What video game designers can teach executives about loyalty
by Kate Pavao, August 2013
Executives are awash in data, but they don’t always know how to use it to create deep connections with customers, partners, and employees. Rajat Paharia, founder of gamification company Bunchball and author of Loyalty 3.0, has an idea: “They should look at the world of video games, where game designers have been working on this for 40 years,” he says. “Take the best techniques they have learned, and use them in order to motivate real-world behavior.” Here, Paharia tells Profit readers how to do just that.
On loyalty: Loyalty 1.0 is prevalent today with frequent-flyer programs, or “buy 10, get 1 free”–type incentives. Loyalty 2.0 introduced the idea of one-to-one marketing with targeted campaigns. But as more and more technology mediates everything we do, those systems are collecting data that can now be used as raw material for a next-generation loyalty program.
Loyalty 3.0 is based on the premise that we’re all walking data generators now. When company leaders take newly available big data about user activity, combine it with the latest understanding on motivation, and then ignite it all with the spark of gamification, they create a really powerful engine for engaging, motivating, and driving true loyalty.
True loyalty means that in the face of a competitive offer, your customers, your partners, and your employees will stay because there is a relationship beyond the transactional.
In the face of a competitive offer, your customers, your partners, and your employees will stay because There is a relationship beyond the transactional.
On getting started: Gamification is using data-driven techniques from video games to motivate people. Executives often mistakenly think they can throw badges, points, or other surface elements on a website without really understanding what actually motivates their audience—or what business objectives they’re trying to drive.
We say, “We’ve got to come up with a mission statement for this program.” It should be very concise, articulate, and accurate—and include a number or goal that you’re trying to hit. For example, “We are going to use gamification to motivate our channel partners to contribute 20 percent more to our pipeline this year.” Once you have that mission statement, then you work backward: What are the key performance indicators [KPIs] to measure? Then, what user behaviors will drive KPIs?
percentage of executives who believe delivering a great customer experience is critical to their business advantage and results (Source: Global Insights on Succeeding in the Customer Experience Era an Oracle study)
On Eloqua’s smart program: Eloqua [acquired by Oracle in December 2012] has a community called Topliners where customers and employees share best practices and tips, and learn about products. The number of registered users had been growing by 30 percent a month for all time, but the number of active users had flat-lined.
So Eloqua turned on the gamification component, enabling participants to get rewarded for onboarding themselves and contributing quality content. This way, users could develop a reputation that would be valuable outside of the Eloqua community.
Eloqua saw an immediate 55 percent lift in participation, which has sustained over time. More users answered questions, freeing employees from having to do that. There was a 40 percent increase in support call deflection. Also, customers engaged in the community were more likely to renew.