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How gamification has become serious business in enterprises

Companies are using gamification to rally customers around their brand, create engagement and generate more effective customer incentives for loyalty.

Games are serious business for online retailers such as Step2 Co. The Streetsboro, Ohio-based online children's toy store recently added a game-like twist to its customer reviews, turning these comments into a BuzzBoard, a social loyalty program. The company crowned the most prolific reviewers as Queen Bees, and they receive $20 gift certificates for their contributions.

The goal is to encourage more customer content. Reviewers are promoted through the ranks, with trajectories from New Bee to Honey Bee to Super Bee, and finally to Queen Bee as they provide product reviews, videos and photographs, share that content on Facebook, and earn positive ratings from other BuzzBoard members. The points these reviewers earn also get them $5 to $20 credits toward future purchases.

Known as gamification, companies are increasingly seeing the virtues of providing customers with incentives to solidify brand loyalty or encourage new purchases. Gamification techniques engage participants with an activity or reward that customers find entertaining or valuable and, as a result, influence customer behavior.

Gamification gathers steam

While the details of BuzzBoard are whimsical, its goals are serious: to reward and generate customer loyalty, generate credible content, gain referrals and ultimately increase sales, explained Tena Crock, director of digital strategy for Step2. "Loyalty is important to us, as is the content we're getting from [customers] -- the videos, the user photos they share. That kind of feedback has more authenticity for our customers."

Companies are increasingly seeing the virtues of providing customers with incentives to solidify brand loyalty or encourage new purchases.

Step2 also benefits from the exposure of the content on Facebook and on retailers' sites. They use PowerReviews software both to "gamefy" the board and broadcast new reviews to retailers that subscribe. Sales is always an important goal, and Crock notes that the average value of a customer's basket upon checkout is 17% greater if the customer has interacted with reviews prior to checkout.

Fun contests aren't a new prospect for merchants, of course. The concept of motivating shoppers with a game-like competition isn't either. Since the advent of S&H Green Stamps -- a popular trend in the 1950s and 1960s -- and the move to put small toys or puzzles inside cereal boxes, companies have been vying for customers' wallets with fun, entertaining "extras" associated with their products.

But today, those extras are less likely to be plastic puzzles as they are to be online coupons, free products or a higher rank in the game. They range from the Starbucks coffee chain's Star codes and Rewards Cards for discounted coffee to Nike's mobile Nike+ Running App, a downloadable app that tracks a user's workout and his or her goals and translates the progress into "NikeFuel," an all-purpose measure of activity that assesses whole-body movement using distance, time, pace and other measures.

It's not just retail that is getting gamified. All industries are candidates, according to Mario Herger, CEO of Los Altos, California-based Enterprise Gamification Consultancy LLC, a consulting firm that specializes in gamification and social media. Even fairly sober industries like financial services and telecommunications have adopted it, either internally for employee improvement or externally to engage and educate customers. Sales departments have long used sales contests to gamify the monthly quota for sales staff, for example.

"Gamification aims to change behaviors and habits or give the players information they normally would not have," Herger said. "That [definition] can apply to humans in all industries, from support center agents to minors working in coal mines -- any place you want to change their behaviors, train them, measure them, engage them, or perhaps just entertain them."

Gamification uses many familiar game components to do so, including avatars, hidden treasure, magical worlds, scavenger hunts, timed challenges or racking up points to earn a higher ranking and greater privileges in the game.

The rewards range from external ones, such as discounts and cash-off purchases to intrinsic ones such as a feeling of having helped others or solved a difficult puzzle. Crock noted that she often sees customers take the time to reply at length to customer questions in a separate Q&A forum for no reward at all.

Shared goals

The first step to take in gamification, said Leah Carlisle, an adviser at TechnologyAdvice, an IT consulting and software evaluation company, is to decide what the goal of the gamification is – what behavior is it trying to motivate or what information is it trying to pass on?

"Are you trying to get people to download your content or get more people to interact with your website? Whatever it is, you need to identify it then ask how gamification can help," she said.

In addition, the goal you choose must be shared by the customer, noted Brian Burke, research vice president at Gartner Inc., who attributed much of the failures of gamification to companies' inability to identify shared goals. Customers aren't motivated to increase a company's sales, after all. The Nike+ effort works, he said, because it doesn't focus on selling Nike exercise gear, but on helping customers reach their fitness goals. Those successful customers, in turn, may refer other potential Nike customers to the program.

The same thing is true of Step2's BuzzBoard, which aims to provide credible product information, and rewards loyal customers with discounts and praise for providing that content. The customers win with good information and discounts and the company wins through referrals and higher sales.

Besides a shared goal, there are two other caveats to making gamification successful. One is to avoid a winner-take-all approach, such a sales contest in which the least experienced sales rep is pitted against the "salesman of the month." Inevitably, many of the less competitive players won't try very hard, Enterprise's Herger noted.

Finally, the approach should mesh with the corporate culture. Step2's Crock says they worked to come up with something fun and friendly. "We wanted to do it in a way that would feel natural to them and that they'd want, not something we were shoving down their throats," she said. "We think we've reached that balance."

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What are some of the ways you, as a consumer, or your company benefit from gamification?
As a consumer, there's the obvious incentive of getting rewards/bonuses for my participation in a gamification program. There's also the ability for me to learn something new by interacting with the company representatives and/or other customers.