February 1, 2013
By Kelly Liyakasa,

Is Gamification Overhyped?

Some 80 percent of gamified applications will fail to meet business objectives by 2014, according to Gartner.

Gamification—an umbrella term for incentivizing desired behaviors in employees and customers through points, rewards, and other loyalty drivers—is nearing the "peak of inflated expectations," according to Gartner's Hype Cycle, a research methodology that outlines a new technology's viability for commercial success.

To reach full productivity in this cycle, the new technology must first pass through the Trough of Disillusionment, which is the threshold when, according to Gartner Research Vice President Brian Burke, "the cracks start to show" after a period of high interest and frenzy.

These cracks are most commonly caused by poor design. Anything that's poorly designed will be doomed to fail, according to Kris Duggan, CEO of enterprise gamification platform provider Badgeville. "Everybody would agree with that."

"This is not to say that gamification applications are doomed to fail and it's pure hype…. We think that long-term, gamification [will] have a positive impact for organizations," Burke tells CRM. "There's clearly a market for what these vendors do, and [some] have a considerable client base."

In past predictions, Gartner has stated that by 2014, more than 70 percent of Global 2000 organizations will have deployed a gamified service for consumer goods marketing or customer retention purposes.

For a company to reach its goals through a gamification effort, it must first have clarity on the specific business objective it's looking to achieve, Burke says. There are three ways to apply a gamified process: changing behaviors, developing skills, or enabling innovation. Internally, a company might want employees to learn new software or brainstorm a project through ideation. The argument is that a gamified process can help accomplish those goals.

Burke has seen companies fail in developing a gamified program by immediately jumping to "shiny objects"—the badges, points, and rewards—without considering the intermediary steps, like grasping what motivates the target audience and how to enable that audience to reach personal goals that overlap with the business' goals.

Burke cites Nike as a company that has grasped gamification with its Nike+ initiative. Nike+ blends an online community with physical tracking device Nike+ FuelBand for calorie counts and reports. Newly launched NikeFuel Missions turns personal fitness goals into a game connected to a Running App and the FuelBand. "It's different than the company saying, 'Watch this video or click on this link for two points,' which is sort of the puppet approach to gamification," Burke adds. That is the less sustainable approach, he says, which is more prone to failure.

For other companies to avoid the 80-percent trap by creating badges and points for actions without a strategic purpose, it's vital to think through the unintended consequences of rewards in a gamification deployment. An example is the telemarketer who is rewarded for the number of phone calls he makes. "It's asking, 'If I reward them for how long they spend on the phone,'" Duggan says,"'are they going to be making the right kinds of calls?'"

Success can also depend on what kind of gamification deployment a company is seeking. On the customer-facing side, the list of behaviors is fairly simple. Typically, Badgeville's B2C clients want customers to "buy, come back, to review, and share," Duggan notes. "There aren't a whole lot of unintended consequences to rewarding those actions. It's not like they're going to say, 'Oh my gosh, they bought more than we wanted them to.'"

Consumer-facing deployments are more about quantity of results, whereas internal enterprise deployments are about the longer-term quality of behaviors, which can be a challenge to achieve.

Badgeville's internal enterprise deployments have grown from about 10 percent to 15 percent of its business a year ago to 30 percent to 35 percent today. Duggan expects it to reach 50 percent this year. Bunchball, another enterprise gamification platform company, says its business is split more or less evenly at 50-50 for consumer versus enterprise, "with the engaged enterprise continuing to grow as a percentage," according to its CEO, Jim Scullion.