"It's very much like the Wild West," Brayden Olson, founder of Novel Inc., says emphatically. "There's gold out there, gold for anyone, but a lot of companies are not going to find it." Olson's describing the burgeoning field of gamification. The term was barely known eighteen months ago, and you're not likely to find it in any dictionary. But, suddenly, gamification is the hot new business concept, with many of the world's most admired companies signing on.
So what is it? Gamification -- pronounced "game-if-ication" -- is an attempt to engage customers using techniques glommed from video games. Think the levels and coins in Super Mario, which create a building sense of progress and reward. Applied to business, gamification promises to make more people buy more products and services, on a repeat basis. At the second annual Gamification Summit in New York City last month, 400 guests representing companies such as Microsoft (MSFT), American Express (AXP) and Home Depot (HD), rubbed shoulders with early adopters like personal finance site Mint.com's Aaron Forth and Alexandra Wilkis Wilson of flash-sale e-commerce site Gilt Groupe. Big business wants in on what Forth and Wilson know. They both help run popular and rapidly growing services that rely, in part, on game mechanics to drive their success.
Since 2007 Gilt Groupe, for example, has offered short-term online sales of designer clothes to its members. Its discounts can be as much as 60% off list price. While Gilt's profitability is largely derived from its low cost structure, its real success has been deeply engaging customers through a series of game-like elements that keep users coming back. The short-term nature of the sales, for one, creates an incentive to snap up deals quickly. And because new sales are launched daily, many customers develop a routine around Gilt. At noon every weekday, thousands of urbane customers around the country momentarily put aside their lunch plans to browse the site's newly available wares. Big spenders may be invited to Gilt Noir, with access to previews, special events and sales, and a concierge-like customer service number. (Read more about Gilt boss Susan Lyne here.)
Gilt's secret sauce is to make consumers feel like they are "almost winning," says Kris Duggan, CEO of Badgeville, a company that provides game mechanics to clients such as Bluefly, Universal Music Group, Beat the GMAT and Deloitte. The key, according to Duggan, is to influence behavior, not to simply make a game sporting a client's brand. Many target consumers have now grown up with gaming as a central experience, says author Gabe Zichermann, who as head of Gamification.co chaired the September summit. That's helped not only adoption, but also understanding of the difference between game mechanics and games full-stop. The success of FourSquare and Zynga, meanwhile, helped convince the C-suite that there was money to be made adopting game-like tactics.
