Why it's not game over for gamification
Why isn’t gamification a high scorer on the corporate leaderboard?
Is it because the hype got out of hand? Is it because its name ‘gamification’ trivialises what is effectively an application of behavioural science? Or is it simply because gamification isn’t all that?
Certainly it wasn’t long ago that leading experts were making a big fuss about it. In 2012, Gartner, for instance, predicted that by 2014 the use of gamified services for consumer goods marketing and customer retention would become as important as Facebook. The research house also forecast that more than 70% of Global 2000 organisations would have at least one gamified application by 2015, and that the gamification industry would be worth US$2.8 billion by 2016.
Big numbers. Big predictions. But also, as it transpires, a big miscalculation.
It’s fair to say that the business world circa 2015 isn’t in thrall to gamification in the way that Gartner predicted, and the research house is now estimating that market penetration is a measly 5-10%. In a study of over 100 line-of-business managers by Sunrise Software, only about a third (30%) felt that gamification was here to stay, while a fifth (21%) thought it was a passing fad and half (49%) felt the jury is still out.
And at industry level, an Infosys study into gamification in the financial services sector last year found that the discipline was still in its infancy, even in the United States, with only 10% of the 160 banks questioned having activated a gamification programme.
It is perhaps unsurprising, therefore, that the likes of Fortune magazine have declared that “the whole gamification thing is over”.
So is it game over for gamification? Or is it merely a case of gamification being overhyped before its time, and that its best days are still to come?
Level one: definitions
To get to the bottom of this, let’s first clear up any confusion about gamification, beginning with its definition.
“Gamification applies game mechanics to non-game activities enabling companies to engage more effectively with consumers, employees and partners to accomplish a variety of mission-critical business goals,” says Britt Davies, chief marketing officer at Workplace.
“The concept of gamification works by addressing the many intrinsic needs of the participants including competition, achievement, status and rewards for specific behaviours. People are deeply attracted to these experiences, and the positive impact of gamifying business systems and processes has been proven many times over.”
When implemented properly, gamification can help businesses achieve three broad objectives: change behaviour, develop skills, and enable innovation.
- Changing behaviours: The most common use of gamification is to engage a specific audience and encourage them to change a target set of behaviours. By turning the desired behaviour change into a game, people become engaged and encouraged to adopt new habits.
- Developing skills: Gamification is increasingly being used in both formal education and in corporate training programs to engage students in a more immersive learning experience.
- Enabling Innovation: Innovation games generally use game mechanics to create a more engaging experience, but the key is to engage lots of players, solving problems through crowdsourcing.
Level two: customers
This can be applied to a variety of functions, both to stakeholders inside the organisation and outside.
“Already companies large and small are reporting impressive – and quantified – results in applying gamification to key elements of CRM – customer acquisition, loyalty and engagement, for example, helping create the e-world equivalent of word-of-mouth advertising,” says Maggie Buggie, vice president of digital transformation at Capgemini Consulting.
“They are also using insights gained from using gamification techniques to address pain points in core CRM processes. Gamification can also yield a rich fund of data on consumer behaviour, allowing marketing and website content to be personalised, improving interaction and sales. Cloud-based gamification allows enterprises to widen their reach and make changes more real-time – and more relevant to consumers and employees.”
Korean giant Samsung, for instance, was an early adopter of gamification in CRM. It had a great website, but too many people visited the site once only, and never made a purchase, while too many paying customers failed to come back for more. Working with gamification experts Badgeville, it launched Samsung Nation, a new social loyalty programme with classic game-playing features – leaderboards, learning activities and loyalty points, for example 500 points for registering a purchase, 100 points for providing a question for the website FAQs, 300 points for providing an answer.
The results, reported after only a year, were spectacular. The ratio of registered to anonymous users increased by 47%, the number of customers providing answers to FAQs has risen ten-fold and the conversion rate of website visitors to purchasers rose six-fold.
“Gamification is also proving its power to galvanise customers in the world of healthcare,” continues Buggie. “US company GymPact uses smartphone games to motivate and reward fitness-seekers under its self-explanatory tagline: Conquer excuses with $$$ and get your butt to the gym! The company uses GPS technology to track its users to the gym. Members who meet their workout goals win cash, much of it from GymPact members who pay penalties for failing to exercise as promised. After huge and mostly highly positive publicity in the New York Times, CNN, ABC News and other media, GymPact appears to be going from strength to strength based on its games-playing approach, one which has also fostered a strong sense of community and much social interaction among its customers.”
Level three: employees
But it’s not just the gamification of customer-facing applications that can impact the customer experience. Organisations are also gamifying internal processes to ensure that customer-facing staff are better engaged and perform better.
“Getting the best out of staff, which tends to cover productivity, engagement, quality, and consistency of work, is key for organisations to prosper,” says Neil Penny, product director at Sunrise Software. “It is no secret that motivated staff are more productive, provide a better service, and generally are happier at work. According to a 2012 Gartner survey only 29% of employees were engaged at work, with 52% identifying as unengaged and 19% as disengaged. The stakes are high, and gamification has the potential to improve employee engagement, thereby improving productivity.
“Gamification uses game theory to introduce a competitive element to work operations that use social capital, self-esteem and fun to appeal to the workforce. An important aspect of employee reward and recognition schemes is that they encourage and incentivise staff to work towards corporate goals. Gamification is the ideal tool for this as it can be used to design collaborative or competitive games that maximise business outcomes, thereby recognising everyone to some degree, rather than rewarding just a few top performers. Employee performance feedback goes from being a top-down, periodic event – often once a year at an annual appraisal – to being social, peer-based and real-time.”
