November 10, 2014

Promiscuous Customers? Here’s the Cure

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As consumers grow more and more savvy about purchases, retailers have a tougher time keeping them loyal. This is especially true in the ecommerce arena, where an inexhaustible storehouse of competitors lie in wait beneath the push of a key to take the sale that could’ve been yours. Marketers call it “customer promiscuity”—the tendency of customers to avoid commitment in the interest of finding the cheapest, most convenient deals.

Promiscuous customers – They are an online retailer’s biggest challenge.

Many companies are turning to gamification to increase engagement with their websites, and hopefully improve overall customer loyalty. This isn’t too surprising, given the past few years of hype surrounding gamification and its spread into other aspects of business and technology. But can it really keep customers faithful?

Building Relational Customers

The internet raises many challenges for online sellers, including abandoned shopping carts (about 70 percent of all online orders end this way), user anonymity (failure to capture basic information about individual site users), and low page-view rates (getting past the home page and onto product pages, reviews, etc.), just to name a few.

“70 percent of all online orders are abandoned”In order to better evaluate these problems, it’s helpful to define your current relationship with your customers.

The Myers-Brigg Foundation defines two primary customer models: transactional and relational. Transactional mostly covers the search period, where a customer compares different vendors, or perhaps even makes a purchase, but has made no commitment to loyalty. Relational shopping, on the other hand, means a customer has come to view the vendor as his purchasing home—somewhere he knows and trusts and will return to.

If you’re asking, “How do I attract more relational customers to my site,” you’re missing the point. You don’t attract relational customers; you make them.

How Gamification Can Help

Gamification, as you probably already know, is the use of game mechanics such as badges, points, and level-progression in non-game contexts. The idea is to take something that’s not a game at all and making it “game-like.” According to projections from M2 Research, the gamification market will be worth almost $3 Billion by 2016.

Many online retailers, whether brick-and-click or pure-click, have already started using gamification to counter net promiscuity—some quite successfully.“gamification increases overall site engagement by almost 30 percent” Nike+ is a great example of carefully-crafted (you might even say disguised) online gamification. Nike+ offers goal tracking, achievements, and “Nike Fuel” (currency that can be cashed in for rewards) for becoming a better runner. Consequently, Nike has built an 18 million-strong community of brand advocates and customers.

Samsung uses a similar gamified social community called Samsung Nation that awards badges and redeemable points to site competitors who complete “missions.”

A study by software giant Gigya found that gamification increases overall site engagement by almost 30 percent. That could translate into thousands of users or more, depending on the size of your audience. Here are some specific aspects of engagement that gamification can target and improve:

  • Ratings and reviews written by customers
  • Social sharing, which exponentially boosts word-of-mouth exposure
  • Number of user accounts on your site (which provides more data for tracking specific interests)
  • Sales conversions (i.e., less cart abandonment)
  • Long-term customer relationships 

3 Potential Stumbling Blocks

The rate at which these key performance indicators increase will no doubt depend on the way you incentivize them. Gamification has its critics, and most of them have similar concerns. Here are three of the most common criticisms:

1. LACK OF USER VALUE

Peter Eckert wrote for Ecommerce Times, “Adding . . . badges, levels of achievement, and other useless information without providing a value-added or beneficial outcome can feel pointless and distracting for the user.” He gave the example of Google’s News Badges from 2010, which were supposed to generate interest in news articles but fell flat in September of that year. The allure of digital badges simply wasn’t enough to make users want to disclose their web history to Google.

2. LACK OF USER RESEARCH

It’s important for you to do research on the kinds of rewards and incentives your users are interested in. Maybe they could care less about badges, and what they really want are coupons. Maybe that’s what it takes to get them to follow your site on Twitter or post a positive review. Dropbox, for example, has offered relevant value through gamification by giving extra cloud storage space to users who complete certain tasks like inviting friends or social sharing. The goal isn’t to manipulate customers into doing what you want; it’s about beckoning them to engage with your site by offering them what they want.

3. FAILURE TO CONNECT GAMIFICATION WITH BUSINESS GOALS

Zappos, the online shoe retailer, was recently guilty of making this error. They tested out a new badge game in hopes of bringing more traffic (again, the wrong approach), but the badges were completely arbitrary—and didn’t connect to any monetary rewards or discounts on future purchases. The “gold star” mentality failed them, and if your company forgets to keep game rewards industry-specific, aligned with your brand, and tethered to measurable profit, you shouldn’t expect anything different.

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Though they may sell the same products, online retail sites are completely different animals than their physical counterparts. When you enter a store, you hear the overhead music. You see and touch tactile product displays. You are aware of the simmering possibility that a deal in the store is limited, and therefore imminent. You interact with a (hopefully) friendly salesperson, who perhaps enters your contact information into the POS database. You are engaged, and connected to what you purchase, and in all likelihood, you will revisit that store.

Gamification offers the potential to bring some of this missing engagement to the online arena by tapping into customers’ primal psychological impulses. Science meets commerce. Would you, in good conscience, pass that up?