Gamification goes mainstream

Increased sales, increased participation, increased engagement. It doesn't sound like a game, but those are some of the goals, and reported achievements, of the new field of "gamification."

Gamification is the process of using game mechanics to engage audiences and solve problems, "taking the best ideas from games and applying them to fields where they are not usually used," explains Gabe Zichermann, a consultant in New York. "It produces a big bump in user engagement quickly and cheaply, relative to other methods. We are also making work more fun, which leads to more and better work done by happier employees," Zichermann adds.

The key phrase is game mechanics; no one is suggesting business software be turned into mythical quests where users slay colorful monsters with flaming swords. But even traditional companies may add some common gaming techniques to keep things interesting, sources agree. These include:

Points: Users get points for various achievements. Points can often be spent for prizes, which may be actual merchandise or services, or forms of status.

Leveling: Points become harder to get as the user accumulates them, or masters the system.

Badges: As with Boy Scouts or Girl Scouts, badges become part of the identity of the user, and may appear on the user's "trophy page" or with any comments he or she may write.

Leader boards: The user can see where he or she ranks (in terms of points or other achievements). The board may show the top scorers, the user and the ones immediately above and below the user, or the entire field.

Community: This can involve collaboration tools, contests and posting comments or sharing content.

The gamification industry is booming. Wanda Meloni, founder and principal analyst at M2 Research in Encinitas, Calif., calculates that gamification industry revenue amounted to about $100 million in 2011, but she expects it to balloon to $1.6 billion in 2015.

"I don't know of any failures yet, but it is still pretty early," notes Meloni. "Companies are still trying to get to the point where they can measure the impact of games, and there may be some cold water then."

"The growth is enormous," agrees Johnny Miller, founder of Manumatix, a gamification vendor based in Redwood Shores, Calif. "It's amazing how everyone wants to gamify everything, from car makers to airlines to clothing vendors and even restaurant chains."

Rajat Paharia, chief product officer and founder of Bunchball -- a vendor based in San Jose, Calif., that claims to have invented the term gamification after the firm's founding in 2005 -- agrees. "People are not content to passively view content anymore; they expect to engage or participate."

There are two main varieties of gamification: customer-facing systems and employee-facing systems. The former are mostly for websites open to the public, while the latter are for employees of an enterprise.

For consumers

Gamification on consumer sites is typically intended to heighten user engagement, so customers will be more likely to come back. The Record Searchlight, a daily newspaper in Redding, Calif., turned to gamification in hopes of keeping readers by raising the level of discourse in the comments that readers can attach to a story, says Silas Lyons, the paper's editor. The company did this by using a badge system from Bunchball.

"Like many newspapers, we struggle with the comment area becoming a complete cesspool with some flashes of brilliance, but it is a point of high engagement with the users," Lyons explains. So the paper added an "Insightful" button next to the existing "Suggest Removal" button.

Readers who get at least three 'Insightful' votes on at least one of their comments receive a level-one badge, with higher-level badges for those whose get at least three votes on each of the ascending numbers of comments. These badges appear both on their trophy pages and on other comments they write, amounting to a reputation rating. Users also get badges for posting content and for reading certain sections, among other things.

After three months, "we saw a 10% increase in comment volume, and the time spent on site increased by about 25% per session," says Lyons. The number of comments that had to be removed also fell noticeably, he adds, despite the overall increase in the number of comments.

Another example is World Travel Holdings, a reseller of cruise vacations based in Wilmington, Mass., which turned to Manumatix for a system to reward customer loyalty. Registered users of the site get points for posting content related to vacation cruises, explains Willie Fernandez, vice president at World Travel Holdings. They can use those points for merchandise including hats, wallets and umbrellas, for free shore excursions on a cruise, or to enter drawings for electronic devices.

With the use of leveling, the prizes get better as more points are accumulated.

"The feedback is sensational; they are constantly asking for more prizes," says Fernandez. After six months of use, "our active user participation went up 24%, and we have seen an increase in bookings from its use," says Fernandez. Various tracking mechanisms let him pinpoint which bookings can be credited to gamification, he says, and which to other forms of marketing. However, he would not provide specifics on the amount of the increase in bookings.

Of course, there were lessons. At Redding, Lyons says that the site's "deal-finder" badge was a bust. Users earned it by signing up to receive promotional emails. Instead, they dispensed with the honor, in droves.

"We saw an actual decline in the number of those signing up for our promotional emails," he says. "We were offering them a lousy deal in this case: In return for accepting more junk in their inbox, we would turn this badge from gray to blue. The lesson is that you can't just slap badges on things, check them off a list and call it a day. Gamification is not a no-risk strategy. It has to be done right."

Fernandez says that the only real problem his firm encountered was that users understood they could get points if they referred their friends, but seemed to assume that the system knew who their friends were.

But generally, success or failure with consumer gamification starts with the topic, says Miller at Manumatix. "It has to be something people talk about and enjoy. We were approached by a laxative company, but nobody is going to talk about that. And it can't be a boring commodity, or something that is only sold once. No one is passionate about their refrigerator."

For employees

Enterprises have captive audiences with their employees, but have found ways to use gamification to reinforce desired activity and enhance productivity.

