GAMIFICATION PITFALLS: BADGE FATIGUE AND LOYALTY BACKLASH

BADGES ARE NOT MAGIC BULLETS

Let’s cut through the hype – badges and points can’t magically resuscitate a disengaged online community. Never once during my career designing video games did we ever look at an unsatisfying level or poorly balanced game mechanic and say, “If we give players 1,000 points and a badge right here, it will make everything better!”

In spite of this, the buzz about “gamification” has spawned an entire industry fixated on overcomplicating the thinnest part of the overall online engagement equation–namely, audience capture through simple badging and points systems. Worse, we’re already seeing signs of badge- and points-fatigue from the first wave of online audiences subjected to these systems, including those recently identified by Marketing and Advertising expert, Adam Kleinberg. Indeed, overuse of these “high fructose” approaches can even lead to an undesirable outcome I like to call “Loyalty Backlash”—active disengagement when a customer realizes their behaviour has been manipulated with no personal gain.

This Loyalty Backlash is not a new phenomenon, particularly in the fast-paced and fickle world of online community engineering. Take the waning IPO darling Groupon, for example. If you’re like many people, you jumped on the daily deal bandwagon, lured by the promise of deep discounts. But many have now grown weary of sifting daily through their Inboxes for something they want, only to be rewarded by having to battle merciless crowds and deal with frustrated and exhausted staff. This has led to mass unsubscribing, or worse, taking the attitude that any company offering a Groupon was somehow a “damaged brand.”

I recently came across evidence of this damaged brand/loyalty backlash firsthand reading a restaurant review on Yelp. The reviewer was complaining about their most recent visit, criticizing everything from the food, to the service, to the behavior of the other customers. A respondent to this review posted a terse and telling comment, “What did you expect? You used a Groupon!!!”

THERE ARE NO “QUICK FIXES”

With all due respect to infomercials, I find it generally wise to be skeptical of people promoting exceedingly simple solutions to complex problems. Even if someone did invent a “magic bullet” quick-fix to all your online engagement woes, you wouldn’t keep your competitive edge for very long. After all, if you can install a “plug-in solution” in 5 minutes, so can all of your competitors! Solving problems within a complex environment generally requires more than simple solutions. And designing an effective and captivating gameplay system is not a trivial task. I’ve been designing interactive entertainment for well over 10 years, and I while I feel very comfortable doing it, I still don’t find it particularly easy.

Layering on badging and points services fall into exactly the same category of extrinsic manipulation as daily deal schemes and Foursquare check-ins. By themselves, they deliver interesting and momentary novelty value, but generally have a very short shelf-life—and carry little likelihood of generating long-term customer retention or activation. Granted, I won’t deny that most of us felt some fleeting thrill in Grade 3 from earning our “gold stars” for getting an A+ on our spelling assignments. But beyond the initial jolt of satisfaction, pride, and perhaps surprise (“Cool, I didn’t even study!”), those shiny little stickers provided no lasting joy or residual value.

Simply put: a badge is a motivational and interactive dead-end.

On the other hand, well-structured and carefully designed gameplay is an excellent motivator. After all, it’s fun to play. And win. And even lose, just to be part of the action. And most of us would have no objection to making “fun” more prevalent in our lives, as long as it is made voluntary, fitting, and intrinsically motivating. For proof, look no further than babies—puppies, ducklings, humans—and you’ll quickly discover how intrinsic, innate, and instinctive playing is in nature. What appears on the surface to be a simple game of tag, hide-and-seek, or play-wrestling is in fact a safe, effective proxy to learning useful, real-world skills. We’re hard-wired to make the association between playing with learning. And since learning provides great evolutionary benefit, we are naturally drawn to any form of “play.”

CROSSING THE LOYALTY CHASM

Someone coined the phrase “Gamification” a short while ago (I say “someone” because I’ve personally met no fewer than three different people within the past year who claim to have invented the term). This word was initially intended to cleverly convey a novel approach towards deepening audience or customer engagement by applying gameplay mechanics. Unfortunately, the term has become hijacked by promoters of rudimentary/shallow approaches that have much more in common with “reward systems” or “loyalty programs” than true games.

