Let the Games Begin

Originally released in 2003, The Call of Duty video game series has become one of the most popular and profitable ever released. The latest episode in the saga “Black Ops” raked in more than $650M worldwide within just five days of going on sale, making it the fastest selling video game of all time.

Players simply can’t get enough – latest statistics show over 600 million hours of gaming time has been logged on Black Ops since its launch in November 2010. Every day, thousands of fans compete on-line for badges, improved firepower, XP (eXperience Points) and coveted ranks of honour.

Outside of the video game industry, you don’t have to look very far to see “players” competing for points and rewards. Take Facebook for example; ever noticed how close your number of friends (aka “high score”) is displayed in relation to your profile name?

Welcome to the dawn of “Gamification”. An almost overnight buzzword which industry analysts are predicting to surge from a $100M market opportunity today, to an estimated $1.6bn by 2015. So what’s the fuss about? And what opportunity does this create for us as consumers and business leaders?

Defined by Wikipedia as “the use of game play mechanics for non-game applications”, Gamification uses the make-up of a video game (points, levels, badges, challenges, leaderboards) to engage consumers and to solve problems. This is all well and good, but many of us run companies that aren’t even remotely connected to the gaming world, so how are these principles relevant?

Take rewards. Within a game, in return for shooting some bad-ass Godzilla look-alike, you earn points and ultimately progress to a higher level. Your reward is status – both in terms of game advancement and a high-score you can humiliate your pals with. You might collect a few badges along the way, and even have your efforts further recognised by some well-earned, up-rated firepower.

In business, rewards or so-called “loyalty” programs are nothing new. However, many companies have it so terribly wrong. Take a moment to think of the number of brands you interact with daily that reward you through free stuff? Or worst still, a discount? This is the most ineffective model for developing deep, long-term customer loyalty. As I’m writing this, I’ve received two emails from well-known brands with “final reductions” and “15% off your first order” as subject titles. Delete.

What do you think will happen if you entice a new customer to buy your product or service with an up-front discount? They’ll expect it forever that’s what! You’ve set the bar low from the start – they will always recognise you as the cheapest. After all, that’s what attracted them to you in the first place. So, unless you are always going to be the cheapest (pretty impossible) they will be your worst kind of customer – completely fickle, and off to the next bargain-basement alternative as soon as a glossy discount voucher is waved in front of their cheap-skate nose.

Personally, I won’t order a pizza from Domino’s unless a have a discount voucher, simply because I’m so used to getting my order for an average of 40% below their advertised prices. Does this make me a loyal customer? Does it bollocks. I’m a pizza whore. I’ll shop anywhere that’s going to give me a discount. Why? Because I’ll always find a brand that will give me a discount! I’ve yet to find one pizza outfit that does anything to reward me with something that’s unique, special, or carries any degree of status.

This is one of the reasons Groupon is disliked by so many business owners. It draws the wrong type of customer – one that’s sold on up-front discounts, that only shops on price, and that isn’t interested in becoming a long-term advocate of their brand. Not to mention that Groupon themselves taking up to a whopping 50% of any sales made on top, leaving the poor business owner … well poor!

In his awesome book “The Surprising Truth About What Motivates Us” acclaimed author Daniel Pink analyses the difference between intrinsic and extrinsic motivators. Intrinsic coming from deep within – something we believe in; a higher purpose or cause perhaps. And extrinsic being typically something which is rewarded through money or free stuff– i.e. do this (such as drink in my hell-hole of a bar, or buy my crappy product) and you’ll get that (a free shot of peach schnapps or £10 cash back).

Dan uses an example of rewarding a child with money to take out the trash. He highlights money is often used as a motivator to get people to do something they don’t want to do – the trouble is, once you’ve set the expectation that they get money for doing it, they will expect it every time. Hence why paying your kids to take the rubbish out never really works the way we’d all like it to.

