Video game theory – using gaming for customer loyalty | KPMG | BE

Video game theory

Video game theory

The dynamics of games like Super Mario Bros. are teaching retailers how to address customer loyalty programs.


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Video games

Creating loyalty strategies based on game techniques is known as ‘gamification’.  Gamifiation draws on techniques designers use to change player behavior – points, rewards and leaderboards – to help brands and retailers connect with consumers.

Super Mario Bros. is a bizarre tale. A portly Italian plumber must defeat the army of a turtle-like creature to save a trapped princess. As our hero becomes more adept, he is rewarded with the power to break bricks, fly and shoot out fireballs. Yet this video game has such resonance, it has sold more than 40m copies and can teach retailers and brands something about customer loyalty.

"Gamification" for customer loyalty

Creating strategies based on game techniques

Creating loyalty strategies based on game techniques is known as ‘gamification’. In the words of Rajat Paharia, founder and chief product officer of Bunchball, which has pioneered its use, it draws on techniques designers use to change player behavior – points, rewards and leaderboards – to help brands and retailers connect with consumers. 

This approach could help brands and retailers worried by shrinking customer loyalty. In August 2013, marketing agency Havas Media asked 134,000 people in 23 countries to rate 700 brands. Most of those surveyed would have been happy for 73% of the brands to vanish. Millennial consumers, who now account for US$1.3trn of global consumer spend, are not swayed by brands. One thing we do know about millennials is that most of them grew up playing video games – on consoles, hand-held devices or online – as the internet developed and that partly explains the current fascination with gamification. 

Paharia is bullish about this new strategy’s potential. “Companies started out trying to maintain customer loyalty with complex discount schemes – buy 10 get one free! These are transaction-based, focused on customers and don’t generate the kind of loyalty businesses want. Then we tried one-to-one marketing, targeting loyalty through segmentation and personalization and direct mail and email. Open rates on these communications soon plummeted: customers were overwhelmed by the noise. The major enabling components in this new approach are: motivation (we’re reacting to what consistently and honestly drives human behavior), big data (especially data from interaction with customers) and a competitive experience that offers autonomy, control, the chance to master a skill, a meaningful objective, instant feedback, and interaction with/membership of a community.”

Retailers and brands using gamification

It's a simple as creating a game!

Sometimes, gamification can be almost as simple as creating a game. When Japanese soft drink giant Pocari Sweat launched an electrolyte drink in Indonesia, it created an online game called Ionopolis in which 94,000 players signed up to combat comic book monsters out to dehydrate a city. Competitors posted updates on social media, checked in to FourSquare locations to perform tasks, and were rewarded for buying drinks with in-game benefits such as codes to check hydration meters. 

Apparel chain Urban Outfitters built gamification into its app, which asks users to upload a photo, fill in a few personal details and customize their display background. The app gives points to users mentioning the brand on Twitter or Instagram and rewards them with such perks as advance warning of sales and early access to merchandise and concert tickets. Some photos have generated more than 50,000 likes. 

Alwin Magimay, Head of Digital and Analytics at KPMG in the UK, says: “Gamification can create an emotional connection with a brand or service and can provide businesses with a way to create new value – improving customer service, for example. One of our large retail clients needed to train staff at different stores to do things in a consistent way. In this case, staff in the fish department had to arrange fish in a particular way, but there was no uniformity from store to store. Staff were trained, but the execution was ineffective. They used a game where staff could photograph their finished layout, upload it, and colleagues from other stores could comment and score their work. Using this game, they quickly achieved around 80% consistency in the way fish were displayed.” 

Paharia believes most businesses could benefit from gamification but success is not all about gimmicks and techniques. “The questions you have to ask are: What is this campaign? What am I trying to get people to do? And why are people engaged with it? If your offering has no core intrinsic value, gamification won’t make any difference.” 

By value, Paharia means community; a compelling story (as odd as Super Mario Bros. sounds, the quest at its core is simple); reward (real or virtual) and engagement through real-time feedback (like Mario collecting his coins). Magimay says: “There’s a big opportunity for companies to take advantage of gamification, but there’s not enough imagination being put into how businesses can leverage it to drive economic value.” 

Key learnings

Three points for executives to consider

  • The power of games

    Some brands and retailers are using gamification to build customer loyalty. What’s keeping customers loyal to you?
  • Craft compelling content

    No matter how much you invest in gamification, you need to be sure you offer something that excites customers. If they don’t understand the benefit to them, they won’t play. 
  • It’s not just about customers

    The same drivers can be used to change your staff’s behavior and, in many cases, improve the way you serve the customer.

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