My main point here is that it’s not enough to focus on just capturing audiences. They need to be managed, retained, and most important of all, activate the culture of their community. The focus of any brand’s online strategy should be to get their members safely across The Loyalty Chasm, moving beyond simple interactions and creating communities that are more involved, committed, and loyal—ideally, by bringing them into a system that grows more useful over time. In a recent post, Gamification blogger Andrzej Marczewski reached the same conclusion, identifying the three similar phases of customer engagement: brand introduction, customer engagement, and loyalty.

The “holy grail” among the elite designers of online engagement systems today is that which is self-motivating and self-rewarding—adjectives more commonly associated with true video game designs than simply a trophy case with a leaderboard.

And while on the topic of leaderboards, I’d like to take this opportunity to dismantle a big myth about their value and applicability. From my perspective, I can think of very few things that are more damaging and demotivating towards the culture of a community than a leaderboard. Look at it this way: if you’re lucky enough to be sitting in the top position, everyone below you hates you. If you’re ranking #17 on the Top 20, you hate everyone above you. And if you’re not on the Top 20 list, you feel like an outsider (and maybe hate yourself). The competitive elements introduced by a leaderboard don’t make things more fun and or more social. In fact, I’d go so far as to say they make things more ANTI-social and demotivating.

THE ROAD TO AN ACTIVATED AUDIENCE

True “game design” approaches will increasingly make their way deeper into the design of online user experiences. As Matt MacLaurin, eBay’s Senior Design Director, announced in his Gamification Summit 2012 presentation, the term “Gamification” will soon go away. It will just be called “Design.” At Pug Pharm, we’ve experimented with applying many different tried-and-tested game design principles and technologies—those typically used by traditional video game designers—to achieve intrinsically motivated and fully activated online audiences. One of the most successful approaches we’ve tried simultaneously taps into two distinct core human tendencies that are commonly found in successful online video games: 1) the desire to collect interesting things we care about, and 2) a curiosity about meeting people who think just like us.

These are both powerful and universal themes. After all, we all like collecting unique things we find particularly interesting—sports cards, shoes, stamps, expensive cards, etc. One person I spoke with recently confessed (with a disturbing lack of compunction) to collecting various animal parts from roadkill! We also seem to like interacting with our collections, arranging them, completing sets, sharing and trading them, and even inventing games around them. Offering audiences a way to collect and organize interesting things is engaging at a very fundamental level—much more so than giving them a trophy case of generic badges with a leaderboard.

A very important characteristic of collectables is scarcity. Earning a generic badge is nice for a moment, but owning an extremely rare collectable (the Honus Wagner baseball card, Action Comics #1, etc.) creates an additional degree of value, vanity, and prestige in the holder. To deliver these principles in the virtual realm, we’ve ensured that all the collectable rewards we deliver to the user are drawn from a managed economy of virtual goods—specifically designed to reflect a variety of interests, themes, topics, etc. This creates a wide range of interesting new engagement design possibilities—along with powerful and insightful user analytics. Through this approach, a user’s “virtual collection” becomes a powerful window into their thoughts, preferences, attitudes, and beliefs. By doing so, you’re unlocking the exact same gameplay mechanics that power some of the most successful casual online games. After all, most of the top Facebook games (Farmville, Mafia Wars, CityVille, etc.) are arguably nothing more than highly-polished collections games hidden behind a seamless and addictive player progression model. By applying these same principles, it becomes possible to get your audience safely across The Loyalty Chasm, moving them towards complete activation.

We’ve even taken this approach to an exciting new level in recent projects, building native technological systems into our Picnic™ platform whereby these virtual goods can be used as the bridging mechanism to socially connect people sharing common interests and create a unique community culture. This has been a game-changer. Using expressive collectables as a way for people to find other like-minded community members adds a compelling new sense of purpose to the collectables themselves, while adding an exciting dimension to the social online experience. It’s like combining the most intriguing parts of Pinterest and eHarmony.

