I’ve been debating with some of my colleagues from the loyalty marketing business about the potential impact of gamification. My counterparts in the debate are seasoned and experienced. They’ve lived through smart cards, contactless cards, even Java rings, all of which were technologies positioned to change some aspect of consumer marketing. Therefore, they are skeptical by nature.
As a member of the advisory board at Badgeville, I guess you can say I’ve taken a stand. I know there is promise in using gamification, not just to create an engagement layer in a loyalty program, but to support a new genre of go-to-market strategies. Sometimes “we” can be too close to the argument, and it pays to look at how others are reacting to a new concept.
Some voice their opinions not through their blog, but with their checkbook, so it was great to see the announcement that Badgeville closed a $25 million round of funding this week. This announcement has significance on two levels. First. it stamps players in the gamification industry as legitimate contenders in the broader data-driven marketing industry. Gartner estimates that more than 70% of Global 2000 organizations will have a gamified application by 2015, so the potential for growth is clear.
Important for Badgeville, it also signifies the market confidence in the company as the number one player in the space. Badgeville now counts more than 165 customers including Oracle, EMC, Deloitte Touche, Dell Samsung, Universal Music, and the Walt Disney Co. It also has formed strategic alliances with Yammer and Jive.
The rule of thumb for traditionally constructed loyalty programs is that up to 80% of annual budget is allocated towards the cost of rewards. Imagine if this same behavior change could be created through solutions less dependent on tangible rewards. There is a monstrous amount of money at stake to be saved, and the big brands that have been operating loyalty programs for years understand the opportunity.
Gamification may still need some grooming and there certainly needs to be a better way to describe what Badgeville and others do. To me, it all falls under the category of Customer Strategy, but we’ll let the market decide on the best nomenclature to apply.
The important thing to note is that this week, Gamification officially graduated from fad status and is setting its sights on winning a greater share of the loyalty marketing services business.