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    Brain Circuits

    The business value of gamification: Three pathways to new customer acquisition

    by Michael G. Jacobides, M. Dalbert Ma, Konstantinos Trantopoulos , Vasilis Vassalos Published January 8, 2025 in Brain Circuits ā€¢ 3 min read

    Well-designed games can bring in new users, who may eventually become customers. This can lead directly to new revenue streams or boost interest and brand equity by association. In the second of a three-part series on gamification, here are three pathways to gaining new customers.

    1. Offer tangible savings and rewards without facilitating social comparison

    Why it works

    • Tangible rewards bring in additional sales that are directly bundled with further tangible benefits.
    • Excluding social comparison concentrates usersā€™ motivation on extrinsic rewards.
    • Digital loyalty programs that bundle purchases with points that can be redeemed for additional physical goods have great appeal.
    • Games can be more enticing when they incorporate an element of chance or even gambling.

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    2. Combine virtualization with tangible rewards

    Why it works

    • This approach allows for a more differentiated experience in which users compete in virtual arenas for real-world rewards (this is like winning prizes at a fair).
    • Chance-based mechanisms can significantly increase interaction with the platform.
    • Interacting with other ā€˜playersā€™ and competing for rewards can increase participation.

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    3. Focus solely on social comparison and exclude both virtualization and tangible rewards

    Why it works

    • This strategy should only be pursued when the user goal is closely related to self-improvement (e.g., fitness or knowledge-based learning).
    • As technologies mature, (digital) games and physical experiences start to merge; customers may begin their buying journeys on social media but still want an in-store, experiential element that they can share online.
    • The in-store experience allows visitors to share directly to social media and unlock digital-only offers. The game thus has the potential to become a means to engage customers in the digital and physical realms at the same time.

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    Key learning

    A ā€œone-size-fits-allā€ approach to gamification does not work for customer acquisition and retention. Different goals (acquiring customers, expansion, and refining market positioning) require different design elements and mechanisms. Begin by defining the strategic objectives: once you know these, give designers and engineers a clear brief to work to and choose the right KPIs to gauge success.

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    Further Reading

    The Business Value of Gamification

    The business value of gamification: pathways to customer relations

    Play to win: Enhancing customer engagement with gamification

    Beyond subscription models: recurring revenue-generating patterns

    Authors

    Michael G. Jacobides

    Michael G. Jacobides is the Sir Donald Gordon Professor of Entrepreneurship & Innovation and Professor of Strategy at London Business School. He studies industry evolution, value migration, firm boundaries and organization design. He is the Chief Expert Advisor on the Digital Economy at the Hellenic Competition Commission and a co-author of the WEF’s white paper on digital platforms and ecosystems. He served on the Global Agenda Council of the World Economic Forum and has presented at the Davos Annual Meetings.

    M. Dalbert Ma

    Dalbert is a PhD candidate in the Strategy and Entrepreneurship department at London Business School. He has a Masters in Management from IESE Business School, a Master of Laws with a specialization in competition law from Erasmus University Rotterdam, and a Bachelor’s in Philosophy, Politics and Economics from the University of York. Before academia, Dalbert was involved in financial technology research at China’s central bank and in infrastructure project financing at Deloitte Financial Advisory.

    Konstantinos Trantopoulos

    Konstantinos Trantopoulos

    Advisor and Research Fellow at IMD

    Konstantinos Trantopoulos is an Advisor and Fellow at IMD. He collaborates with senior executives across global markets to shape strategies and guide investments that drive growth and profitability. His current focus is on how companies can leverage AI to create and capture value. His insights have been featured in leading outlets such as Harvard Business Review, MIT Sloan Management Review, California Management Review, MIS Quarterly, Ī¤Īæ Ī’Ī®Ī¼Ī±, and Forbes. Konstantinos is also the co-author of Twin Transformation, available on Amazon.

    Vasilis Vassalos

    Vasilis Vassalos is leading the Information Processing Lab and is the Director of the MSc in Data Science at the Athens University of Economics and Business. He has received numerous awards and has been Principal Investigator for over 15 funded research and advanced development projects since his arrival at AUEB. He is the author of over 70 technical publications and two US patents. He received a Diploma in Electrical and Computer Engineering from the National Technical University of Athens, and his MS and PhD in Computer Science from Stanford University.

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