Essay on gamification (mathprof bengu)

B

SYSTEM GAMIFICATION Relevance of
Gamification in

IN BUSINESS Enterprises

This article is about the concept of gamification of business systems. It
reviews the impact of this concept on both the society and Enterprises.

University of Cape Town P. J. Bengu (2012)

UNIVERSITY OF CAPE TOWN

Department of Information Systems

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Abstract
The idea of embedding game techniques and mechanics in the business systems to enhance
customer engagement and experience has recently out bursts into the business world. This idea is
known as gamification. It is believed that gamification will soon be the widespread new approach of
advertising. Unlike a traditional way of advertising, gamification is not only about promulgating the
sale of a product, but also to incentivize the customers to participate in business activities while
satisfying their desires.

The purpose of this paper is to divulge the concept of system gamification, and evaluate its relevance
to the Enterprises. In doing so, it begins by conveying the origin and background of gamification.
Thereafter it looks at its future relations in respect to the business context. The major findings reveal
that the growth of gamification will reach about $3.6 billion in 2017, and 80% of global Enterprises will
have adopted the use of it.

The graph below illustrates the growth of market size of gamification in the next four years. From the
graph it can be seen that the adoption of gamification will grow exponentially and soon become a
traditional practice in marketing strategies.

Figure i (Meloni et al., 2012)

Keywords: Gamfication; Digital Marketing; Human Psychology; Business

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Table of Contents

PLAGIARISM DECLARATION .........................................................................................................................................i
ABSTRACT .................................................................................................................................................................. ii
1. INTRODUCTION ................................................................................................................................................ 1-2
1.1. Origin, Background and Future................................................................................................................................. 1
1.2. Application in real life ............................................................................................................................................... 1
1.3. Gamification in Business ........................................................................................................................................... 2
2. GAMIFICATION IMPACT ON THE SOCIETY .......................................................................................................... 3-6
2.1. Consumer Behavior and game dynamics................................................................................................................. 3
2.1.1. Game appeal to human psychology ............................................................................................................... 3
2.1.2. Game mechanics ............................................................................................................................................. 4
2.2. Customer Benefits.................................................................................................................................................... 5
2.3. Social criticisms of Gamification .............................................................................................................................. 6
3. GAMIFICATION IMPACT ON THE BUSINESS ........................................................................................................... 7
3.1. Relevance to Enterprises ........................................................................................................................................... 7
3.2. Digital Marketing and Gamification .......................................................................................................................... 7
4. FUTURE PROJECTIONS OF GAMIFICATION ............................................................................................................. 8
4.1. Adoption and development of Gamification ............................................................................................................. 8
5. CONCLUSION ....................................................................................................................................................... 9
6. APPENDIX (GRAPHS) .......................................................................................................................................... 10
7. REFERENCES ................................................................................................................................................. 11-12


Introduction

Origin, Background and Future
The concept of Gamification is the idea of using game mechanics, design techniques and game
thinking in a non-game system to enhance user experience and engagement (Dixon et al., 2011).

Gamification cannot be considered entirely as a new concept, it originates from back in 2008 when it
was first introduced by Gabe Zichermann. The founder and CEO of Gamification Co. Zichermann
(2010) referred to the concept of gamification as “Funware”, which he defined as “the art and science
of turning your customers` everyday interactions into games that serve your business purpose”.
Gamification gained its fame and widespread in the year 2010, when it was first popularized in the
digital media industry (Dixon et al., 2011).

“Many large Enterprises are starting to look at gamification as a powerful strategy to drive
engagement across their internal and external programs” (Herger, 2012. p. 6). Proponents of
gamification believe it to be the next generation of advertising strategy. Customer relationship will be
made stronger and ever lasting through facilitation of entertainment for users whilst interacting with
the brand (Mind Commerce Research, 2012).

