'Gamification' - what is it and how can FMCG companies use it?

Date : 06 February 2013

You might have heard of 'gamification' – it's becoming an industry buzzword as consumer goods companies use it to engage with shoppers, reward loyalty and gain a competitive edge. We explain how it's developing and how it could help keep your businesses agile.

What is 'gamification'?

Gamification, in simple terms, is applying the principles of video or computer games to other contexts. There's a lot of hype about engaging with the 'Millennial generation', those born in the eighties and nineties who are very tech-savvy, but gamification arguably transcends many age groups; 'younger adults' who can remember growing up around the Nintendo, playing SimCity, or even just going to an amusement arcade on holiday have all been lured in by gaming.

What are the opportunities?

As well as appealing to a diverse range of people, the principles of gaming can work in different areas of people's lives, so there's scope for those techniques to be used by a whole host of different industries and functions.

Consumer business marketers are paying particular attention to the opportunities that the emerging digital environment gives manufacturers and retailers to build both their brand and their sales by engaging shoppers more effectively.

But gamification is not without its challenges; in fact, our research shows that only 14% of manufacturing businesses have a strategy that co-ordinates marketing and sales for long term growth.

So, what are the building blocks for gamification?

With many businesses still getting to grips with joint sales and marketing activities, understanding how gaming principles can be applied to commercial initiatives offers an opportunity to get ahead of your competitors.

We have been speaking to strategic design consultancy 20.20 and Badgeville, a start-up company that has developed a technology platform to enable gamification solutions for businesses and help them to understand how the gaming concepts are becoming a commercial reality.

Taking a step back, a number of essential elements make games successful: desire, incentive, achievement, reward, feedback and mastery*. These building blocks encourage users to play more, get more involved, expend more effort and strive for reward and are easily translated to buying and experiencing consumer goods.

Building loyalty and advocacy is a priority for many businesses operating in a consumer goods industry that is experiencing unprecedented and highly challenging trading conditions; reflecting on the opportunity here, Scott Schnaars of Badgeville noted that 'in the next 18 months not having a social loyalty strategy built around gamification will be like not having a Facebook Like button today'.

20.20's Head of Online, Andrew Hearn goes on to say "Creating on-brand solutions that solve fundamental business problems – such as increasing sales, retaining loyalty and harnessing social interactions - in a manner that is both engaging and fun for customers - must be an obvious decision."

Strong words, but at IGD we believe that playing by yesterday's rules is not an option, and businesses will be forced to be more agile in the years ahead to drive sustainable growth.

How is it working?

While gamification principles have been applied to media and fitness industries with success - check out Nike+'s FuelBand if you're not convinced - it's still in the early stages for consumer goods. Danone is one business that has embraced the 'acquire, engage, retain' gamification mantra, working with Badgeville.

Wanting to find, converse with and reward its most loyal customers virtually, away from the store, Danone came up with ways to trigger gaming behaviours in an online loyalty programme. Scanning purchased products with a smartphone rewards users with points and virtual achievements, including discounts and special prizes from kitchen appliances to holidays.

The game not only encouraged people to engage, but also to 'advocate' the brand, with users sharing their achievements on Facebook, immediately reaching out to hundreds of friends and many thousands in their contacts' wider network. The aim is to move the shopping experience beyond the store for valued customers, building brand interaction on the web and ultimately driving sales for key products.

What do we think?

We know shoppers are facing challenges, and our industry is trying hard to keep up with them and provide solutions that make life easier.

The basic principles of gamification are simple and offer an opportunity for brands to engage and drive shoppers to be ambassadors for them.

Here at IGD, we really enjoy getting out and meeting businesses that are adopting agile thinking, trying to anticipate the shopper and understand the "new normal" of their daily lives.

The consumer goods industry is only just beginning to gain commercial success from gamification, and we know that joining up sales and marketing to harness the power of digital technology can be challenging, but understanding the principles of "acquire -  engage - retain" has the potential to deliver tangible returns. Ultimately, we know companies learn by doing, not watching, so we would be delighted to hear how you are experimenting to digitally engage with shoppers and grow your business - get in touch!

Next steps...

Check out our online and digital trend page for the latest news, research and Special Analysis on this area.

* Gabe Zichermann 'Gamification by Design' quoted in the article "Gamification - The game changer" by 20.20