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2013: The Year of Gamification

Kris Duggan is CEO and Co-Founder of Badgeville.

Over the past year, gamification has clearly evolved from an untrusted and misunderstood “cool new thing” to become a staple of any serious business success strategy. If recent news and analyst insight is any indication, 2013 is shaping up to be The Year of Gamification, as desire for this now must-have business component reaches a fevered pitch among companies and penetrates our everyday experience.

As companies of all types examine ways to incorporate gamification into both their internal and external operations, it’s a perfect time to peer into the gamification crystal ball to see where the industry is headed in the coming year. In 2013, expect the following trends to emerge.

Gamification will be the Big Data App for Business.
Gamification generates a wealth of behavior data, allowing organizations to gain valuable insights into specific customer and employee activities across their digital touch points, including their website, mobile app and more. Companies will use this data to determine what content and experiences are high-value versus those that are not, and see how customer actions correlate with business success. With gamification, they’ll be able to clearly see the behaviors employees perform across applications and truly understand what motivates them, with a closed-loop process to further incentivize the most valuable behaviors with engagement mechanics.

Poor design will sink many Gamification initiatives.
In November 2012, Gartner announced that, although they expect 70 percent of Global 2000 organizations to add at least one gamified solution by 2015, they see 80 percent of gamification applications failing to meet business objectives by 2014.

The reason? Poor design.

The fact is that getting the technology right is a small piece of the puzzle. Understanding loyalty, behavioral psychology, employee productivity and business process management is critical to designing an effective, sustainable gamification program.

And, that’s still only part of the equation — an organization must also have a crystal-clear understanding of the pain points their gamification program must address and clearly defined metrics to determine whether it’s measuring up. Once a program launches, it needs proper support to focus its growth and ensure continued success. With gamification programs scaling so rapidly, it’s no surprise that the ones built on wobbly underpinnings will begin to collapse.

Gamification will become a core part of system integrators' transformation programs.
“Serious businesses cannot ignore the transformative possibilities of gamification across their enterprise,” says Carter Lusher of Ovum Research. Why not? Gamification is, at its heart, about transforming behavior. And behavioral change, according to new research from Capgemini Consulting and the MIT Center for Digital Business, is key to accelerating large-scale digital transformation.

The Digital Advantage: How digital leaders outperform their peers in every industry details how digital leaders invest significantly in the soft side of digital transformation, building and sharing a digital vision, engaging the workforce in understanding that vision and ensuring ownership and accountability of the transformation.

Many top system integrators have already begun partnering with leading gamification vendors to expand gamification across the Global 1000. Accenture, Deloitte and other firms already have their own gamification practices in place. Capgemini, one of the largest consulting agencies in the world, recently announced a partnership with Badgeville to accelerate gamification use in their digital transformation practice.

Gamification will help collaboration tools achieve their promise.
At the end of 2011, Forrester reported that, despite investments in social collaboration software over the previous five years, only 12 percent of workers were actually using it (via ZDNet). Expect 2013 to be the year that social collaboration software investments will finally pay off, thanks to gamification layered on top of these installations to boost their adoption, engage users and influence, analyze and reward behavior on these apps.

Software providers will turn to Gamification to reduce customer churn.
Software giants continue to move toward cloud distribution and away from traditional software licensing. In fact, Goldman Sachs predicts a 20+ percent compound annual growth rate in the SaaS market from 2011-2016 versus just 7 percent for on-premise software. As a result, software revenue models are becoming more dependent on customer renewals, while also more susceptible to customer churn: if customers don’t use software, they won’t renew it.

And the stakes are high: according to a recent Goldman report, just a 2 percent increase in customer retention results in a 28 percent increase in revenue and a 20 percent higher valuation. That means a public SaaS company with $100 million in revenue and $500 million valuation would see a $100 million increase in its valuation with just a 2 percent increase in customer renewals.

Gamification has been proven to neutralize churn and boost retention. By encouraging and incentivizing software use by engaging users, gamification will become the loyalty application for SaaS providers. Software companies that care about usage and renewals will have to incorporate gamification into their products in order to compete.

Internal Gamification will improve employee productivity and retention.
The increased use of gamification within organizations to influence and reward employee behavior will drive operational efficiency and employee retention as a result. Employees will have a single environment that aggregates and showcases their achievements, like hitting sales goals, satisfying customers with superior service, completing training programs, becoming mentors, achieving tenure milestones and more.

By publicly acknowledging and rewarding employees for their achievements and showcasing those rewards, gamification will also help improve employee morale and, subsequently, retention. Plus, by surfacing real-time behavior information, gamification speeds up positive feedback loops between managers and direct reports. Managers will be able to more effectively give immediate feedback instead of having to wait for end-of-quarter reviews.

The CMO will increase focus on Gamification for loyalty and engagement.
Today’s hyper-connected, media-rich world offers unique challenges to marketers. CMOs are kept awake at night by the burning question: “When so many sites, devices and apps compete for audience attention, how do I keep customers from abandoning me?”

In truth, many brands don’t: more than 60 percent of customers take their business to a competitor after completing a business relationship with a brand (KISSmetrics). Another 72 percent of customers never log in to interact with user-generated content tools, according to a November 2011 Gartner report (“Top 10 Issues With Proprietary Web Communities”). Facebook itself admits that only 16 percent of fans ever see posts from a Facebook brand page. Perceptive CMOs realize engagement is critical, yet it’s becoming increasingly difficult to rise above the noise through standard means.

Gamification has become a powerful engagement tool to cut through the clutter, boosting engagement in multiple venues, such as a 124 percent jump in votes in a customer community (Marketo), a 215 percent uptick in weekly retention and 120 percent increase in top-user participation (Everyday Health), and a 3000 percent rise in buy clicks (sneakpeeq).

The media landscape is not getting any less cluttered; in fact, it’s getting worse. Marketers will turn increasingly to gamification to counteract the static.

Gamification will "cross the chasm."
Gamification has gained the attention of leading organizations worldwide because it has proven to be a genuine driver of business metrics where those objectives rely on human behavior. In 2013 gamification will “cross the chasm,” as Geoffrey Moore calls it, making the leap from being the province of early adopters, enthusiasts and visionaries, to being standard operating procedure in the plans of pragmatists in the general business population.

From industry leaders in financial services, media and entertainment, education, healthcare, retail, technology, hospitality and big oil, there won’t be an industry or audience that gamification doesn’t touch in 2013.

There’s little doubt that 2013 will be the year that gamification goes mainstream. Successful strategies will hinge upon formulating a complete plan (for both launch and ongoing management), understanding the key metrics to be addressed, setting realistic expectations and developing the platform or partnering with a provider whose capabilities and expertise align with business objectives. Whether aimed at internal or external audiences, gamification can be the loyalty and engagement engine that drives business growth in 2013.

The views expressed are those of the author and do not necessarily reflect the views of BusinessNewsDaily.

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