Mind Commerce Research (2012) reports that gamification is expected to be employed by
approximately eighty percent of 2000 Global organizations in 2017. It also projects that the growth of
gamification will reach 3.6 billion US Dollars in this same year. Gamification is a rapidly growing
concept, and therefore it should be reviewed carefully. This paper will do just that, and it will also
provide examples of gamififcation usage in real life.

Application in real life
Gamification in business is mostly used to incentivize customers to buy more goods and services.
This is normally done through the use of loyalty club systems. The systems in which customers are
provided with club accounts, and are entitled to earn a motivational reward for every business
activities they partake in.

In academe, gamification could be used to motivate students to engage more in their studies or extra
mural activities by providing elements such as points, badges etc. The most common scenario in
tertiary institutions is whereby students, after completing a course evaluation, are exempt from full
number of tutorials required for that particular course as to inspire them to do the course evaluations.

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Having said gamification is an incentive strategy, it could therefore be used, not only in the business
or academe context, but in many other forms as well. It can be used as a form of currency in the
organizations. For instance, a catering company can offer vouchers for every meal missed, and these
vouchers could then be used to purchase anything from somewhere else (Educause.edu, 2011).
However this essay shall focus mainly on concept of gamification in relation to the business context.

This essay will analyze the impact of system gamification on the society, by reviewing the effects it
has on the consumer behavior, and benefits it provides to the customers. It will then revise the impact
and the relevance of gamification to the businesses. It will finally evaluate the criticisms of
gamification in both societal and business context, and conclude by analyzing its future projections.

Gamification in Business
Nowadays competition is encountered almost everywhere, most especially in the world of business.
For every single form of business there are many entities engaged in it. For instance, in a business
center one can find more than three retail stores situated close to each other, selling the same or
similar products, targeting the same group of people. In such competition it is quite clear that new
forms of marketing strategies are needed. This leads to the concept of gamification (Jiang, 2011).

Due to the developments in marketing strategies, most of the Businesses are customer orientated.
Therefore for every business decision they make, they have to consider possible reactions of
customers. This reactions are basically what they need to control in customers, for they don`t want
bad reactions for the sake of their financial returns. Gamification is a best tool to control this reaction
behavior of the customers.

Businesses could then use it to draw consumers` attention to their brands, and manipulate or
incentivize them to purchase their product more and more. They can also use it to build a longer
customer relationship through gamified brand loyalty programs. Gamification is the future of
Enterprises, and so do social media and digital marketing. This paper explains how these concepts fit
together, and most importantly how will they impact on the future of both society and Businesses.

This article explains the relevance, impact and benefits of gamification to the Enterprises. In doing so,
it also reviews the effects of other concepts that foster and work with gamification.

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Gamification impact on the society

Consumer behavior and game dynamics
The underlying objective of system gamification is typically to influence human behavior, or rather
consumer behavior in this context. System developers do this through the implementation of game
dynamics in non-game systems. Game dynamics are elements that incline to motivate and
encourage humans to engage more in a game. These motives are directed to appeal to human`s
desires, needs and wants, and this technique is archived through the study of human psychology.

Game appeal to human psychology
Human`s needs, wants and desires are the main things people are living for. Almost everyone is
engaged in what they are currently doing in order to get something they need, want or desire at the
end of the day. These three essentials are well categorized in what is world known as Maslow`s
hierarchy of needs (figure ii) (Poston, 2009). Maslow (1943) said that “Classifications of motivations
must be based upon goals… or motivated behavior”.
Game designs do just that, they provide goals i.e. game
mechanics to motivate user behavior. In the context of
system gamification this mechanics are usually the
rewards consumers are earning for participating in
business activities. Most common game mechanics used
in gamified systems are: points, levels, challenges, goods
and so forth. System developers implement this game

Figure ii mechanics in non-game systems in a way that would best

correlate with human`s needs, desires and wants. Therefore inspire them to engage more in business
activities whilst satisfying their needs. The matrix on the next page illustrates the correlation between
human desires and game mechanics. Figure iii (Bunchball.com, 2010).

