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Denis Pombriant Gamification—A New Medium to Engage, Reward & Retain Customers

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By Denis Pombriant, of Beagle Research

Gamification and its Link to CRM and Customer Relationships

Gamification is a largely unexplored topic in CRM but one that has legs and will increase in importance over the next few years. What is it? A reasonably consistent definition is: the process of using game thinking and game mechanics to solve problems and engage users. As a practical matter that also means using software infused with game thinking and mechanics to achieve your gaming ends.

There are so many layers in this simple definition that I expect to be writing about it for a while; ditto the number of uses and potential misuses of the technology. This post can only serve to outline some of the big ideas. For the time being we're all good and only focusing on the positive.

I first got interested in gamification as a judge in the CRM Idol competition last year when some of the companies in the competition showed how they were gamifying CRM processes, especially marketing and selling.

While I was initially really jazzed about CRM gamification, I also quickly became concerned about the potential for game "thinking and mechanics" to manipulate people into doing some things that they might regret. I am specifically concerned that vendors might gain the upper hand in pushing the customer's buttons well enough to drive them into high debt or worse. But hold that thought for another time.

Much of what I've learned about gamification isn't new but an evolution of ideas that have been percolating about as long as social networking. Another fountain of source material goes all the way back to some research conducted at MIT in the 1980's and 90's by Eric von Hippel and published in his book, Democratizing Innovation. But von Hippel focused on learning about the link between customer happiness and loyalty when, for example, a company reaches out to the customer in various ways. Trust develops and often customers become more loyal to brands.

Many CRM products today offer multi-channel capabilities for exchanging ideas with customers and this bi-directionality is essential in gamified applications. In a sense gamified apps might simply be considered as having better reward systems than typical dialog systems, which are themselves a leap beyond conventional CRM and ecommerce.

Latter day gamification seems to build on von Hippel's research using explicit techniques that cause people to engage with a product or a brand for rewards that are often measured in points. Nothing new here, by this simple description your credit card's offer of reward points or miles achieves the same thing. But the intensity of the experience and thus the bond in a true gamified relationship is much greater.

Think of dropping a coin in a slot machine or playing World of Warcraft and you have a better example. There's enough research that describes a link between the gaming act and the release of a tiny amount of dopamine in the player's brain. Dopamine is one of the main neurotransmitters and it participates in the reward cascade. You feel good when you win at a game or receive some kind of reward or badge. But the dopamine high is fleeting and it is easy to develop a craving for the stuff, which is what drives many people to put a second or fiftieth coin in the slot. This subject should and will be explored further.

A few years ago it looked like CRM was going to be challenged by something called VRM or vendor relationship management. VRM was a kind of response to what appeared at the time to be increasing vendor regimentation in an effort to control customers. In CRM shorthand VRM would combat the direction toward less R and more M.

VRM is still out there but it is largely an academic idea and last time I checked, people were looking for grant money to built prototypes. That's hardly a good sign as the typical route to the market is through the garage start up and venture capital. But I digress. Back to gaming.

If you can make the interaction fun and rewarding and thus build loyalty there is less need for more draconian customer or account control. Games can get customers to do your bidding — to a degree — without coercion. In this context gamification has at least two big benefits. First, it can drive loyalty and conversely reduces churn. But understand, the loyalty is not driven by some addiction to dopamine. Rather, the customer playing the games sticks around long enough to provide a lot of data that a smart vendor can analyze for patterns.

Second, and closely related to the first point, no company and no product is always going to be a perfect fit for every customer but gamified systems make it a lot easier to find customers on the road to unhappiness and intervene very early. So the gamified application at least has the potential of capturing data to figure out what the customer wants and to capture attitude data as well.

While there is no such thing as 100% in interpersonal interactions, gamification might get a company much closer to a churnless customer base. There are many implications to churnlessness including figuring out how a new product penetrates the market. But a customer base without churn could also evolve to have much less friction too. I think it's reasonable to say that loyalty generated would be a by-product of generated trust and in a trusting relationship there is less friction of all kinds.

When I think about reducing friction I also think about reducing the amount of face-to-face interaction needed to maintain the relationship. Whether all of this could reduce actual travel and replace it with cyber face time is unanswerable now. But that aspect could potentially take cost and carbon out of maintaining customer relationships too. The idea of frictionless relationships is a long way from gamification and possibly just one of many unknown but knowable side effects of this new idea. Gamification is multi-faceted and has a powerful potential relationship to CRM and other front office technologies. It will likely change how we do business and it is certainly an area that deserves more attention and study from the CRM community. End

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In a sense gamified apps might simply be considered as having better reward systems than typical dialog systems, which are themselves a leap beyond conventional CRM and ecommerce.


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