Thursday, 4 June 2009

The Game of Life


Guess a number between 1 and 100…

5? 37? 56? 82?

I’ve no idea what you’ll have selected but I can guess it will be pretty random so lets change the rules a little.

What if I ask everyone reading this blog to guess a number between 1 and 100, but the person who’s guess is closest to two-thirds of the average value selected by everyone else wins £100.

Now what number have you chosen…

Well to save you time, it can’t be over 66 (2/3 of 100 = 66.6)- but then if everyone works that out we have a problem as no one will guess more than 66. So do you assume that everyone gets it and go for two-thirds of 66, which is 44? But then you might not be the only one thinking this way…

Interestingly it seems that for most normal people the average value comes out around 22 and indeed in one test run by Danish newspaper Politiken, over 19,000 people took part and the winning value was 21.6 with the prize of 5000 Kroner.

What’s interesting about this is that with a reasonable incentive ($1000) people actually thought about how to achieve this reward by working out what other people would be thinking.

They essentially came up with a strategy to win and changed their behaviour to follow it.

This is known as the “Two-Thirds Game” and is just one example of Gaming Theory (and there are lots of other games too).

It shows that with an element of competition and an incentive you can begin to direct behaviour. Games like Dollar Auction also show how people will actually take a course of action which seems irrational just to not lose the game (or the most money).

This isn’t just about games or mathematics - this approach can actually be used in the real world to change peoples behaviour

A great example of this was in an article on which discussed how using gaming elements could change or encourage behaviour. In one example a developer launched a social networking application called “foursquare” which allowed people to track places they visited and publish these to friends. The application awarded points for visiting the same place multiple times in a day and badges for roaming far from home, with a leader board to provide an element competition. The result - he says “We created a monster here”, people were racking up points and checking in dozens of times a day.

And its not just for entertainment. The classic loyalty example of the frequent flyer programme which had people making return flights for no other reason than to achieve the required points to reach a tier upgrade shows the lengths people will go to to reach a goal and gain a reward.

We’ve been doing this for years one way or another within channel and employee programmes, using league tables and comparisons to create competition between participants.

A more tangible and better design example however is that used by LTSB for an internal employee ideas programme. As I’ve discussed previously, this programme known as the Innovation Market creates a game out of ideas, using a currency and a stock market type environment. As James Gardner, Head of Innovation and Research at LTSB says “we coupled ideation and innovation together in a way that's fun. It was an interesting revelation to us”.

An example of a loyalty programme using gaming is that run by Ladbrokes, a offline/online betting company in the UK with its OddsOn! programme. Within this scheme customers earn points for every £1 of money staked but can then redeem these points for bonus vouchers which can increase the winnings of any bet by 5%-20%oddson. In essence these vouchers are acting as wild cards, letting punters change the odds in their favour. How and when they use this voucher will differ by customer, but it changes the rules and allows the loyalty programme to actually become part of the game.

At a recent O'Reilly Emerging Technology Conference, Jane McGonigal, a well known game designer and researcher said

"Games create drama and excitement - we've done that for years with videogames, and now we can apply that thinking to the rest of life."

I have to say I agree with Jane and think that applying the gaming approach specifically to loyalty programme design could have dramatic effects on engagement and activity.

There is no denying that at a basic level, the loyalty programme itself could be viewed as a game, with rewards for certain activities and features such as tiering to encourage customers to “play the game”. Indeed, some programmes include features such as progress charts – showing a participants distance from the next reward.

Whilst these features can all be somewhat motivating to the individual, it’s not going to unlock the competitive streak you’d see if your friend was getting there quicker.

Indeed, as social media expands into more mainstream loyalty programmes, this opens up the possibility and acceptability of peer-to-peer comparison and the naturally competitive nature this will engender if the right types of gaming elements can be created.

I think using gaming to motivate and change customer behaviour is an interesting concept and applying it within the context of a loyalty programme could be, quite literally - game changing.


Peter Korchnak said...

Using games to motivate loyalty and encourage repeat business works, exactly as you describe. There is a problem, however:

If you use these loyalty or reward programs, you're no longer selling the benefit of your initial product, but rather the benefit of the reward itself. Are you satisfying the need your product/service is addressing or are you satisfying the need to get the reward? The air miles example is a great case in point: people didn't fly to get from place A to place B, but to win reward points.

The result is simply selling more stuff, not serving your customers better. Consumption for the sake of consumption. Monstrous, indeed.

Anonymous said...

Hi Peter - I don't disagree with you and I think this is a danger for any loyalty programme. If you don't align the programme design with your brand positioning then you are likely to attract people who aren't your core customers and so will be loyal only to the promotion or programme rather than the product or service. I don't think using gaming elements changes this approach, it just means you need to think about how to attract and engage consumers in a way that fits with the brand and in some ways using gaming techniques may help.

In the example I used for Ladbrokes, the reward works well in actually enhancing the overall sales process, not detracting from it.

With regard to consumption for consumptions sake, I agree with your concerns, but they could be applied to all marketing. Anything that encourages someone to buy something they didn't really need could be put in this category.

However taking a flight simply to rack up enough points for a tier upgrade would be obscene, if, I would expect, somewhat rare.

We can't however lose sight of the fact that everything can be used for commercial or alturistic purposes and there is an increasing number of "green" loyalty programmes being established of which these techniques could equally be applied and if it drives up "good" behaviours then thats a positive.

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