Tuesday 19 July 2011

The problem with foursquare...

CrunkedFoursquare is seen by many as a template for a new style of loyalty programme - trading physical rewards for virtual achievements in the form of badges and showing how tiering can be scaled horizontally, not just vertically. Whilst these achievements may technically be valueless, they do seem to provide value for Foursquare with various reports indicating that it is still the King of location based services with up to 5x more check-ins than rival, Facebook Places.

But as a (reasonably) dedicated Foursquare user, what's becoming clear is that the design of foursquare is really less about retention and more about acquisition. Sure, I'm still playing so it's done a great job of keeping me engaged - in essence retaining me. However at an individual behaviour level it is less convincing.

The challenges in terms of collecting badges ensures I continue to check-in, but each badge, once attained is essentially done. I don't need to do anything more for that badge, it's mine, forever. The same for mayorship. If I don't do anything more (and if no-one else checks in) then I retain that ranking.

Simplistically, Foursquare is a behaviour change acquisition programme, not a behaviour change retention programme.

Foursquare probably don't care too much - they don't need me to exhibit the behaviours necessary for the "Crunked" badge more than once, they just want me to keep checking in and to chase that next badge.

However, as we begin to echo these kinds of gaming and recognition mechanics into mainstream loyalty programmes, we need to consider the consequence of recognising a behavioural achievement only once.

We can see this consequence in traditional loyalty programme tiering. While tiering can be quite limiting in that it normally only recognises one behaviour - that of spend - it is also limiting in that it "tops out" with many scheme operators seeing customer behaviour begin to tail off once a customer has reached a designated tier level. In essence they have achieved it.

This isn't because the customer has given all they have, instead the customer has simply moved on to a competitor programme. They are "gaming" the whole loyalty eco-system, racking up recognition across different brands as they've exhausted the challenge (and the benefits) within that one brand.

This isn't just limited to loyalty.

Banks see the same behaviour around card fees. Where a customer is charged a fee but can essentially "earn out" that fee based on spend, there is a noticeable drop in spend once this earn out period has been met. Customers haven't stopped spending, they have just reached the goal or challenge set, even though this wasn't the intention.


Given that customers have a psychological need to finish what they've started and a competitive streak to do better, it doesn't make sense to limit achievement recognitions to a once only event. Instead, we need to make sure that they can keep progress, either to maintain that recognition or to lift it further.

Looking across to games, they recognise different levels of achievement for the same behaviour. The iPhone game Cogs for example provides a bronze, silver and gold recognition for different behaviours such as the time taken or the number of moves required. This means even when the task is complete, I can usually do better.

This isn't to say that one off recognition isn't important. Customers need to feel they have achieved something, "banked" it and can move on. However, if this is the only sticky retention mechanic a programme uses it risks losing focus on key, repeatable behaviours.

Behaviour isn't simply changed, it is maintained.

A great example of recognition which looks to maintain behaviour (if slightly unique) is United Airlines acknowledgement of frequent flyer, Tom Stucker, who has racked up 10 million miles on their programme. In recognition of this amazing feat, Stucker was given a unique (for the moment) titanium loyalty card and has had his name put on the side of a United Boeing 747. Whilst a tearful Stucker was overwhelmed by this recognition, the problem for United is they have just raised the bar again. There is now a new challenge to be achieved and you can bet there are some out there with their eyes set on it.

As we start to democratise our loyalty programmes, bringing in horizontal recognition and increasing the engagement through broader challenges and rewards we need to make sure we don't limit a programmes growth by letting a customer simply tick the box and move on.

Wednesday 6 July 2011

Gamification expands the loyalty toolbox

I spoke at Marketing Week Live last week on the "Future of Relationship Marketing". It's always great speaking about the future of something as in theory nobody can question you; by definition the future is yet to happen - so I could be right...

However, whilst the topic was on the future, in reality the future is already happening, we just aren't seeing much of it within mainstream loyalty programmes (yet).

As I've written about previously, the presentation was all about Interaction Loyalty and the impact that recognising every interaction - every check-in, status update or product review - has on loyalty programme design and specifically reward and recognition.

Given the requirement to recognise activities which don't always have a nice neat margin attached to them, we also now need some different tools in the box to support this - and this is where gamification thinking comes in. Through gamification we can exchange rewards with actual value for rewards with social value and link recognition not just with rewards but also with core motivation. However, what's interesting to note is that gamification is simply a set of tools within Interaction Loyalty - not a new definition of loyalty itself.

Embedded below are the slides I used, feel free to review and comment.