Business benefits of introducing gamified processes to employee reward and recognition concepts include:
- Driving continual employee engagement – staff can compete within teams, against each other, or with themselves, aiming to beat their colleagues and peers. New games, goals, and quests can be devised to keep things interesting.
- Knowledge improvement – with clever design, gamification can encourage staff to read more, skill-up, help to train themselves and pass on knowledge to others. At a very basic level, processes for entry level staff can be scripted, making it quicker to get new staff up and running.
- Focus on business goals – gamification can help ensure that everyone is working towards corporate goals. By engaging with their staff, organisations are far more likely to achieve their stated business goals.
- Staff motivation and retention – improved recognition helps to motivate and retain staff as they feel more appreciated. Minimising staff turnover improves knowledge retention, and in turn customer service.
- Cost effectiveness – points, leaderboards and recognition amongst peers cost a lot less than expensive incentives, and are more effective at increasing productivity.
Level four: challenges
All of this sounds quite inspiring, and it’s quite easy to see how some pundits got caught up in the excitement with their predictions. So why has it failed to meet its expectations?
There are a number of reasons.
For instance, even when predictions for the future of gamification were sky high, they still came with a caveat – Gartner forecast that by 2014 as many as 80% of current gamified applications would fail to meet business objectives mainly because of poor design.
In particular, the research house believed that the novelty factor surrounding gamification meant that there was too much focus on obvious game mechanics such as points, badges and leader boards, rather than the more subtle and more important game design elements, such as balancing competition and collaboration.
Brian Burke, research vice president at Gartner, explained at the time: “As a result, in many cases, organisations are simply counting points, slapping meaningless badges on activities and creating gamified applications that are simply not engaging for the target audience. Some organisations are already beginning to cast off poorly designed gamified applications.”
Similarly, Dr Michael Wu, principal scientist of analytics at Lithium Technologies, noted in 2011 that gamification adoption was from the 'badgers' and the 'pointers': “In the whole spectrum of gamification tools, points, badges and leader boards are essentially the most basic. They're the ones that are the least effective in the long-term because they have a short reinforcement time scale."
The real challenge, according to Gartner, is to design player-centric applications that focus on the motivations and rewards that truly engage players more fully.
Related to this, some brands have viewed gamification as the end rather than the means.
Wu elaborates: “People confuse it with building a game on top of some existing process and that is actually not true. Those are not gamifications. Gamification is really good at getting people to start doing something. I like to always say that gamifcation won’t solve your business problems, if your business or your product or service don’t provide value for customers. Gamification may begin to start trying to, and then they [customers] realise it is not valuable and then they quit. It is not going to work. So if your product and service indeed provides value for your customers then gamification is a good way to start them trying it and once they realise it has value they will continue to use this product and service. And gamification becomes a secondary reinforcement system. It reassures the value that they are getting from the service and product they are using.”
Meanwhile, other brands that have misunderstood gamification have tried to apply its principles to what is ultimately fairly unsophisticated marketing.
Alex Blaney from Session Digital says: “Gamification needs to be purist in its approach as users are savvy to the signs of monetisation. They'll avoid any sniff of them being hunted for their wallet. The best ways to success is being genuine and committed to 'enjoyment' above anything else. It's the spirit of viral. Users will only interact and share what they find enjoyable, humorous, inventive or creative. Gamification has these essences at its core. Putting 'money' before 'enjoyment' will only lead to failure.”
Level five: opportunities
However, even though the vast majority of gamification implementations are still shallow applications featuring points and badges without any strategy for long-term engagement, there are a growing number of case studies that demonstrate the real value of gamification, and also highlight that there is solid – if not spectacular – growth in investment in many industries.
- T-Mobile reported a 31% improvement in customer satisfaction scores after incorporating gamification in its employee collaboration platform, with staff participation increasing 96%.
- Sun Life Financial saw retirement contributions and uptake of new products rise strongly after launching a gamified learning management tool that helped improve financial literacy in their staff.
- Allied Global reported strong improvements in its call centre KPIs after introducing gamification in its contact centre to improve staff engagement.
- Coca-Cola’s loyalty programme has exceeded expectations after using gamification to update its functionality.
- Utility companies such as National Grid US are using gamification to comply with policies requiring them to reduce their customers’ electricity and gas use, encouraging customers to joining energy-saving challenges. Utility companies are expected to spend $13.5 million on gamification in 2015 this year, rising to $65 million by 2016, according to IDC Energy Insights.
Even in the Infosys study that found few banks have a gamification programme, two-thirds reported that they had plans in the works.
Gamification may not have met the ambitious predictions of experts, but it is powering up. And this momentum will continue as the discipline matures and brands understand it better.
“Gamification concept itself is not a magic solution. It’s more like how you use game elements to solve the business problem,” emphasises Madu Ratnayake, Senior Vice President and Head of Digital at Virtusa. “The typical gamification solution might include the Points, Badges and Leaderboards but having them in the products or services don’t make them engaging. It’s all about how you use such elements to build a user journey.”
There is genuine value in the gamification of applications for customers and customer-facing staff, but these need to be executed appropriately and with appropriate expectations. Whether gamification will ever reach the dizzying heights predicted for it is up for debate. What is not in doubt is that there is something very powerful here that can be applied to great benefit by customer-focused organisations, provided they get it right.
With this in mind, in the coming weeks MyCustomer will be examining gamification and how to get it right – from building a strategy to best practices. Plenty of information to ensure that your organisation is a high scorer.
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 20 years, including Internet Works, CXO magazine and Business Management. He joined MyCustomer in 2007.