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Guest post by: Mark Johnson Become an Author

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Gaming is hot. And according to research reports, it’s poised to get hotter.

· According to Neilsen, games are the second most frequent Internet activity for Americans after social networks ---more popular than email --- with Americans spending an estimated 906 million hours per month on social networks, 407 million on games, and 329 million on e-mail.

· M2 Research reports that the market for gamification will grow to $1.6 billion in 2015, from $100 million in 2011.

· And Gartner contends that by 2015, more than 50% of organizations that manage innovation processes will gamify those processes, and that by 2014, a gamified service for consumer goods marketing and customer retention will become as important as Facebook, eBay or Amazon with more than 70% percent of Global 2000 organizations having at least one gamified application.

And here are some really eye-opening stats as revealed at the recent Los Angeles Games Conference: Over 50% of gamers are now female, with 30% of the gamer population now being over 45; there are 40 million active social gamers in the U.S. (they play at least 1hr/week) and over 200 million gamers on Facebook.

These findings have great implications for brands in terms of how they can/should fit gamification most effectively into their loyalty marketing strategies. The important point for marketers to realize is that playing games is no longer just for people’s entertainment. Increasingly, marketers are using gamification --- or more specifically, the psychology of gamification ---- to attract, cultivate and retain brand enthusiasts over the coming years.

Some people believe that gamification is just adding badges or points to their website. And yes, while some brands have used check-in programs such as Foursquare on that elementary level, they are missing a valuable opportunity to truly motivate and incent desired behavior ---- long term. This is because at its core, gaming is all about modifying people’s behavior by tapping into the psychological trigger(s) that prompt us to take action and keep us interested and engaged.

In a recent blog post, Michael Wu, Ph.D., Principal Scientist of Analytics at Lithium, discusses the science and psychology behind gamification. The goal of game dynamics, according to Dr. Wu, is to drive a user-desired behavior predictably. Therefore we must understand how humans behave in order to understand game dynamics. Using the Fogg Behavior Model, developed by Prof. B.J. Fogg, experimental psychologist of Standford University, Dr. Wu explains that any desired behavior is divided into three necessary factors that must fire simultaneously: motivation, ability and trigger. So, in a game players must be given a motivation to do something (emotional investment, promise of reward, etc), the ability to complete the action (ability can mean skill, but it can also mean having the time or the game options) and a trigger (a cue) to complete the action.

The timing of the trigger is critical: An appropriate trigger at the right time leads to the predictable behavior and makes the individual feel good about doing it. A poorly timed trigger, on the other hand, might not produce the desired outcome and may cause the individual to get annoyed, frustrated, and develop a negative emotion about the activity.

Wu contends that when the timing is right, game mechanics/dynamics have the magical power to turn boring chores into desirable activities because:

1. Game dynamics use positive feedbacks (e.g. points, badges, status, progression, customization, surprises, social factors, etc.) to build up the users’ motivation.

2. They increase the perceived ability of users by making difficult jobs simpler and more manageable;

3. Game dynamics place triggers in the path of motivated users when they feel the greatest excess in their ability. That is, triggers that prompt the user for action are designed to bring about the convergence of motivation, ability, and trigger all at the same moment.

Look at Weight Watchers for example. While we know that members lose weight because they ultimately learn the value of healthy eating and regular exercise, that’s not the part of the program that most resonates with people. Chances are if you ask Weight Watchers members about their successful weight loss they will talk excitedly about topics related to the company’s “game” approach to weight loss such as points, levels, challenges, leader boards, etc. Playing the game is what members most identify with reason they’ve shed the pounds --- not the lifestyle change of diet and exercise. Yet, it’s the gaming that successfully modified their behavior.

Gaming is also used successfully at AJ Bombers, a Milwaukee-based burger joint. They had successfully used Foursquare --- a location-based mobile app --- for a while. Playing the game, guests "check in" at the restaurant and earn badges based on a variety of factors, including frequency of check-ins, etc. As co-owner, Joe Sorge, told Loyalty 360, sales of menu items promoted on FourSquare have risen roughly 30% since the restaurant began using the service.

But Bombers discovered that it’s lonely at the top for the Mayor (AKA Jim Simon) --- and that’s a problem for Jim and for the continued enthusiasm for Foursquare as well. As Sorge explains, it’s really tough to dethrone Jim because he compiles about 16 check-ins per month. “That difficulty leads to a bit of check-in fatigue for our regular customers who are Foursquare users because they feel they could never reap the rewards of the program.”

To remedy the situation, Sorge implemented a “Loyalty Royalty” program. They use their dashboard utility to track the 3 Foursquare users with the most check-ins for the last 30 days. Then, the very next month, those customers can help create that month’s Loyalty Royalty menu --- a menu built by them, just for them, whenever they visit AJ Bombers. Explains Sorge, “They name the items themselves and can even create and tweak the recipe themselves. As a bonus, they can also select one day that month where their menu item is featured and available to all guests of the restaurant --- which further helps to spread awareness and fosters adoption of Foursquare in general.”

Starwood Hotels is also incorporating gamification into their loyalty program. According to their website, members of the Starwood Preferred Guestprogram “can collect more than just badges on Foursquare” when they link their SPG and Foursquare accounts ---- they get cool perks like 250 bonus points per check-in and chances to unlock a hidden Free Resort Night Award.

It’s also important to note that the benefits to Starwood are huge. When SPG members opt in to the Foursquare program, Starwood is able to access a myriad of information about their customers’ travel activities ---- such as what cities they go to most often, the hotels they choose, etc. This is just the type of customer-centric information that will help Starwood enhance its loyalty marketing efforts.

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