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Brain Circuits
The business value of gamification: Pathways to customer retention
Customer retention is a long-term endeavor. By securely locking customers into a game, firms can generate more value from them and gain a crucial competitive edge.
Tangible loyalty programs such as air miles and store cards are not the only way to retain customers and forsake the addictive appeal of games. Merely offering extrinsic rewards such as cash eventually reduces intrinsic motivation, whereas gamification ā the use of game-like elements such as points, rewards, and challenges in non-game activities ā can greatly aid customer retention.
Two pathways to customer retention
1.Virtualization
Virtualization is the transposition of real-world activity and elements into a virtual form through avatars, profile spaces, and augmented/virtual reality.
- It allows gamification initiatives to retain users regardless of other design features.
- By creating an immersive parallel universe that users can mentally inhabit and explore, virtualization seems to engross players in and of itself.
2. Social comparison
Activities and games that are centered on the user tracking their behaviors and performance have a fairly weak ālock-inā because users do not have much invested in the platform and can easily switch to another one. Including an element of social comparison can boost retention, even though it doesnāt offer any rewards beyond those built into the game itself.
- The user identities involved must be desirable and aspirational.
- Users need a credible and sizeable existing community onto which they can project their identity (this can be just friends and family).
- Awarding badges and competitive ranking points that gain social value over time will keep users more tightly bound to the activity.
Key takeaway
Businesses must persuade users to engage frequently over a long period and commit time, attention, and money along the way. Through gamification, they can turn their game into a firm fixture in usersā daily routines that they will habitually turn to as a behavioral ādefaultā and help boost customer retention.
Authors
All views expressed herein are those of the author and have been specifically developed and published in accordance with the principles of academic freedom. As such, such views are not necessarily held or endorsed by TONOMUS or its affiliates.
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