The idea behind the correlation of human psychology and game designs follows from that of actual
games. Games, by origin, are designed to appeal to humans` psychology, and therefore violate their
autonomous decisions. Once a game has earned a great appeal to one`s consciousness, user tend
to be addicted to it. It is because of such addiction people incline to make irrational decisions about,
perhaps a game they want to play. Critics of system gamification may argue that such practice
violates consumers` autonomous decision, and lead them to buy things they are not intending to
purchase, or purchasing a lot more than intended.

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Matrix of correlation between Game mechanics and Human desires

Figure iii (Bunchball.com, 2010)

Game mechanics
As mentioned earlier, game mechanics are game rewards that are designed to trigger humans`
desires and perhaps get them to engage more into the game, or rather business activities.
Bunchball.com (2010, p. 9) defines game mechanics as “tools, techniques and widgets that are used
as building blocks for gamifying websites or application”. These mechanics are the key elements of
gamification, they are the building blocks of system gamification. Therefore it is important to clarify
them.

1. Points
Points are typically used to reward users in various ways. A common application of this
mechanism is in the mobile network industry. Most mobile network companies, such Mobile
Telephone Network (MTN) use this technique to encourage their clients to purchase more
airtime and to make more voice calls. They provide their clients with a certain number of points
for every airtime purchased and every call made. These points could then be used to buy
Short Messages (SMSs), Data bundles or airtime after having accumulated a certain number
of them.
2. Levels
Levels are different classes that categorize participants in a program. This technique is usually
used in athletics, especially martial arts. For instance, Martial arts participants are classified in
levels where each level is represented by a different colored belt. (Bunchball.com, 2010)

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3. Challenges
This technique is closely related to competition. In this technique all participants are let to
compete to earn the highest score, but only the winner will receive a reward. For instance,
Vodacom, a mobile network company, lets its clients to compete on arranging nine alphabets
to match theirs. In this case all Vodacom clients participate but only one or few will win.
(Bunchball.com, 2010)
4. Virtual goods
Virtual goods are intangible products that are purchased for use in online communities, such
as social networks, online games and so forth. Ernst & Young (2010) defines Virtual goods as
non-physical objects within the online community represented by animations and pictures.
Users can be rewarded with these virtual goods, which they can then trade within the
community in exchange of either points or actual money. (Ernst & Young, 2010)
5. Leaderboards
Leaderboards are mostly used in arcade machines to rank the players. They display a
hierarchy of scores to indicate how players are performing against one another. In the context
of gamification, leaderboards are used to display participants` results with an aim of inspiring
competition, and therefore creating valuable behavior for the business. (Bunchball.com, 2010)
6. Badges
The technique of badges is about giving participants assignments to accomplish and then
rewarding them for doing so. The idea is to arrange challenges based on actions that you„re
tracking, and reward users for reaching certain milestones. The same approach applies to
other similar forms of remunerations such as Trophies, Ribbons and Medals.

Benefits of customers
Having set out the mechanics that are used in system gamification to trigger humans` behavior, it can
be said that these types of rewards are in consumers` interest. We all want to earn something in life,
it could be a badge, recognition level, spendable points etc. it doesn`t matter as long as it satisfies our
desires. Therefore proponents of system gamification believe that this ideology is not only in the
interest of Businesses, but also in the interest of customers.

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Social criticisms of gamification
Critics of system gamification argue that gamification is not acting in the interests of customer, rather
it manipulates them. Bartle (2011) believes that gamification is basically bribery, for he defines bribery
as “rewarding someone for doing something that you want them to do.” He also said that gamification,
in some instances, remunerates customers with rewards that are not valuable, and invaluable reward
is not really a reward. He is basically saying that superficial motivations such as virtual goods are not
enough to remunerate customers, at least in a fair sense of humor.