For instance, LiveOps of Santa Clara, Calif., offers different types of call center services. The firm works with nearly 20,000 remote contractors, whose volume of assignments -- and therefore the number of hours they work and their cumulative wages -- is based on the quality of their performance, explains Sanjay Mathur, vice president.

Using points and leader boards, "we can separate the wheat from the chaff and reward the best agents with more opportunities," he says. The system is a combination of Bunchball features and in-house systems, he adds. Using the system is optional for the agents, but about 80% opted in, and 95% of those stayed in, he says. "They like knowing how they are performing and what they need to do to get call volume," he explains.

With gamification, the training for a roadside assistance agent fell from four weeks to 14 hours, he notes, as it facilitated a switch from brick-and-mortar to virtual classrooms. The performance of the sales agents increased 8% to 15%, depending on the product, he adds, citing gamification as the reason since no other changes were made.

Badges combined with social networking amounted to a completely different gamification approach for VivaKi, a Web service agency in Chicago that has workers in five locations. VivaKi signed up for an employee performance-management platform from Rypple, a gamification vendor in Toronto that has since been acquired by Salesforce.com.

Rypple was described by a spokesman as a private, internal social network for managing all aspects of performance, including goal setting, coaching, recognition and feedback. (Only positive reinforcement is used; negative correction is handled offline.)

"We wanted to roll out cool, fun things for the employees," says Cassandra Yates, human resources manager at VivaKi. "People can create their own badges to give out, and some have gotten creative. For instance, someone did one with a picture of Yoda, for mentoring. You see new people using the system to thank those who helped them, from the first day on the job."

The end result is that employee performance reviews are much easier to perform, she indicates, since so much feedback is available. She is also confident that the users are not gaming the system, so to speak, to make themselves look good. "Everyone can see what they write, so they don't make anything up," notes Yates. "And they're not just saying 'great job today' -- they're giving special thanks for specific things on specific projects."

Neither Mathur nor Yates report significant problems. But Ryan Elkins, founder and CEO of iActionable Inc., a gamification vendor based in Provo, Utah, cautions that it isn't a one-size-fits-all solution. Employee-facing gamification "tends to work well in job functions that don't pay well. In boring jobs or call center jobs, people come in and detach themselves from their work. Gamification helps bring them back and gives them something to focus on."

Conversely, Elkins says, the harder it is to quantify a person's contributions or participation, the less likely gamification is to work. "And you need a big community, since it is hard to promote competition with only a few people."

But even among high-paid, isolated salespeople, Elkins says that he has seen gamification used to encourage them to keep their paperwork up to date.

As for pitfalls, "If you are trying to drive specific behavior, but you don't understand the behavior of the end users, you may create a false dynamic, such as driving salespeople to make [time-wasting] phone calls in situations where normally they only use email," notes Scott Holden, a director at Salesforce.com, a San Francisco-based SaaS vendor that offers gamification features.

More potential pitfalls

The gamification field may be too new for it to have run into two problems that Michael Wu predicts. Wu researches online behavior for Lithium Technologies of Emeryville, Calif., which provides social networking services for businesses.

For consumer-facing sites, the problem is called over-justification, he explains.

"If you reward people for doing something they are not interested in, you demotivate them in the long run," Wu says. "It's like giving kids a dollar for doing math problems." They will do the math problems because they like the money, but will become conditioned to do it only for the money.

"Gamification is a good short-term tactic, and is good for getting people to do something, but for the long term, it won't work, as the over-justification effect will kick in," Wu explains. "No one knows how long it will be before it kicks in, but we know it won't be forever," he cautions.

But if users can find some intrinsic value in the site, such as participation in a community, then gamification only needs to work until they find that value, Wu adds. After that, gamification becomes a reinforcement rather than a driver, he notes.

Beyond that, "If enough people do gamification the wrong way, there is the danger of consumers being conditioned to resist all gamification, just as they now resist pop-up windows, and that would be a loss for all of us," he warns.

For internal, employee-facing gamification, Wu says the primary danger is that the motivators could become morally offensive. "If someone recycles because they are environmentally conscious, and suddenly you pay them to recycle, they may see the money as cheapening the act, or as being less than their time is worth, feel offended, and stop doing it."

"You have to be careful," Wu adds.

Meanwhile, with both consumer and employee gamification, there are legal issues that an enterprise ought to be aware of, notes attorney Joaquin Gamboa, partner at the Washington, D.C., law firm of Levine, Blaszak, Block & Boothby.

He asks: What kind of data is being collected? Where does it come from? Do users know how it will be used? Who is protecting the data? Who gets access? "These are not reasons you should not do gamification, but are questions that should be approached thoughtfully," he says.

Other legal issues include whether comments from users who get prizes need to be treated as paid endorsements, the value of the virtual currency used for rewards and the intellectual property embodied in the user-generated content, Gamboa says.

Finally, there's a potential pitfall in expecting too much of gamification, as Lyons discovered with the Redding system. After the first three months of gamification, the newspaper held a reception for the 50 or so top commenters, offering drinks and appetizers. Only five showed up.

"I think they prefer the online world to the real world," Lyons says.