakpeeq, which bills itself the largest social discovery site on the Web with approximately 1.1 million registered users, said it has increased engagement by 18 percent using gamification to keep people on the site longer. In September 2011, the company began using Badgeville’s Behavior Platform. Neil Gandhi, senior software engineer at Sneakpeeq, said they felt badges and leader boards would help people discover new products and brands, “and it turned out that it worked.” Sneakpeeq requires users to register via Facebook, and he said they introduced badges as a “method of self expression” that show up on a person’s Facebook feed. “It’s a way to tell friends what they’ve done on the site and maybe their friends will go and check out products to earn a badge,” he said.

Users can earn badges in a variety of ways, such as for peeking, which is when they “turn over” a price tag on a product. Once they have accumulated a number of badges, they might be able to get an item for free or receive free shipping.

The Badgeville platform keeps track of the various user behaviors--such as peeking, sharing an item with a friend, registering for the site, or looking at different pages--and determines when users are eligible for badges. Gandhi declined to discuss specific ROI metrics, but said that since they launched the platform, they’ve seen an increase in the total number of “loves, peeks, shares, and buys” from five per minute to 45 per minute. 

“This tells me a couple of things; The first is gamification really works if used in right way,’’ he said. “It also tells me that people like to be engaged. They want to belong to a site that promotes behaviors that users enjoy doing. Sometimes they become very competitive about getting these badges that don’t have any value associated with them. They just wanted to express themselves.”

Added the Altimeter Group’s Li: “The bottom line is, people are highly motivated by recognition.”

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