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10/22/2014

Gamification in Financial Services and Learnings from other Industries

You might not be overtly aware of it, but financial service firms are gradually making gamers of all of us. Gamification is defined as: "The concept of applying game-design thinking to non-game activities"

 

Despite this very simple description, you might not be any wiser as to your daily exposure and participation in such a practice. The last time you posted a review on Trip Advisor for example or Open Table, you will have no doubt been very proud to receive an update informing you that "40 people have read your review and 15 people found it useful", this will then be reinforced by the fact you have been awarded a "bronze badge" for your first review and the statistic that you are now in the top 30% of reviews read that week. You have begun to earn points, online social status and it's addictive! There is always one more achievement to unlock and one more badge to earn.

Gamification is all around us:

Social media has further embedded this concept into everyday life on a 24/7 basis. Twitter, Facebook and LinkedIn are all one big game. Points are earned by the number of Likes your most recent update provides, the number of contacts you have or the re-tweets you attain.

The power of gamification has been strongly embraced by big business and combined with the ever expanding Digital agenda, it is an area Financial Service firms are increasingly focusing their attention. Some of the core distribution channels with examples from across a range of industries are explored below:

Digital Couponing: The proliferation of smartphones fuelled a boom in the use of coupon users on the high-street. Regular users of the various providers are driven by the thrill of the chase and attaining the best deal possible. According to Juniper Research (2014) there are 560 million mobile coupon users globally in 2014, with this figure set to rise to 1.05 billion by 2019.

Leading Mobile Couponing Apps: Voucher Cloud, Four Square and American Express

Credit card providers such as American Express have been quick to adopt their popularity within Financial Services. They offer the unique potential to provide personalised offers based on your purchase behaviour or your location. They also generate a sense of belonging to a particular group and as such, feed on the power of the network to increase customer loyalty.

Telematics & Internet of Things: Tesco (Bank and Insurance) and Aviva now let you track your driving performance using their mobile App / Portal to analyse the results online. This sort of functionality will become more widespread as the Internet of Things (IoT) encompasses more and more household objects. For example, smart metering within the energy industry will allow you to see your energy usage in real time and provide you with an "efficiency score". Customers can then aim to increase their efficiency score by using energy more carefully or investing in energy saving products.

loyalty programmes: Airlines such as British Airways and hotel chains such as Hilton, have long maintained customer satisfaction and repeat purchases via the strength of their loyalty programmes. Points are earned by the frequency and amount of cash spent over a period of time. These points then translate into a "Tier Rating" such as Silver, Gold and Platinum. Customers are incentivised to rise up through the Tiers to unlock increased benefits and services. Tier status is heavily valued by programme members and persuades many to refrain from switching to a rival brand.

British Airways Tier System

Social Networks and Status: Our interaction with brands is increasingly played out in the social arena. Networks provide users with a sense of belonging and their overall social standing is often graded on the number of posts or contributions made. Foursquare rose to become a market leader in the "local search and discovery App" space by integrating user contributed tips, check-ins, how to guides and reviews. It allows users to see which of their friends has also visited and if an offer or coupon is available from a provider such as American Express.

Firms can engage with customers via this channel in other various ways:

  1. Online forums owned and run by the firm: Act as a social hub to provide information and answers to various customer queries. In this format, the firm has more control over what is posted and the information shared amongst users.
  2. Online forums run externally by customers: The information shared is out of the control of the firm but they can (if they want) post information just like any other user.
  3. Facebook and Twitter: Offer very direct interaction with customers on open networks that are highly visible to anyone. Firms cannot moderate what is said about them but they can use their official pages to provide their desired marketing message and pro-actively look to respond to posts elsewhere to enforce this.

Portals: The new generation of Portals are providing more than just a landing page and a place to get basic product information. In fact, they are pulling many of the key themes identified above in to one central focal point. Firms know that to drive ongoing customer engagement they need to give users a reason to come back on a daily basis. Gamification is playing a key role to achieve this.

Research suggests the greatest obstacle to success with most gamification efforts is poor design. Successful offerings have focused on the following:

  1. Understand the psychology of the customer: People are motivated very different forces depending on their own personal goals. A hotel rewards system for example, will have less touch points, a lower need to include social aspects and an increased focus on tangible benefits when compared to a pure online service offering such as LinkedIn
  2. Maintain interest: Incentives should remain a challenge and offer the participant a realistic opportunity to realise their goal. Using the "Carrot and Stick" analogy, at regular intervals the customer must get the carrot.
  3. Take a long term approach: Short-termism has been the downfall of many gamification attempts. The design of the programme should incorporate lifelong value added by the customer, allowing them to re-join the "club" at any point in the future without being disadvantaged

Despite the fact Gamification has been part of the landscape for some time in various formats and the increased prominence that the Digital agenda has provided it, there remains a long list of detractors, stating that it is just a fad. More often than not however, those perfecting the art are generating strong networks from humble beginnings and for those more established; cementing their market position and increasing customer loyalty, making it a must have part of any strategy.

 

Sia Partners

 

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