CLIMBING BACK UP THE SLOPE OF ENLIGHTENMENT

Of course, the bad news is that Gamification is swiftly sliding down the Gartner’s “hype cycle” into the Trough of Disillusionment. The good news is that new technologies are now hitting the marketplace with the features and flexibility to service the next wave of more sophisticated online community engagement projects. This includes our very own Picnic™ Customer Engagement Engine—a platform designed to create community culture through gameplay and built over the past 3+ years by a team of veteran game designers, web technology experts, and software-as-a-service product managers.

But ours is just one of countless approaches and technologies that are sure to start emerging within the dynamic and rapidly evolving world of user engagement design. In the years ahead, we are certain to find many new projects—including those that have realized the “pointlessness” of points & badges—looking for flexible and lasting solutions to increase online loyalty, consolidate their communities, and convert people into customers. And that’s when I think things will start getting really interesting, with exciting new projects pushing the boundaries and redefining the expectations, interactions, and relationships between brands, their customers, and the community members themselves.

Steve Bocska is the President and CEO of Vancouver-based Pug Pharm Productions, a technology leader in customer gamification, retention, and activation. Steve has an extensive background as a gameplay designer, designing highly successful video games for companies including Disney Interactive, Electronic Arts, Ubisoft, Fox Interactive, and Activision. Pug Pharm’s Picnic™ Customer Engagement Engine creates community culture through gameplay.

REWARDING CONTINUOUS LEARNING IN A CUSTOMER SUPPORT ENVIRONMENT

Pug Pharm creates a unique “Gameplay Ecosystem” where brands can create individual or cross-property social entertainment that attracts and retains customers and builds brand recognition and loyalty.

New products and services, changing internal procedures and the introduction of new tools require customer support staff to be constantly learning. The challenge is for customer support departments to implement an effective tool to monitor and motivate continuous learning among staff members. The question is, can gamification help?

The easiest way to determine if staff members have learned and adopted new material is through testing. Direct gamification techniques of rewarding points and badges for positive test results can certainly help to rank your team members and drive competition. However, if you set up a strictly competitive environment, how does this help to build teamwork and peer interaction? How do you provide new hires a supportive learning environment while continually challenging your experienced staff? Pug Pharm aims to fill this gap by creating a gamification system with more than simple virtual trophies and leader boards.

Beyond badges

Pug Pharm Productions is a technology company that offers an engagement platform with three main components:

  • core gamification features (providing rewards for completing desired actions);
  • a virtual-item collection system and;
  • a mechanism for connecting users with similar interests.

Our technology, paired with a savvy front-end implementation, can take customer support learning beyond simple competition.

Having fun while monitoring results

To ensure new hires aren’t being unfairly compared to long-term employees, individuals are grouped based on experience or even past performance, with a question pool assigned to each group.

Instead of simply trying to get the most points for the most right answers, the goal is to complete a game board by collecting virtual items. Management or staff can choose the game board theme; for example “Things I’d Want on a Desert Island.”

Every time an individual answers a certain number of questions correctly, they are able to pick an item from a random pool and assign it to the game board. Wrong answers trigger a delay, such as a 10-second display of the correct answer.

The board is locked after a set amount of time, and everyone with a completed board is entered to win a prize.

With built-in analytics, companies can see which questions were difficult for staff and require further instruction.

Building team connections

As the system then compares boards based on specific items, individuals can connect with people who have similar interests. Staff can also share their board internally or on Facebook, and vote on which set is the most creative, giving peer-chosen winners a status boost within the team.

One of the great features of Pug Pharm’s technology is that team members can create the virtual-item game pieces themselves. The game board question can be distributed the day before and staff allowed a few minutes to upload images pulled from websites. People will actually be looking forward to being quizzed (and will study accordingly) to see if they can find their own items!

This system can, of course, also be applied to any department where there is a high-need to monitor and motivate continuous learning, such as sales or software development. Gamification can assist with staff knowledge testing; you might just have to look for something more than simple points to make it effective.

This post was originally published as a guest post for the Gamification Of Work blog by Hillary Samson, VP Marketing for Pug Pharm productions.

