Gamification and AI: The Future of Customer Loyalty and Behavior Change
Gamification is the use of game design elements in nongame contexts, and some only half-joke that it has been popular since Moses came down from the mount with the fifteen commandments. It works for the obvious reason that people are more likely to engage in an activity if it’s fun.
Gamification was supposed to shoot the moon circa 2010 with Angry Birds and Farmville and soon Candy Crush ruling the internet and addicting a generation to social games playing. At that time, numerous vendors splashed onto the market with fancy new sales- and employee satisfaction-boosting gamification platforms. However, it turned out that effective gamification was difficult to execute, and poor design hamstrung most gamification efforts (at the time, Gartner estimated that 80 percent of all efforts would fail).
In the decade since, gamification has attracted little attention, understandably, with a few noteworthy companies developing standout programs.
Today, companies are projected to spend between $19 and $37 billion on gamification globally by 2027, with the numbers varying widely, given the difficulty of defining gamification in all its applications. And now, with AI coming into play in gamification, as in everything else, marketers are watching closely and wondering just how future gamification efforts will unfold.
Executing Expertly on Gamification
Gamification projects must, of course, align with business objectives as expressed in marketing strategy along with an understanding of the target audience’s preferences, motivations, and pain points so that a gamified experience truly resonates with them. But with this basic foundation solid, it’s fair to say that expert gamification breaks down to one word.
Dopamine.
Lighting up the feel-good centers of the brain is 75 percent psychology and 25 percent technology. For it’s not just about competing to win in some game, it’s about sharing how you won. That’s what drives most game participants today to level-up in a company’s game and leave with a positive brand association. It’s the sharing part.
No Challenge Is Worthwhile Without “Ownership”
Participants want to feel that they have a stake in the game, that they are playing a role in setting their own goals and striving for them. So, the feeling of ownership becomes the third critical element in successful gamification. (Mechanics of effective ownership are Exchange Points, Virtual Goods, Building from Scratch, and Collection Sets.) This feeling of ownership also means wanting to discover what might happen next in the game. (Mechanics of effective gating are Easter Eggs, Random Rewards, and Rolling Rewards.)
A great example of this is Hilton, setting their loyalty program where frequent travelers take ownership of their progression through silver, gold, and diamond tiers, wanting to know what’s required of them to progress to the next level.
Increasing Customer Loyalty
On a marketer’s list of metrics, “driving new behavior” doesn’t always make the top five. But it can be a powerful tool for just that. As described by Mark Weinstein, CMO of Hilton, “When you’re trying to figure out how to get a customer to try a new behavior that’s adjacent to what they’ve done before, we see gamification working really effectively.”
“I think that we as humans are trained to play the game, to climb the ladder, and so people ask us here at Hilton, ‘I’ve done, Silver and Gold, now I’m Diamond. What’s my reason for staying one more time? What do I earn next?’ So, we said, ‘Okay, let’s have bonuses for people as they unlock more activity beyond the existing tiers.’ And what we saw was incredible: a high degree of elasticity from those top-tier customers. Wherever we set the goalposts, they suddenly achieved it! The vast majority of consumers, without admitting it, are highly susceptible to changing behavior if the goalposts are changed to move them along that journey. We want to be rewarded for our behaviors. Each milestone becomes a thing. And so, we learned that if you have a top of the mountain for those who are climbing the mountain, it actually is a disincentive. What you need to do is keep giving them new reasons to engage with you and meaningfully unlock more value.”
Progressive rewards based on purchase history and performance
AI-driven gamifications can offer progressive rewards and incentives directly linked to the player’s purchase history. So, for example, an individual player who has made purchases from a brand with some consistency could be alerted right in the game to the opportunity to win even more points based on continued purchases—locking in purchase behavior and combatting churn. AI can determine precisely which schedule of points awards is going to best increase the customer’s lifetime value (LTV), adjusting on the fly as needed to always be dynamically balancing LTV.
Beyond historical purchase behavior, AI can also make the gamification experience more dynamic by setting the games’ challenges and difficulty levels based on the players’ performance and initial engagement levels—instead of on static, pre-programmed progression schemas. That is, AI can dynamically adjust the game’s difficulty level based on the players’ performance, balancing effort with reward for each player, ensuring players are given an experience attuned to their cognitive and emotional states as they are playing.
As we have seen, much of technology-driven gamification is still in the product development and marketing hype cycles. But it is promising (and beginning to deliver) more dynamic in-game interactions with players and becoming an increasingly valuable utility for marketers in the years ahead.
About the Author
Mitch Duckler is founder and managing partner of FullSurge, a brand and marketing strategy consultancy based in Chicago, Illinois. He has more than 30 years of brand management and management consulting experience at Unilever, The Coca-Cola Company, and Prophet. His client base includes Fortune 500 companies and numerous world-class brands, such as ExxonMobil, Deloitte, Cox Communications, Manpower Group, BlueCross & BlueShield, LexisNexis, Caterpillar, Abbott, and Hyatt Hotels.
Mitch is also a frequent speaker on key topics related to brand and marketing strategy. In 2021, he delivered a TEDx talk—Discover Your Differentiator—at the Cal State-Fullerton TEDx event. Over the past 20 years, he has spoken at dozens of high-profile events across five continents and is a frequent interview guest on brand and marketing related podcasts.
Mitch is a faculty member of the Association of National Advertisers (ANA) Marketing Training & Development Center, where he facilitates workshops for member organizations on key topics related to brand and marketing strategy. He also chaired the American Marketing Association’s (AMA) Annual National Marketing Conference for four consecutive years.
Additionally, Mitch has written articles on brand and marketing strategy for top industry periodicals, including Branding Magazine, Brand Quarterly, BrandWeek, Marketing News, and Marketing Management.
He is the author of the bestselling book, The Indispensable Brand (2019). His new book, The Future-Ready Brand: How the World’s Most Influential CMOs are Navigating Societal Forces and Emerging Technologies, will be released May 2024 by ForbesBooks.