Costa (2012) supplements Bartle`s argument by stating that “It feels like bribery if participating is
clearly just a means to serve the brand, and people are going to feel used.” Gamification is not a real
game, rather a collection of game elements. This means that gamififcation is not as sophisticated as
actual videos games, and therefore it could be easy for customers to be cheated or for them to cheat
the system. (Costa, 2012)

Participants are rewarded too soon in the process. The remuneration should build over time to reward
a long-term commitment. If participants are remunerated too early and often, their commitment will
mean nothing, because the rewards will be of a very small amount and significance. Therefore it
does not worth the effort. (Costa, 2012)

Barraud (2012) claims that gamification can demotivate genuinely interested customers. For instance,
some people don‟t like competitions and they would loose interest on what they like once competition
is introduced to it. Zechermann (2011) also said that if gamification introduces competition and
subsequently removes the genuine intrinsic interests of other participants, then it will be promoting an
activity at an expense of those participants.

Other philosophers believe that people in aspects such as education and work must have intrinsic
motive to engage in them. They argue that educational activities and work are kind of things people
should do out of their willingness, without being incentivized. Incentivized people tend to do things for
the sake of achieving a reward, instead of their greater good (Jiang, 2011). Academics and work have
an instrumental value within themselves, a greater good than a gamification reward. Therefore
gamification shouldn`t be practiced in academics and work.

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Gamification impact on the Businesses

Relevance to the Enterprises
Ideologies that influence human psychology can be useful in business affiliations, for they can be
helpful for inspiring and manipulating consumers purchasing behavior (Cialdini & Rhoads, 2012).
Influencing consumers purchasing decisions is the most vital point in business marketing. The
objectives of business marketing strategies are to attract new customers while keeping the existing
ones, and to build a stronger relationship with them (Kotler & Amstrong, 2010).

These objectives are achieved in many ways such as marketing campaigns, advertising, social
responsibility programs and so forth. The dawn of gamification concept comes about a new approach
of attain these objectives, and yet satisfying consumers` desires and entrepreneurs` goals (Herger,
2012). Therefore gamification is relevant to Enterprises by means of marketing, and subsequently
provision of desired business objectives.

Digital Marketing and Gamification
Lusch et al. (2004) mentioned that the dominant traditional sense of marketing is moving from the
trading of goods to a more interactive customer relationship and service focused logic. This transition
is made possible by the advances in digital technology and more innovative ways of channeling
business operations (Bhattacharya & Bolton, 2000). With this growth in digital environments, such as
e-commerce, digital marketing, e-business etc. digital information has become an integral part of
marketing strategies (Rowley, 2002).

The actual relevance of system gamification to Enterprises is wholly through digital environments, in
which it ranks in the top four of digital marketing (Mind Commerce Research, 2012). Gamification, in
business, would not be efficient and effective if it is operated outside the digital environment.
Consider brand loyalty program, it could be a bit tedious to manage customers` participations and
rewards on a pen and paper fashion. It is easier to digitally gather, store, retrieve and manage
information than doing it manually.

The concept of digital marketing is rapidly growing in recent years and so does gamification. These
two concepts are tidily linked, and are not one in the same. Digital marketing is mainly about
performing business activities online. For instance, advertising goods and services on the web,
whereas gamification comes in to encourage users to purchase more of these goods and
services.The adoption of digital marketing and system gamification will revolutionize the world. These
concepts are considered to be the next new generation of handling business operations.

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Future projections of Gamification

Adoption and development of gamification
“Gamification represents a promising strategy for public and commercial brands to increase customer
activity, brand loyalty, broaden reach and monetized assets.” said Mind Commerce research (2012).
For this reason lots of large corporates have began to adopt and realize the opportunities that
gamification could offer.

MR2 Researchers (2012) believe that digital entertainment, including gamification, will continue to
attract attention of many consumers through compelling game mechanics and designs that enhance
user experience. The more consumers are attracted and motivated, the more overall participation
increases and so do Business financial returns.