Instant Audience Engagment the Pug Pharm Way

 

Pug Pharm Productions offers an online platform with a very unique combination of fully-integrated systems and technologies, namely:

1)      Gamification Systems

2)      Item Collection Gameplay Engine

3)      Social Matchmaking Technologies

The platform is the perfect solution for any brand or company looking to give their online audience motivation to do more, connect with other like-minded users, stay longer, become more loyal, and spend more money. This toolkit allows quick, easy, and affordable transformation of any brand’s website or mobile applicationinto a fun, addictive, socially-connecting online activity/gameplay system.

Designed over a 3-year collaboration between “AAA” console game designers and web technology experts, this platform is the world’s first combination of technologies that simultaneously delivers engagement, motivation, rewards, social networking/matchmaking, item-based gameplay, and huge monetization possibilities.

Pug Pharm’s SNO Gamification Engine enhances user engagement by seamlessly funneling users–in parallel, from multiple websites simultaneously—into a deep, rich socially-connecting gameplay environment. It is a highly scalable, cross-property, gamified solution which combines unique interest-based socially connecting gameplay with a virtual item system. As a persistent online gameplay service, it allows online brands and developers to quickly and easily create next-generation “gamified” social networking applications.

This proprietary technology simplifies the creation of next-generation social networking gameplay. It offers instant support for sophisticated social gaming features including:

  • user-to-user interest matching
  •  item collection challenges
  • scarcity-controlled virtual items
  • customizable public profiles
  • dynamic friends lists
  • item gifting
  • threaded contextual messaging
  • leaderboards and achievements

It is an easily-integrated toolkit for serious developers of branded websites and casual games, making it possible to quickly and affordably add interest-based social gamification features to web and mobile applications.

Pug Pharm notable clients include forNASA (Project Whitecard/AstronautMMO), OMNI Films (website for TV reality show “Ice Pilots NTW”), RealityGames/FashionLab (MyXtyle), a world-class international museum, and several other leading brands and high-profile projects as gamification examples.

 

Competitive Summary for Gamification Companies

NameKey CustomersFeaturesDifferentiator/Advantage
Pug Pharm
(Vancouver, BC)
Ice Pilots NWT, Project Whitecard (NASA’s MMO)
-Core gamification features
- Integrated virtual-item collection component
- Full-featured, affinity-based social network
- Moves beyond badges to include strong game-play and social network components
- Functions well both for shorter-term projects and long-term integration
Badgeville
(Menlo Park, CA)
TNW, Philly.com, Blackbook.com
-Core gamification features
-Focus on analytics

-Analytics software (Social Reward and Analytics Platform)
-Focus on medium-size businesses
BigDoor
(Seattle, WA)
Devhub,Cheezeburger Network, BuddyTV-Core gamification features
-“5 minute integration” of Minibar
-Full-service consulting
-Addressing small business market
-Free pricing for a basic feature set
BunchBall
(San Jose, CA)
NBC, Victoria Secrets, Hasbro, Comcast-Core gamification features
-Collaborative Game Play
-Multiplayer poker game
-“1 day to 5 weeks” integration
-Full-service consulting
-First mover advantage (claim to have “invented gamification” in 2007)
-Focuses on “serious customers”
-Multi-million dollar funding support
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Revenue from Social Gaming and Free-to-Play

 

 

Revenue for the worldwide interactive entertainment market is projected to hit $70.1 billion in 20151 with Online Games showing five times more growth than Console Games and representing $20 billion of the total. The installed worldwide base of personal computers will have jumped from 228 million in 2008 to more than 600 million by 20132. Overall game-related dynamic advertising spending is also expected to grow from $55 million in 2008 to more than $1.2 billion by 20143.The two leading categories for online games are massively multiplayer online games (MMOGs) and casual games. While the “MMOG Lite”category in North America was worth $800 million in 2009, it is projected to top $3 billion by 2015 (and over $7 billion worldwide) 4.

