The business value of gamification: pathways to customer relations – I by IMD

Tangible loyalty programs such as air miles and store cards are not the only way to retain customers and forsake the addictive appeal of games. Merely offering extrinsic rewards such as cash eventually reduces intrinsic motivation, whereas gamification – the use of game-like elements such as points, rewards, and challenges in non-game activities – can greatly aid customer retention.

Two pathways to customer retention

1.Virtualization

Virtualization is the transposition of real-world activity and elements into a virtual form through avatars, profile spaces, and augmented/virtual reality.

• It allows gamification initiatives to retain users regardless of other design features.
• By creating an immersive parallel universe that users can mentally inhabit and explore, virtualization seems to engross players in and of itself.

2. Social comparison

Activities and games that are centered on the user tracking their behaviors and performance have a fairly weak ‘lock-in’ because users do not have much invested in the platform and can easily switch to another one. Including an element of social comparison can boost retention, even though it doesn’t offer any rewards beyond those built into the game itself.

• The user identities involved must be desirable and aspirational.
• Users need a credible and sizeable existing community onto which they can project their identity (this can be just friends and family).
• Awarding badges and competitive ranking points that gain social value over time will keep users more tightly bound to the activity.