Many brands choose to reward customers with discounts in return for loyalty – i.e. the more a customer spends, the deeper the discount. This is equally idiotic in my eyes. Under this model, brands are giving money away to consumers that aren’t motivated by discount! They are actually loyal; they enjoy your product or service. You offer them something unique, which is why they keep coming back – not just because they want a free double macchiato on their 8th visit.

No doubt rewards are an integral part of Gamification, however it’s their integration into your business model that matters. Your loyal customer doesn’t typically expect a discount. As an example, I frequent my local restaurant for a number of reasons; ambience, quality of food, welcoming staff and even (trying not to sound pompous) status. I know I can get served drinks before others in a queue, always get a table even when they are manically busy, and even use back-office facilities (I might have asked them to do some photocopying for me on the odd occasion!) It’s these perks based on familiarity and status that keep me loyal.

But even they continue to make a rewards mistake – they offer me a constant 25% discount on all food in return for my loyalty. They are giving me money off when they don’t have to – I would pay full-price every time.  This is a dangerous incentive for the consumer that is motivated by price alone (the worst kind). The brand conditions them into expecting the discount, and they are unlikely to return unless they continue to get it.

The true essence of Gamification is providing your loyal “players” (aka customers) with rewards that aren’t centred on discounts or free stuff. True loyalists want access to something money can’t buy – they want to be rewarded through something that’s truly exclusive – something would normally be out of their reach – something that makes them feel an integral part of your brand. For example, my local restaurant could offer true loyalists an exclusive VIP area that will accept your reservation in a moments notice (others are bumped to make way for a VIP), larger tables and luxurious seating, a private cocktail bar which will mix you anything your heart desires and a menu packed full of uprated, exclusive eats. They could even reward you on your birthday by allowing each VIP member, private access to the entire VIP lounge.

This methodology of status rewards based on loyalty is a true motivator. Everyone wants to feel special. A 5% discount based on spending £100 doesn’t make anyone feel special, nor provide the true incentive to return. Consumers want to be engaged, and be noticed. Nobody wants to feel like a number.

Thinking back, when I was a growing up Roald Dahl’s Charlie and the Chocolate Factory was one of my favourite stories. Originally released in 1964, the evidence of Gamification is even present back then. Chocolate magnate extrordinare Willy Wonka understood that true customer loyalty isn’t gained by offering discount coupons with every purchase of a Wonka Bar. Instead he was smart enough to realise that he could offer a much greater experience than just ten pence off the next chocolate hit.

Instead, he offered every wide-eyed child that bought a Wonka Bar, the awe-inspiring, once-in a-lifetime, money can’t buy opportunity of a peek behind the magical, dream-like fantasy land of his chocolate factory. Anyone who’s read the book, or seen the movie knows first hand at the mind-blowing effect this had on children throughout the land, desperate to get their hands on a glittering golden ticket.

I do believe any industry can start to look at the true mechanics of Gamification to improve their consumer experience. For example, an IT software company could build a community around their product – encouraging users to help each other with tips, tricks and know-how. The most active participants could earn coveted “badges” (another key area of Gamification – check out Foursquare for a great example of badge use) such as “Rookie”, “Genius” and “Messiah” based on their levels of interaction and the problems they solve. Reaching each stage is rewarded by something incrementally better (not discounts on new software licenses!) therefore motivating “players” to be more active in the “game”. The rewards should be exclusive and change often – for example, how about a lunch with the CTO or CEO? (a prize which costs the business nothing, but is a huge deal to a loyal customer). Imagine a die-hard Apple fan being rewarded by a lunch with Steve Jobs himself.

One important rule is there should never be any ultimate prize, otherwise the “game” is over – there is no reason for a player to continue. Think of this like defeating the “big boss” at the very end of a video game. Once he’s dead, you’ve won. There’s nothing else to accomplish.

When building Gamification principles into your business, there should never be an end for your “player”. To reach true success, the ultimate prize for your player is actually the taking part – using their skill and knowledge to help others. Your brand becomes part of your customers’ routine, and the reward is the actual engagement. If you are able to architect this type of game, I salute you.