Game-Based Marketing

Inspire Customer Loyalty Through Rewards, Challenges, and Contests

Gabe Zichermann, Joselin Linder

• Publisher: Wiley
• Year: 2010
• Print ISBN:
  9780470562239
• Edition: 1
• eBook ISBN:
  9780470618691
• Topic: Business
• Subtopic: Marketing
• Index: Business

Harness the power of games to create extraordinary customer engagement with Game-Based Marketing.

Gamification is revolutionizing the web and mobile apps.

Innovative startups like Foursquare and Swoopo, growth companies like Gilt and Groupon and established brands like United Airlines and Nike all agree: the most powerful way to create and engage a vibrant community is with game mechanics. By leveraging points, levels, badges, challenges, rewards and leaderboards – these innovators are dramatically lowering their customer acquisition costs, increasing engagement and building sustainable, viral communities.

Game-Based Marketing unlocks the design secrets of mega-successful games like Zynga's Farmville, World of Warcraft, Bejeweled and Project Runway to give you the power to create winning game-like experiences on your site/apps. Avoid obvious pitfalls and learn from the masters with key insights, such as:

• Why good leaderboards shouldn't feature the Top 10 players.
• Most games are played as an excuse to socialize, not to achieve.
• Status is worth 10x more than cash to most consumers.
• Badges are not enough: but they are important.
• You don't need to offer real-world prizing to run a blockbuster sweepstakes.

And learn even more:

• How to architect a point system that works
• Designing the funware loop: the basics of points, badges, levels, leaderboards and challenges
• Maximizing the value and impact of badges
• Future-proofing your design
• Challenging users without distraction

Based on the groundbreaking work of game expert and successful entrepreneur Gabe Zichermann, Game-Based Marketing brings together the game mechanics expertise of a decade's worth of research. Driven equally by big companies, startups, 40-year-old men and tween girls, the world is becoming increasingly more fun.

Are you ready to play?

CHAPTER 1

The Argument for Loyalty

Since its founding in 1926, NBC News has amassed one of the world’s most important—and valuable—video archives. And although the company had previously used its historical video content for its own editorial purposes and sold access to major educational institutions, key executives at the $17 billion-plus NBC/Universal media conglomerate felt that a major business opportunity was being missed. After all, this content—from moon landings to assassinations—had to be worth more than the minor revenues it was generating per year, or else perhaps it had become truly priceless. But despite the positive cachet of using such a term, pricelessness is a bad thing when running a for-profit entity.

Put another, understated way, “We had a business challenge,” said Chris Tiné, veteran TV producer and one of the driving forces behind what would become a thoroughly innovative and ground-breaking movement in traditional media: the gamification of news.

Tiné continued, “We’re sitting on this archive of amazing video clips of NBC News. How do we get these clips in front of an audience so they can have meaningful interactions?”

For Tiné, the goal was twofold: one, to get this valuable footage of American and worldwide history out from archival purgatory, and two, to create a new profit center for the company. In both cases, NBC succeeded through games.

With the creation of iCue, an educational software application used in high schools as a supplemental studying tool for Advanced Placement classes, Tiné managed to create a system whereby NBC’s extensive footage was put to good use.

“Video trivia was not the first idea we had,” he explained, “but the more we started to brainstorm, think, and roll ideas around, the more we loved the idea of building a game that would engage students, teachers, and parents.” While iCue continues to receive extensive plaudits as a breakthrough initiative in engaging learning communities with history, it was the next step in NBC’s video evolution that truly set the company apart.

In 2008, the group launched What’s Your IQ? a game built for Facebook, one of the fastest-growing social networking sites, as a side project to iCue. What’s Your IQ? is a video trivia game that leverages hundreds of hours of NBC News film and video footage, wraps trivia around it, and allows users to play against their friends, join teams, earn badges, and climb levels—all within the Facebook platform. Of course, this was a substantial challenge, especially considering that YouTube is a completely free video service with billions of hours of content available at the ready—and no educational “wrapper” to discourage casual players seeking distraction instead of learning.

Against that backdrop, Tiné and his team focused on using Facebook to drive traffic to the iCue site. Then something unexpected happened: What’s Your IQ? itself began generating substantial viral usage and, unbelievably, revenue.

The process turned out to be simpler than anyone could have imagined. By making a fun game, “[advertiser] brands realized they got to associate themselves with outstanding video content,” said Tiné, “not to mention, a sticky application.”

