Gamification has always been a successful tool to boost consumer engagement and loyalty. And while loyal clients with competitive personalities get a thrill out of virtual prizes that showcase their performance, the number of firms using this business tactic has been shrinking recently. Is the game over?

Hyped over past several years, gamification via loyalty rewards has been huge among retailers as "gamified" consumers often turned into unpaid sale reps for their favourite brands. Nowadays loyal customers are earning physical and virtual rewards for desirable activities. Referral programs provide incentives for consumers to recommend brands or products. Return-visit loyalty points make it easy for certain retailers to become the consumer’s preferred vendor. In addition to driving customer loyalty, gamification can also be used to analyze customer behavior, giving retailers even greater insight into their customers. Briefly, gamification has grown a community around brands quite successfully. However, according to recent figures, gamification as a business strategy in 2014 is no longer a fashionable option.

From hype to stark reality

Same as with social games, for every hit there are a dozen duds, poorly designed and more aggravating than addictive. Not every game invented by a retailer turns into a consumer magnet. Of course, big business cannot be blamed for experimenting with ways to use consumers' collective addiction to “leveling up” to drive higher rates of consumer and employee engagement. However, things have changed since 2011 when the term "gamification" turned into a buzzword. Nowadays, its days seem to be counted.
According to market research firm Gartner, market penetration of gamification technology is estimated at just 5 to 10 percent. The pioneers of gamification have applied this platform to all types of challenges, from encouraging consumers to use a new product or service more liberally to reshaping employee behavior or processes. But without well-grounded goals, some high-profile early projects have failed miserably.
A good example could be Marriott Hotel Group, which attempted to use a game similar to Facebook's Farmville to teach potential new employees about the hospitality industry. The project was supposed to represent the first wave of a series of game-inspired attempts to improve employee engagement, but the rest have yet to materialize. In short, the results have not been that encouraging. According to Gartner, up to 80 percent of early gamification strategies will fail by the end of this year.

Gamification done right: Nike

But there are success stories, too. For instance, the gamification initiative Nike+ - a website athletes can use to record performance against their fitness goals. It currently boasts more than 28 million users who turn regularly, giving the brand significant exposure. According to experts, the key to Nike's success in gamification is that it focuses on enabling the users to achieve their fitness goals, rather than Nike’s goals.
Another example of how to successfully engage customers, prospects and employees comes from the business-to-business world. Specialized in technology services, Bluewolf is using game principles as part of a campaign to get more of its consultants to share information and best practices that could benefit clients and to build their “personal brands” through social networks and by writing blogs. Participants earn points towards certain perks (such as discounted hotel rooms) by completing designated activities.
In 2013, the program triggered a 57 percent increase in internal knowledge sharing, a 68 percent boast in social traffic and a 153 percent rise in blog contributions.

Sources: http://smartdatacollective.com; http://fortune.com
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