STATUS, ACCESS, POWER
MLM 4.0: Gamification and the Future of Rewards
In the quest to lure customers from competition and keep them coming back, companies have used customer reward strategies running the gamut from discounts to loyalty cards and free gifts. In the 1980s, airlines changed up the approach with status-based programs that gave customers access to perks and the prestige of being a premier customer. A million and one spin-offs followed.
Today’s mobile technology has opened up new avenues to motivate and reward customers. The latest game-changer is aptly known as gamification, a strategy that uses game elements to incentivize real-world behavior. It’s a field still in its infancy, but one that is booming: Analysts at tech consulting firm Gartner predict that by 2014, gamification will be as important as Facebook for consumer goods marketing and customer retention, and over 70% of Global 2000 organizations will have at least one gamified application available to consumers.
So how does gamification work, and why should direct sales companies take notice?
Gamification strategy is all about incentivizing certain behaviors by using games and game elements like challenges, levels, points, and achievement tracking.
If you are picturing the latest Farmville sequel and are scratching your head at how to incorporate that into a rewards strategy, rest assured that the “game” in “gamification” need not always be so literal, or so complex. At its most basic, gamification is like the brilliant trick every parent has up his or her sleeve: “Let’s play the quiet game,” or “Whoever finishes cleaning first wins,” they say, and suddenly their kids are not only willing but eager to do an otherwise routine task.
For example, in the healthcare industry, companies are using gamification mechanics like tracking and point rewards to encourage healthy lifestyle choices via online portals and applications. In education, challenges and learning quests motivate students to participate in e-learning activities and acquire new skills.
Gamification strategy can be applied to anything from a simple contest to an app to a full-blown website programmed specifically to track and reward customer actions. It can be incorporated into existing marketing strategy or compensation plans or developed as a new campaign. And it can be targeted to incentivize a wide range of specific behaviors. In the Direct Sales world, these behaviors might include buying products on a regular basis, leaving testimonials, sharing information with peers, offering training to downline distributors, and recruiting people to join the organization.
More than just a game
Gamification is powerful in a business sense not so much for the game elements themselves, but how the elements enhance a consumer’s relationship with your company and the way they experience the behavioral choices you seek to motivate.
Take Nike+, for example. To both incentivize running (which leads to product sales of running shoes) and promote customer loyalty, Nike developed Nike+, a tech piece that pops in your Nike running shoes, synchs up to a mobile device app and tracks your running mileage. Nike+ uses game mechanics like tracking, social interaction, digital rewards, and points to motivate real-world behavior. After a run, consumers can upload the data, chart their progress, and plan out future runs. They can also compare their progress with other users and friends, and receive scores and points as they reach their running goals.
The result? Consumers are motivated to run, they get a sense of accomplishment tracking their progress, and when their Nikes wear out they buy new ones so they can keep up with the program. Everyone’s happy (except that overeager newbie runner with the shin splints).
Nike+ not only provides a useful and fun tool, it changes the entire experience of running to be more engaging, measurable and rewarding. This is arguably more powerful at earning customer loyalty than a simple discount offer (that could be undercut by a competitor) or a free pair of laces after your fifth purchase.
Gamification expert Gabe Zichermann argues that rewards that give consumers status, access and power are more effective than simple tangible or monetary rewards, because they meet our greater needs as social, emotional people. Even academic research on consumer rewards and loyalty programs suggests that social relationships may be as effective if not more so than financial rewards to motivate consumer behavior.
Game elements that draw on social relationships are a particularly good fit for direct sales businesses because the industry is so inherently social to begin with; relationships are at the center of every organization and individual success is tied to one’s network of upline and downline people. In effect, a powerful social structure is already in place that game elements can easily tap into.
Some companies do use gamification to connect users to real-world rewards, like money or prizes redeemable by points earned, but gamified consumer rewards don’t even have to be actual tangible objects of monetary value to be effective. Instead, companies might set up rewards like access to exclusive web features based on personal progress, promotion to leadership roles like moderating forums or hosting web events, or public recognition of achievement status.
To skeptics, gamification may sound like yet another tech buzzword or a passing fad that validates a cultural obsession with video games and distractions. However, it is part of a bigger vision that sees value in engaging customers and synching up rewards with their day-to-day behavior, rather than merely throwing money their way as motivation. When used effectively in an organization, gamification is a powerful strategy to help incent the right behavior, increase customer interaction, and promote retention.
Up next, we’ll lay out specific gamification examples that can boost Direct Sales businesses.
Henderson, Conor M., Beck, Joshua T., and Palmatier, Robert W. “Review of the theoretical underpinnings of loyalty programs.” Journal of Consumer Psychology 21.3 (2011): 256-276.