By “sticky,” Tiné meant that What’s Your IQ? routinely attracted well over 100,000 users per month (the peak usage of NBC News online is 2.4 million streams viewed per week). But more importantly, most of these users were dedicating meaningful hours playing the game. And why? The game’s design itself was focused on fun first and business (or educational) objectives second. In the process of designing their product this way, the iCue team discovered something very important: they could create a sticky user experience that generates positive brand value and cash while building long-term loyalty.

While most advertisers today find themselves struggling to achieve even one of these objectives clearly, the iCue team—and countless others—have learned that only games can cut through the clutter of a crowded brand marketplace and socially networked environment to attract, retain, and monetize consumers like no other.

“Stickiness” Is Loyalty

The idea of “sticky content” isn’t new, although the term has mostly been associated with Web sites. The basic concept is that stickiness is a qualitative measure, most closely aligned with two standard Internet metrics: time spent on a site and number of repeat visits per user. When you consider those statistics together, you get a composite view of a site’s stickiness.

When applied outside the world of the Web, stickiness is often referred to by another name: loyalty. When a coffee buyer chooses Starbucks over Pete’s Coffee every day or a TV viewer continues to watch David Letterman over Conan O’Brien at 11:30 p.m., we call that loyalty. The same motivators and paradigms apply regardless of whether we are looking at offline or online worlds.

While the vagaries of the economy or radical shifts in the competitive marketplace can profoundly affect the expression of loyalty, it is nonetheless the most enduring bond between a product, brand, or company and its customers. As products become commoditized, it is loyalty—pure and simple—that keeps people buying. Loyalty is consumers’ expression of brand preference and their repayment of the equity you’ve invested in the relationship.

On the Web, the stickiest sites are social networking and multiplayer games. As illustrated in subsequent chapters, they have more in common than meets the eye at first. In the off-line world, the most successful loyalty programs are those run by airlines and other hospitality companies. Online, hundreds of millions of game-players spend billions of minutes each month chasing points, levels, badges, and rewards—both real and psychological. At the airport and in the supermarket, similar numbers make choices every day, with their real time and money, placing these virtual currencies ahead of their real-world counterparts.

What if we could combine the best of both online and offline programs by taking the superior elements of each and weaving them into a fun and long-term customer loyalty program?

We can. And Game-Based Marketing is the guide to this brave new world of customer engagement through Funware: the application of game mechanics to everyday situations. Many innovative companies and organizations already understand the power of games and are well on their way to reshaping industries from financial services to space exploration. Undoubtedly, the rise of generations weaned on games and the promise of Funware will reshape your industry, too.

Playing with Loyalty

Look in anyone’s mail, wallet, or inbox and you are certain to notice a common thread: loyalty programs are everywhere, and like it or not, we are all invested in them. If you are like 80 percent of Americans, you probably have one or two credit cards that are earning points and seven or more frequent traveler accounts that are open, of which three to four are active across airlines, hotels, and car rental agencies. You may even be among the top echelon of “casual” rewards program players, having responded to a promotion or eaten at a particular restaurant in order to earn bonus points sometime in the last year. And if you’re like most of us, you have tales of great success (like landing a luxury oceanfront suite in Tahiti for your honeymoon) and outrageous failure (perhaps having to pay $250 in taxes and fees for that free ticket) to recount about your journey through the loyalty program universe.

Does it ever feel like you’re playing a game with your preferred airline for those free First Class tickets, one where you can’t stop collecting points even though you can’t always redeem them for the rewards you want? Whether you know it or not, you are.

But what is a loyalty program if not a complex, multilayered, gamelike exercise in achieving status, rewards, and special treatment? Whether you seek free upgrades, a Gold Card, or entrance into the Red Carpet lounge while waiting at the airport, what you are invariably seeking is a win. The underlying drive to keep playing based on a belief that you will someday win those rewards is exactly the type of motivation that gives loyalty programs their power.

Of course, for those who know the game is afoot, the entire frequent flyer program (FFP) experience is radically different than for those who don’t. Millions of players are at this moment counting, calculating, and strategizing their next loyalty moves as readily as if they were playing World of Warcraft, Bridge, or Klondike Solitaire. As loyalty programs bump up against the social Web, countless sites and discussion forums have been launched in order to help players play better and win more. This of course has fed a cycle of increasing complexity in the loyalty program world, thereby creating a marketing opportunity for brands that promise to simplify the process. Capital One’s “No Hassle Rewards” card program is one example; it allows consumers to earn points on their credit cards and offers cash back and airline miles, among other rewards that suit their lifestyles.

