Don’t Just Shoot at Zombies: The ROI of Gamification
“But is our program making any money?”
You’d be surprised how many times in my career as a consumer loyalty consultant that a new client asked me that question. It was almost always followed up with “And please don’t tell us that its not.”
This scenario is common because many companies make the same critical misstep when measuring the impact of their customer loyalty programs. Namely, they spend hours pouring over data on enrollment, point earning, breakage and redemption trends, while often being clueless about the one metric that matters most – incremental revenue. This explains how a loyalty program can literally run for years without anyone at the sponsoring company being entirely sure whether it’s profitable.
From Loyalty to Gamification
Now that I have a foot firmly planted in the gamification space, I’ve begun to notice a similar trend. Marketers planning a gamification strategy often focus entirely on increasing engagement behaviors – registrations, time on site, return visits, missions completed, badges earned. There’s nothing inherently wrong with tracking those kinds of metrics, but unless you are managing a monetized, ad-driven website, those activities are only weak proxies for ROI. There are much more direct metrics to prove out ROI – for instance, lift in spend, lift in sales, cross-purchase, high-value customer and employee retention -- yet they are often neglected in favor of those more proximate “engagement” metrics.
And therein lies the problem -- focusing on earning engagement rather than on earning dollars is a lot like spending an entire video game doing nothing but shooting at zombies while neglecting to collect the glowing energy balls that you need to stay alive. While the former might be more interesting and easier to do, you eventually you end up with a lot of kills, but an empty energy bar and a dead character.
Trust me, you want your gamification strategy’s “energy bar” (its proven ROI) to be fully charged the day your CFO asks you to show how its impacting the company’s bottom line. To do that, you need to be chasing the right metrics.
Mapping Your Gamification ROI
Fortunately, the process for credibly proving out the ROI of your gamification strategy is a straightforward one, namely:
1. Determine your core ROI metrics - These should be the same ones you are using to measure your existing program, namely those that most closely map to revenue. For example:
- Banks – card usage, share of wallet, breadth of spend, cross-product purchase
- Retailers –shopping cart value, purchase frequency, purchase recency
- Hotels – increased room nights, service add-ons
2. Determine your lift goals – My recommendations is to take your average campaign performance and initially shoot for your gamification strategy to drive 1-3% lift over that. You can adjust this conservative goal upward as you refine your strategy over time.
3. Tie those real ROI metrics to closely aligned participation behaviors – A useful exercise is to perform regression modeling to isolate which behaviors are most closely correlated to movement in your key ROI metrics
If you don’t already have good historical measures for key behaviors, you can run your gamification strategy in “silent mode” for several months in order to track participation and establish baselines. This will be more helpful if you can isolate behaviors to specific customers (or customer segments) so that you can compare behavioral response prior and post your gamification launch. This helps you avoid the common mistake of comparing customers engaged with the gamified experience vs. those not.
4. Establish a discipline of regular reviews to track the impact of your gamification strategy – An ideal review cycle is every four to six months. Again, being sure to focus not just on tactical measures (badges earned, missions completed, etc.) but on lift in your core ROI metrics and in incremental revenue.
Gamification has proven to be a powerful and effective strategy to move behavior, so you shouldn’t hesitate to keep your own gamification strategy out of “zombie mode” by holding it to the strongest standards of ROI.