Gaming e-Commerce – How Retailers Can Get Their Game On

I was talking to a colleague the other day who mentioned that her team is incorporating gaming elements into their e-commerce website, and although we didn’t get into the specific elements, the conversation stuck with me and got me thinking of what elements would work. This post deconstructs some of my thoughts on designing a winning (pardon the pun) gaming eco-system for a retailer.

Promotions are a double whammy to the long term health of a brandWhy gaming? Studies indicate that at least half the U.S. online population between the ages of 18 and 44 engage in social games, of which roughly 46% are female. Gamers are more likely to be online shoppers and are more likely to review products online*. They are also highly engaged mobile users. But most importantly, gaming is a great substitute for price promotions as a way for retailers to drive repeat purchases without conditioning shoppers to increasingly lower prices. The problem with promotions is that they drive down retailer margins while discouraging brand loyalty – a double whammy in the long term. Gaming on the other hand promotes sustained brand loyalty by marrying self-motivation to extrinsic rewards like discounts.

Incidentally, website gaming elements may include loyalty points (“kicks” earned via Shopkick app), badges and leaderboard (Foursquare, Threadless contests), buzzboard (children’s retailer step2), countdown timer (Shopify’s product discount app, Woot, any deal site), progress bar (profile strength on LinkedIn), customization (Converse’s create-your-own-design feature) etc. Of course, eBay’s competitive bidding and feedback system is the granddaddy of gamification in e-commerce.

Business Drivers

First, let’s start with the obvious overarching goals. For an e-commerce company, these would be twofold – engage new visitors quickly and get them to start buying as soon as possible (the likelihood of retaining a new visitor decreases as more time passes after the first visit), and retain and engage existing customers to convert them into brand-loyal customers. A pre-requisite would be the ability to recognize and differentiate between new(ish) visitors and customers…and treat them accordingly.

Next, identify principles to ensure that the gaming elements bolster the above drivers. I’d argue for:
– simplicity and convenience to drive usage (i.e. easy to understand and redeem, features are available on mobile)
– personalization (i.e. users always know where they stand in the “game”)
– looping (i.e. incentivizing future purchase, even as awards are redeemed)

Designing a gaming eco-system for an e-commerce website

Inventory management can be a big challenge for retailers. One way to flatten the volatility around demand (and reduce the need for promotions down the road to move unwanted inventory) is to get website visitors to score design ideas in exchange for virtual currency. Of course, users may score products willy nilly to earn more points but you can get around this by awarding currency only to users who have scored winning products (i.e. products that score above a certain threshold and as a result go on to be sold on the website).

In a nutshell, this is how the gaming eco-system would work:

1. A visitor can purchase products using real money or the website’s virtual currency.
2. Virtual currency can be earned by various actions e.g. scoring a winning product design or submitting it, sharing the scored product design with friends, submitting comments on a product design, sharing a purchase with friends, submitting a review on a purchase etc. Simply put, identify actions on a website that that turn visitors into evangelists and shoppers into loyal customers, and tie these actions to an incentive. Keep it simple.
3. Don’t put the user in an endless gaming loop. Remember that the ultimate goal is to increase website conversions, repeatedly; loop back to this goal often.
4. To loop back to the conversion goal, implement a website recommendation engine that is tied to the amount of virtual currency in each individual user’s bank.
5. Incentivize desired actions e.g. a retailer can use incentives to drive a shopper through a series of timeline-based actions from buying diapers to onesies to dresses for a 6-month old to outfits for a 1-yr old. As Amazon has taught us, rigor in understanding event timelines and conducting cohort analysis is critical in e-commerce.

A note on virtual currency – consumers prefer discounts and social actions* over loyalty points and badges as a form of virtual currency**. That said, it is in the retailer’s interest to provide currency that is tied to future purchase. One way to do this is to provide electronic gift cards (call it “money back”) that can be redeemed for future purchases on that website and/or can be transferred to friends.

* Source: New Media Measure Interpretation Report, Saatchi & Saatchi study on Gamification
** Source: Saatchi & Saatchi study on Gamification