Gamification & Customer Loyalty: The Good, The Bad, and The Ugly
Gregory CiottiMay 1, 2013
Outside of big data, gamification—the use of game mechanics in a non-game context to engage users—is the darling child of business publications today.
It's easy to see why businesses of all sizes have flocked to the use of gamification. It is widely applicable since it taps into fundamental elements of human behavior. When executed well, it can make even mundane activities seem like a game, creating motivation and desire for users to keep “playing.”
But there’s a dark side to gamification. When gamification begins to insidiously make its way into product use because it’s the trendy thing to do (but not necessarily the right thing to do), businesses can end up shooting themselves in the foot as they draw customers away from the product’s primary goals in favor of misplaced badges and rewards.
For now, let’s step back from the hype and take a critical look at both sides of the gamification coin.
The sections below feature examples where game mechanics are properly used to help guide ideal user behavior. Likewise, there are examples of where gamification goes wrong by emphasizing arbitrary rewards over end goals that benefit both the customer AND the business selling to them.
How to Win the ‘Game’ of Customer Loyalty
The quintessential example of gamification being used with great success is airline rewards programs. Though airline rewards are often cited as best-of examples, most people don’t truly realize how successful these programs are.
Consider this startling fact from the book, Contagious, from professor Jonah Berger of the University of Pennsylvania’s Wharton School of business:
We all know that miles can be redeemed for free travel, hotel stays, and other perks. Still, most people never cash in the miles they accumulate. In fact, less than 10 percent of miles are redeemed every year. Experts estimate that as many as 10-trillion frequent flyer miles are sitting in accounts, unused.
That’s enough to travel to the moon and back 19.4 million times. So if they’re not actually using them, why are people so passionate about racking up miles?
Because it’s a fun game.”
Frequent flyer programs are based on our natural inclinations toward achievement and competition (two essential elements of gamification). They work because we love earning points and ”VIP” status.
Complementary research from academics Xavier Drèze and Joseph C. Nunes conclusively shows that airline miles incentivize customers even when they are meaningless (taking into account that 90 percent of airline miles never get used, they are essentially meaningless). The takeaway here appears to be that gamification can turn an average customer loyalty program into one that sticks.
You’ve most likely experienced the enchanting nature of video games and their ability to get players addicted to virtual rewards. Gamification leverages the same tactics. As an example, online gaming has found ways to turn nearly any mundane task into a heated competition by building mechanisms for achievements (real and/or virtual rewards) and public competition (where users are recognized for winning).
Game mechanics can be applied in far more ways than mere rewards and achievements. Consider In-N-Out Burger’s viral “secret” menu that has become legend among customers since being implemented.
Or how about Dropbox’s tactic of getting users started with their product by completing tutorial levels that earn them extra space for each completed task?
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Greg is a writer, marketing strategist and alum of Help Scout. Connect with him on Twitter and LinkedIn.