Nike has just launched its FuelBand with much fanfare in the USA. It is a wrist band that measures all the physical activities you do during the day. It measures walking, running, dancing, playing etc and gives you a score. You can set your goal for the day and the lights on the band turn from red to yellow to green as you get closer to your goal. You can compete against yourself, your friends and even the whole world. Watch the commercial for FuelBand here:

Nike clearly believes in Gamification. That ugly new piece of jargon describes something known to mothers world-wide. Mothers often play games with their children to make eating fun. Or do other chores that the kids didn’t want to. Now companies around the world believe that if you turn something into a game, then consumers will perform the actions that you want them to. Thus Nike believes that more people will take up running and playing because of the FuelBand and thus would be in the market for Nike products.

Gamification is the new thing that marketers are getting excited about. It all started with “Four Square” and “Gowalia”. These social apps required consumers to check-in at various places and in exchange got points that gave them social standing. You got badges and titles (like “mayor of”) and went up or down a leader-board. And thus got bragging rights. A flood of other brands followed. AdAge reported that brands like 7-eleven, JetBlue, H&M and Tesla Motors have all used gaming in some form for their brands.

So what is the difference between gamification and a loyalty program? In a loyalty program you rake up points as you buy more of a brand. It is a game of sorts.

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The crucial difference is that the normal loyalty programs give you rewards, but often not recognition. The new games allow you to show off your status through social media and thus get you real recognition over and above any rewards that you may get. Earlier you may have felt good as you travelled up the ladder from silver to gold to platinum in a loyalty program. But that information was often known only to you and the only way to show it off was by flashing a piece of colored plastic. Now friends, colleagues and people you want to impress, can see your status on your Facebook page.

Marketers have often assumed that the only way to get consumer loyalty was to bribe them with rewards. However this strategy hasn’t been working of late for a variety of reasons. One of them is that consumers actually prefer recognition way more than the paltry rewards that they get. Thus flyers value checking in at special counters and using the airline lounge more than the free miles (especially given the restrictions on using those miles). Shoppers at department stores appreciate the free parking and the special payment counters.

The armed forces have always known this. They pay their men very little, but make up by giving them a variety of medals, ranks and badges. Millions of men around the world have risked their lives for medals, while there is no known case of someone displaying valour to earn reward points.

Gamification takes this idea of badges and ranks and amplifies it using social media. It turns out that human beings love to tell the world that they are now Sergeants of their little platoons, and are shy of announcing how much they earn. The world, in turn, admires their new stripes while it sneers at people who show off their wealth.

That’s the lesson for marketers in a nutshell. Make your consumers feel special. That is worth much more than the reward points. It may not solve all your loyalty problems, but quite a few of them.

Suman Srivastava is Founder & Innovation Artist at Marketing Unplugged, a firm that is focused on helping businesses create marketing innovations.

Publish date: May 30, 2012 1:15 pm| Modified date: May 30, 2012 1:15 pm

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