The adoption and implementation of gamification is expected to grow exponentially in the next few
years. It is forecasted to accumulate a market share of over $2.5 billion in 2016, refer to figure 1 in
appendix. MR2 Research (2012) shows that currently only 47% of Enterprises have implemented
gamification specifically to engage customers into business activities. It also estimates that 22% and
15% of Enterprises will respectively make use of gamification to enhance Brand loyalty and Brand
awareness in the future, see figure 2 in appendix.

This statistical analysis illustrates that gamification is still in its infancy stage. Smart Enterprise
executives would see this as an opportunity for them to take advantage of gamification while it is still
early; for it will benefit them in a long run when more and more Enterprises begin implementing it.
Anderson (2012) believe that gamification is the dawn of new of commercial and social development,
which might lead to the end of traditional marketing orientation, and the beginning of game-orientated
marketing.

According to Anderson (2012) the adoption of gamification will have attained critical levels by the year
2020. Gamification will have been implemented in so many aspects including marketing, health,
education etc., said Anderson. Other proponents say it will be just as attractive as social networks.
Social networks, or rather social media are the second most used tools in digital marketing following
Search Engine Optimization (SEO). For instance, Facebook alone occupies roughly 75% of brand
awareness activities of many companies (Webmarketing Research, 2011). If digital marketing could
grow this much through social media, then it could go over the edge through gamification. This is
because gamification doesn`t only entail commercial and social engagements, but it includes
inspirational elements for customer experience, which lead to better customer engagement.

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Conclusion
It was never foreseeable that games could be the future of our digital world. Yet we see the concept
of gamification drastically shaping the future of the world. Though gamification is still developing, its
future is quite promising. Its use will not only be restricted to the business operations, but it will be
adopted and used in many other fields, and it will ultimately become part of our everyday life. It will
bring a change to our lives.

Though critics believe that gamifiation violates consumers` autonomous decision by creating desires
for them. At least it doesn`t expose them to any harm of whatsoever kind, rather it enhances their
experience and enjoyment. However Enterprises should not take advantage of it and harshly
manipulate consumers` psychology.

There is no doubt that gamification will be widespread in the near future. There are many other
aspects that foster its growth, including digital marketing and social media. These aspects are also
dramatically growing in recent years, and are making gamification even more crucial concept to
consider. Therefore a good understanding of how it works and early implementation might earn
Enterprises a competitive advantage in the near future. Employment of gamification in Enterprises is
a way to go.

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Appendix (Graphs)

Figure 1 MR2 Research 2012 Gamification Market Forecast

Figure 2 MR2 Research 2012 Client Implementation

Figure 3 Webmarketing Research 2011 Brand Awareness in Social Media

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Reference

Amy, K. J. (2011), Gamification 101: Design the Player Journey. Game Developers Conference (GDC). San
Fransisco.

Anderson, J. (2012). The future of gamifiation. Future of the internet. Retrieved from
http://pewinternet.org/Press-Releases/2012/The-Future-of-Gamification.aspx

Bartle, R. A. (2011). Too much of a good thing. Gamification. Retrieved from
http://www.mud.co.uk/richard/Shoreditch.pdf

Bhattachary, C. B., & Bolton, R. N. (2000). Relationship Marketing in mass markets. Lodon, UK: Sage
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Bunchball. (2010). An introduction to the use of Game Dynamics to influence Behavior. Gamification101.
Retrieved from http://www.bunchball.com/sites/default/files/downloads/gamification101.pdf

Chester, J., & Montgomery, K. (2008). Digital Marketing. Digital Media and Marketing. Retrieved from
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Cialdini, R. B. & Rhoads, K. L. (2012).Human Behavior and marketplace. Marketing. Retrieved from
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Costa, C. D. (2012). 7 potetial pitfalls of gamification: Gamification. Retrieved from
http://www.imediaconnection.com/content/31753.asp

Dixon, D. Sicart, M. Deterding, S. O`Mara, K. Nacke, L. (2011). Using Game Design Elements in Non-gaming
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Herger, M. (2012). SAP and gamification in the enterprise. Gamification
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