Game My Brand

Gaming Loyalty

Posted in Uncategorized by timjonesplanner on January 25, 2011

Most of the thinking behind ‘gaming brands’ is in aid of brand planning, the idea of defining a brand as a game vs. games as executions. However, loyalty is one area that gaming principles can make a very tangible contribution. Are Nike+, Fiat Eco-Drive and Four Square loyalty schemes? I think so, and the implications are explored below.


HAPPY CO-INCIDENCE?

Many of today’s most successful loyalty schemes are influenced by gaming theory. Weather they realise it or not, modern marketers are building incentive programmes that tap into one of our most basic instincts – our drive to game. Applying the principles of gaming to loyalty schemes can result in exciting, innovative, and effective ways to influence consumer behaviour.

HOMO-LUDEN – THE PLAYING MAN

Johan Huzinga coined the term ‘homo-luden’, the playing man, meaning a species that is defined by play. It’s easy to see why, games have been part of our culture for as long as we have records. Today, gaming is the dominant force in commercial entertainment, revenues from games overtook both movies and music in 2008. Gaming is part of our cultural DNA.

So what do we mean by a game? Jesse Schell gives a good definition:

“A problem solving activity approached with a playful attitude”

This definition captures the essence of all games, they are irresistible problems that are fun to solve. Whether you are trying to solve the Sunday cross word, or trying to unlock a super magic dark elf thing on World of Warcraft – solving these kind of problems is fun. It turns out there is a good reason for our love of games. Our brains dopamine circuits reward us for problem solving, we get an emotional high when we ‘win’.

As a species, we hard wired to game.

GAMES DRIVE BEHAVIOUR CHANGE

Games are characterised by behaviour, they require a series of actions that the player must exhibit to solve a certain problem or meet a particular objective. Complex games break an objective into smaller stages, or ‘levels’, and reward progress with some kind of scoring system. This structure provides the player with a series of emotional highs for each little ‘win’, establishing a behavioural pattern that the player must exhibit to progress though the game.

Games are systems that drive behaviour change, which is exactly what loyalty schemes are.

‘GAMING’ PRODUCT PURCHASE

Frequent flyer programmes are great examples of loyalty schemes that game product purchase. They have an objective (collect points) levels (gold, silver etc.), rewards (lounge access, upgrades) that all governed by rules. The result is something truly amazing, over 80% of frequent flyer customers have admitted to taking unnecessary flights in order to gain air miles. And its not just about material rewards, most of these air miles will never be redeemed, on average, we save five times more than we spend. We seem to prefer points to free flights. This is important, these kind of games change our behaviour, to the point where we behave irrationally. I say irrational because gaming behaviour is not explained by material rewards, but by the emotional rewards that winning brings us.

Gaming principles can be successfully used to structure more effective loyalty schemes. However, as more loyalty schemes begin to operate in this way, one scheme will become indistinguishable from another, with consumers owning a loyalty card for every brand in the category. Modern loyalty schemes ‘game’ more than product purchase, they ‘game’ the brand benefit.

‘GAMING’ THE BRAND BENEFIT

Over the last few years we have seen the rise of a new kind of loyalty scheme. Nike+, Fiat Eco-Drive and Foursquare are examples of loyalty schemes that are built on gaming principles. Unlike frequent flyer programmes, these schemes have moved beyond ‘gaming’ product purchase, and actively help consumers game the brand benefit.

Nike is a sports brand that ‘champions the needs of athletes everywhere’, specifically, Nike makes products that help athletes improve their performance. Nike+ is a loyalty scheme that ‘games’ improved running performance.

Nike+ consists of a small chip that is inserted into a Nike running shoe, the chip records distance, speed, pace, run time, and calories burnt. The data is uploaded to a website where the user can see their running performance over time. Nike+ does two important things, firstly, it provides a scoring system that gives runners way to measure their performance. Secondly, Nike+ sets the runner challenges and objectives that motivate the them to improve. Nike+ has effectively ‘gamed’ running, turning a simple activity into a game that has an objectives, points and rules.

Nike+ drives loyalty by building a game that consumers invest in over time, with every km run, consumers are working towards a goal, their behaviour being psychologically re-enforced with every point earned. Brand switching is discouraged, the progress recorded and the points gained with Nike+ cannot be transferred, if consumers want to switch brands, they must loose the time and effort invested. Nike+ also drives cross selling and up selling. Nike running equipment is positioned as vital tool in meeting each challenge, the CRM system uses the runners data to target new products at opportune moments.

APPLICATION

Perhaps most importantly, modern loyalty schemes like Nike+ use gaming principles to help consumer’s ‘win’ in a way that benefits the brand. Nike+ helps consumers improve their running performance, Fiat Eco-Drive helps consumers drive more efficiently, and Foursquare aids socialising – all in exchange for brand loyalty.

Applying this thinking to a hypothetical example shows us that all loyalty schemes can be ‘gamed’. One could imagine B&Q gaming home improvement in a similar way to Nike+. B&Q might provide it’s customers with the online facilities to earn points for DIY tasks, painting a bedroom might earn you 10 points, building a shed might get you 100 points (points could be self awarded or policed by a family member, or even a neighbour). Points might be redeemed against BQ products, products that the consumer would use to earn further points and discounts.

Such a loyalty scheme would not only drive consumer DIY behaviour, increasing the consumer’s requirement for DIY products, but also reward DIY behaviour with B&Q product discounts, driving repeat purchase.

GAME ON

Gamed loyalty schemes leverage our innate instinct to ‘game’ the world around us, they drive purchase by leveraging emotional rewards to psychologically re-enforce the desired behaviour. By incentivising more than product purchase, ‘gamed’ loyalty schemes can root themselves into consumers lives, helping them achieve a personal goal in return for brand loyalty.

This is a piece I recently wrote for the MMC, which can be found at: http://bit.ly/hhgm7k

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