The first article from the series explains the psychology and brain patterns responsible for successful gamification in online promotions.
Gamification is defined as “the process of using game mechanics and game thinking in non-gaming contexts to engage users and solve problems.” Since the very beginnings of gamification a decade ago, it has grown into a great business area with a constantly increasing market value. Real examples of gamified online promotions are all around including promotion strategies from the biggest e-commerce giants.
Starbucks uses gamification to boost sales and deepen customer loyalty. After signing up to the app, active Starbucks clients earn Stars which are later exchanged for free products and discounts. Available rewards depend on a customer’s “level” reflecting their tier of user loyalty.
McDonald’s used the classic game of Monopoly to maximize customer engagement and again, boost sales. Users play to collect “pieces” with unique codes for McDonald’s products. In 2010 alone, this game increased McDonald’s sales by nearly 6% (USA).
What makes gamified promotions work so well? Let’s find out.
If we start to dig deeper, you’ll see that gamification is, in fact, a combination of well-known marketing tactics like the Novelty Effect, Sense of Urgency and finally, Windfall Gains.
Looking for a thrill - The Novelty Effect
Researchers claim that only entirely novel ideas stimulate the structures of the brain responsible for new, unique experiences. Specific brain reactions explain why we feel so good about new things. For marketers, the novelty effect creates a need to constantly provide customers with new creatives to keep their interest.
Gamified promotions (at least those done in the right way) are a rare and unexpected experience for users visiting an online store. The first surprise is the game itself, and later, by using multi-level game structure revealing new creatives all the time, brands can keep customers' engagement in the long run.
Windfall Gains - Driving users into a spending mood
Windfall Gains are benefits which are not 100% expected by the customer. Journal of Marketing Research published a study exploring the impact of Windfall Gains on the propensity to buy. Researchers offered surprise coupons to customers shopping in one of the Stanford stores and tested how they affected buying decisions. The results showed that offering the unexpected incentive to visitors significantly increases the number of unplanned purchases, also driving up the average spend value and basket size.
The efficiency of Windfall Gains suggests that value of a discount is subjective and dependent on the kind of experience it invokes. You can compare it to eating a meal in a restaurant; the experience is shaped not only by the taste but also by the way the meal is served. This phenomenon results in better conversion amongst customers who “won” prizes during the game when compared to offering the open discount to every visitor who signs up.
Gamification enables marketers to offer Windfall Gains to customers as many times as they interact or get to the required stage of the game. Thanks to unexpected savings at their fingertips, customers are more likely to get into a spending mood and utilize the reward.
The sense of urgency - the icing on the cake
One of the most frequent phenomena associated with shopping behavior is a desire to avoid anticipated regrets. It is already proven that consumers find deals much more attractive when incentives are limited in time or available amount.
In the picture, you can see two variants of the same online promotion. Adding a simple banner with a promotion time limit enabled the store to increase conversion to 300% when compared to the variant with no banner.
Similarly, you can see a sense of urgency in the McDonald’s monopoly game which despite years since first launching, still drives up new acquisitions and sales. From the very beginning, the game has been limited to short time periods waking up enthusiastic reactions amongst customers each time it starts again.
Gamified promotions when done in the right way, are a powerful source of new customers, long-time engagement, and conversion growth. The question is, how can you know if you’re running the right gamified promotion? Because gamification is a complex experience shaped by many factors, it is extremely important to track every interaction between your customers and a promotion.
Only with comprehensive real-time tracking can you capture reliable feedback from your audience and schedule respective improvements. Modern e-commerce comes with many tracking features such as unique codes used as rewards and tracking tools used by McDonald’s monopoly. Their example proves that tracking gamified promotions can be nice and easy without the need for extra effort or software built into a game.