The Future of Loyalty—Frequent Flyer Games

Unlike most generic loyalty systems, such as those found at grocery stores or gas stations, FFPs have gone far beyond their humble roots as mildly sophisticated versions of rebate schemes. Today’s FFPs make use of a number of key design features torn straight from a hardcore videogame designer’s playbook, including points, levels, badges, challenges, and rewards, to create the most sophisticated form of loyalty that exists between brand and customer.

Traditional Rebate Program	Frequent Flyer Program
Perceived value must be attached directly to rewards (e.g. “buy 10 cups of coffee, get one free”)	Perceived value is attached indirectly to rewards
Purchases are rewarded with credits that may be converted into rewards	Purchases as well as other behaviors and the successful completion of challenges are rewarded with credits that may be converted into rewards
The more points you earn, the larger the reward (at direct cost to the business)	The more points earned, the more opportunities to advance in status and level, as well as a wide range of possible rewards of varying costs
Points and rewards are the only gamelike features	Challenges, opportunities for team play, and complex game design encourage players to continue playing
Other than points and rewards, players are rarely offered a “world” in which their play is recognized and valued	Airports establish real-world opportunities for players to “show off” status and move forward at little cost (once established) to the airlines
Could benefit from a more complex virtual game in which points are empowered through virtual rewards	Could benefit from a more complex virtual game in which points are empowered through virtual rewards

Put another way, while only some consumers have become aware of the game dynamic at play, FFP designers—travel brand marketers—have become thoroughly sentient, launching an increasing number of campaigns that mirror game challenges almost exactly. For example, the United Airlines’ Team Frequent Flyer Challenge of 2008 encouraged customers to register teams in order to track points together over the better part of a year. The offer was a simple promise of status and 50 million frequent flyer points to be distributed among each team’s players.

FFPs are particularly and extraordinarily powerful. They routinely cause players engaged in the game to make decisions that are counterintuitive to their well-being—and checkbook—in order to “level up.” For example, flyers will choose inconvenient or more expensive flights simply to earn points or levels with a particular carrier, even when the direct option was cheaper or more convenient. Some players even opt to take flights entirely for the purpose of earning points or miles in the run up to the end of the year (known as a mileage run).

Thus, one of the most unheralded achievements of the FFP is how thoroughly its designers have altered behavior in real life—not in a parallel virtual world but here and now, with real cash and time. In fact, if frequent flyers didn’t make these counterintuitive choices—and there wasn’t some arbitrage on rewards available—airlines wouldn’t continue offering FFPs.

Even low-cost airlines such as Southwest, JetBlue, and Virgin America have implemented loyalty programs; it seems almost impossible to imagine launching a meaningful travel brand—of any stripe—without one. Therefore, while the raw success of FFPs is self-evident—and their entrenched nature in our culture unmistakable, the real story is often told by the game’s most hardcore players. And in the case of frequent fly-ers, it is told on a site called Flyertalk.com.

Communities of Influence: Flyertalk

Launched in the mid-1990s, Flyertalk is currently the world’s most popular destination for reward program players. The site boasts over 500,000 unique visitors per month and nearly 12 million posted discussion items covering hotels, airlines, cars, credit cards, and every alternative method for obtaining points, rewards, and status. The site’s influence is so substantial in the hospitality industry that most major brands have full-time ambassadors to Flyertalk. Some companies, like travel search engine ITA, even have beta products built and maintained solely for the community.

But it isn’t just the raw number of Flyertalkers that makes them so interesting to travel and tourism brands; it’s their engagement and influenc...

Table of contents

• Praise
• Title Page
• Copyright Page
• Acknowledgements
• Foreword
• Epigraph
• Introduction
• CHAPTER 1 - The Argument for Loyalty
• CHAPTER 2 - Passive Play
• CHAPTER 3 - Social Networks and Leaderboards
• CHAPTER 4 - Funware Mechanics: Points and Beyond
• CHAPTER 5 - Prizes and Games of Chance
• CHAPTER 6 - The Ultimate Funware: Frequent Flyer Programs
• CHAPTER 7 - Know Thy Player
• CHAPTER 8 - The Future of Gamers: Generation G
• CHAPTER 9 - Motivating Sales with Funware: Getting Employees into the Game
• CHAPTER 10 - Everyone Wins: Games in Your Business
• REFERENCES
• INDEX