January 1, 2013
By Denis Pombriant, founder and managing principal, Beagle Research Group

The Pros and Cons of Gamification

One of the newest developments in our space is gamification. Companies are springing up offering various options, and the early adopters are doing their bit to take them for a spin and mold them into something useful. From some of the most mundane jobs and applications to some that are truly exotic, software vendors are figuring out how to make their business applications fun enough to keep you engaged when you might prefer not to be.

Early candidates for gamification have been some back-office applications, like accounts payable and the always challenging chore of getting the sales rep to enter some data into the CRM system. Companies tried pay and benefits, but these were only moderately effective. The thinking now is that a badge will do what money and coercion didn't.

To be sure, there are lots of beneficial and productive uses for games in business applications. We're generally not talking about Monopoly or spin the bottle, but rather more quotidian things, like tracking output per hour or even machine-generated praise. More sophisticated gaming happens at the vendor-customer interface, and it's here that my concerns arise.

Games work because success generates a little bit of pleasure in the player's brain. Brains that are accomplishing good things secrete chemical messengers like dopamine and serotonin, and praise is one external stimulus that drives happiness. There is nothing wrong with this, provided the player knows that he or she is being played as much as he or she is playing. In a job setting, that's expected, and getting a few "Way to gos" is nice.

But the customer relationship is a different story. Today, vendors can easily generate gamelike environments for shopping, such as, "Bring a friend to buy this item, too, and we'll give both of you a discount [or an added feature or whatever]." The sky is the limit, really. "Buy a lot of stuff and become a super shopper and qualify for even more elite status." Did I mention status is another dopamine generator?

As games related to selling get more sophisticated, the risk increases that the players will forget they are playing with live ammo and not Monopoly money. Like a college student with that first credit card, the allure of the reward might temporarily blind the participant to the downstream realities of debt and payment. Then, too, especially with someone in his or her early 20s, the frontal brain lobes are not fully developed and that's the area of the brain responsible for reminding us that a credit limit is real. The age of majority is 21, but perhaps the age of gaming ought to be 24 or 26, the same cutoff they use for car insurance discounts—and for the same reasons.

Gamification is a two-sided machete capable of doing great good but also real harm. So far I've seen no indication that gamification has gone in the direction of harm. But this kind of thing is insidious. One minute you're a frog swimming around in your own pond and the next you're, well, you know. This is a new area for discussion within our community, sooner or later, and with a broader audience.

Over the last few years, we've seen a massive uptake of social technology, not just by end users, but also by major vendors hoping to turn retail into a richer online experience. What's behind it is the realization that with higher transportation costs, customers will spend less on other things and begin to avoid going to the mall for shopping as recreation.

If shopping becomes even more of an online thing, software systems will have to become more adept at understanding need and stepping into the salesperson role. Gamification is a way to do all this and to enable the vendor to save overhead in the process.

Anticipating that time, people like Doc Searls have long advocated for Vendor Relationship Management (or VRM), but so far there's not much of a market. Perhaps a time is coming when sophisticated end users buy technologies that mirror what the vendors have. We have a vibrant security industry—maybe that would be the start of something for consumer cyber defense.

Denis Pombriant, founder and managing principal of CRM market research firm and consultancy Beagle Research Group, has been writing about CRM since 2000 and was the first analyst to specialize in on-demand computing. His 2004 white paper, "The New Garage," laid the blueprint for cloud computing. He can be reached via email (denis@beagleresearch.com) or Twitter (@denispombriant).