What Is Gamification And Why It Matters In Business

Gamification borrows key concepts from the gaming industry to encourages user engagement and experience. Some of those concepts include competitiveness, mastery, sociability, achievement, and status. The application of game principles to the business context, companies can design products that are more enjoyable to users and customers.

Why gamification matters in business

At its core, gamification involves taking a mundane task and making it more enjoyable. It does this by borrowing key concepts from the gaming industry that encourages user engagement. These concepts include competitiveness, mastery, sociability, achievement, and status, to name a few.

This increased user engagement is largely driven by rewards. In the context of gamification, rewards are in turn driven by game mechanics such as badges, points, levels, and any other factors which give performance feedback to the user and increase a sense of accomplishment. 

By tapping into basic human emotions and desires, businesses can use game mechanics to educate, entertain, and inspire employees and consumers alike.

Breaking down gamification

  • Gamification attempts to bridge the gap between a potential client and an actual client by making mundane tasks more enjoyable.
  • Gamification encourages consumer interaction with a brand through point and status-based loyal programs.
  • Gamification is subject to the same risks that all games possess. Namely, that consumers can become addicted and exploit the game at the expense of others.

Applications of gamification

Perhaps one of the most well-understood application of gamification is in the frequent-flyer schemes offered by most airlines.

The aviation industry harnesses well-known game mechanics in their schemes with frequent-flyer points, membership levels, and their associated privileges.

Though few will associate travel with playing a game, it is hard to deny that game mechanics are a significant reason for the success of frequent flyer programs worldwide. 

Gamification is also used in marketing to driver consumer engagement in much the same way as it is in aviation.

Here, gamification is used primarily to build brand loyalty through competitions, ranking lists, and loyalty programs that utilize point systems.

The goal, as in any game, is to keep the user playing. In this sense, the gamification of marketing strategies is very well suited as it increases the odds a consumer will be motivated long enough to buy.

The incentivized reward program used by Starbucks is a classic example of following up with customers through gamification.

Loyal customers receive stars with each purchase which are redeemable for free food and drinks. Loyalty program members also receive gifts on their birthday and can achieve certain levels according to how much they purchase. 

Gamification can also involve contests to drive sales. In McDonald’s Monopoly Time, the fast-food giant offered cash prizes in the millions for customers who held the relevant game pieces.

The only catch was that the consumer had to dine-in at one of their many restaurants to collect them.

Drawbacks of gamification

While gamification seeks to emulate the positive emotions associated with game playing, there cannot be winners without losers. In other words, some consumers will inevitably associate the game with a negative experience.

Businesses that use gamification in their marketing strategies must also strike a careful balance. Games must be effective in that they should direct consumers to take a specific course of action.

They should also encourage positive associations with a brand and be designed in such a way that consumers cannot exploit loopholes and win at the expense of others.

Games must also be non-addictive – particularly those involving products or services that are considered high-risk such as gambling and eating.

The hook model

The Hook Model is a framework designed by Nir Eyal, author of the book “Hooked” which consists of four elements: trigger, action, reward, and investment. This is a process of gamification that helps startups create habit-forming products. 

An example of Gamification and the priciples of the gaming industry applied to business is the hook model, by Nir Eyal. This is a process and methodology which creates habit-forming products.

To prevent from creating products that are ethically wrong, Nir Eyal proposes the Manipulation Matrix:

Manipulation Matrix

In the Manipulation Matrix, in order to know whether a product can be gamified you want to be in the Facilitator box, where it both improves the users’ lives and the maker also uses it.

The worst case scenario, and a no no in terms of using gamification in designing your products, is if you build products that make users‘ lives worse, and the maker does not use the product.

Of course, the most difficult part here is defining in which way the product might improve the user‘s life.

Key takeaways

Used properly, gamification can be an affective business tool, that helps companies connect the core problems customers experience, built into the product‘s dynamics, to enhance the experience and value of the product for users and customers. This in turn, helps to build a more sustainable business model.

It is important to use gamification ethically, to build valuable products that improve users‘ lives.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"