Social games (with gamification elements) represent a large and growing percentage of current free to play games5. Average revenue per user (including all free and paying users) ranges from as little as $0.35/user/month for a simple Facebook application to $2+/user/month for a well-designed stand-alone offering6. 1%-15% of the audience in a properly designed free-to-playgame will convert into a paying customer and spend $5-$40 per month for virtual items, upgrades, features, and other extended content. People spend over $1.8 billion on virtual items every year7. For these consumers, purchasing virtual items increases the overall satisfaction they receive from spending time in the online community, and the willingness of players to pay for such digital goods is increasing8. Item-based transaction systems are expected to allow online services to increase dramatically9, and it has recently been suggested by Electronic Arts co-founder Trip Hawkins that the virtual goods market opportunity could soon exceed $60 billion10.

The non-paying customer nonetheless remains extremely valuable since they are appealing to potential advertisers seeking product/brand placement and sponsorship opportunities. As comparables, Facebook’s monthly ARPU is approximately $0.25, while Google’s monthly ARPU can be calculated at $1.8211.However, the real value of the premium “paying” customers extends well beyond the direct revenue they generate, since they create a ripple effect of bringing in more buyers and sellers12.

A well-built gamification platform can be revenue generating and does not need to be a cost-center. A Gamification platform can be an important revenue generator with additional features, premium memberships, affiliation partnerships and corporate sponsorship can take advantage of this strong market and revenue potential.

Reference Table 1

1  “Worldwide Market Forecasts for the Video Game and Interactive Entertainment Industry,” DFC Intelligence, 2010.
2 “PCGA Horizons,” report, PC Gamers Alliance, 2009.
3“In-Game Advertising: Market assessment and forecasts to 2014,” Screen Digest, May, 2009.
 4“DFC Intelligence and Live Gamer Release Market Forecasts for Free-to-Play and MMOG Lite Gaming Category,” DFC Intelligence, June 10, 2010.
5 Chen, S., “The Social Network Game Boom,” Gamasutra, April 29, 2009.
6 Liew, J., “Successful MMOGs can see $1-2 in monthly ARPU,” Lightspeed Venture Partners, June 9, 2008.
7 “Boomtown: The Real Money Behind Virtual Goods,” Fitzgerald, Mike, Fast Company, July 1, 2009.
8 Takahashi, D., “The most popular digital goods are virtual money, weapons and gifts,” VentureBeat.com, September 11, 2009.
9 Morton, D., “Making Microtransactions Work,” Edge Online, July, 2008.
10 “Social Gaming Growth Is Getting Harder But Billions Lie Ahead,” Nick O’Neil, Social Times, April 16, 2010.

Gamification Examples – Financial Potential Overview

Gamification is the application of game mechanics to non-game activities to change people’s behavior. Using gamification, corporate loyalty programs can significantly increase their effectiveness by adding more intrinsic motivators to the loyalty experience. The production of gamification projects is expected to generate $1.6 billion in revenues by 20151 and investors have taken notice.

The word “gamification” is used to describe the application of game mechanics in a setting to help encourage user engagement.  There are many gamification examples used in conjunction with social media, social buying and websites. Of course video games being the major source of of inspiration and application.

Within the past year, over $10 million in seed capital has flowed into gamification platform startups and over $25 million into companies applying gamification as a core customer strategy. At least one $100 million fund has recently dedicated a portion of its investment to gamification.2 Marketers have also fully embraced the tremendous potential of harnessing social online activities and games for the purposes of enhancing brand awareness–worldwide online social-networking advertising spending expected to exceed $4 billion by the end of 2011 (see Figure ).Targeted, casual social gaming audiences are among the most lucrative and compelling current online opportunities3.

 Gamification Examples - Pug Pharm Chart 1

Figure . Gamification examples – Advertising spend on social networking websites continues to grow.

1 Proceedings at Gamification Summit 2011, Wanda Meloni, M2 Research, January 20, 2011.

2 “VCs level up with ‘gamefication’ investments,” VentureBeat, December 10, 2010.

3. Urstadt, B., “Social Networking Is Not a Business—But It Might Be Soon,” MIT Technology Review, July/August 2008.

 

 

 

 

 

 

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