Enterprise gamification — the application of social gaming theories and techniques in business environments — is taking off, with Gartner projecting that 70% of Fortune 2000 organizations will have at least one gamified application by 2015. However, Upstream recently reported that, while 78% of marketers believe that customers are more likely to respond to game-based marketing, only 27% have actually deployed the strategy. Reasons for this disparity include a reluctance to embrace new technologies and processes, as well as the lack of a blueprint on how to create and roll out such programs.
However, we are now seeing a broad range of firms from many industries deploying gamified programs to educate customers, train staff, introduce new products or service, as well as building greater engagement with customers, prospects and employees. Some recent examples of gamification in action include:
- Health care benefits provider Aetna teamed up with Mindbloom to offer the premium Mindbloom Life Game to improve personal wellness for customers and employees.
- Extraco Bank of Texas used the Bonus Banking Game to promote benefits and improve conversion rates for a new checking account.
- GM’s Buick created a series of smartphone games to educate consumers on e-Assist, its fuel-saving technology.
- Verizon Wireless gamified its online entertainment and lifestyle portal, Verizon Insider, which resulted in significant increases in traffic on the site.
Based on EMI’s experience in developing and deployment gamification programs for our clients, here are a few best practices to guide your success:
- Clearly define your game objectives, or you’ll find it gets lost in chutes and ladders. Articulate your goals and make the desired changes in customer/employee engagement measurable. And don’t limit yourself to education…product testing, employee recruitment and customer acquisition can all be addressed with gamification.
- Remember the technology baseline and limits of your audience. User experience is key to success; if your audience is all mobile, test on the full spectrum of devices and keep the real estate and graphic limitations of smartphones and tablets in mind. If you’re targeting employee audiences in locations far and wide, download speeds can be a limiting factor.
- Make it fun, but not too easy. Everyone loves to win, but make it too easy and boredom will drive users away. Make winning too hard, and the game will also fail.
- Positive feedback is required. Who doesn’t like encouragement? Let players see their wins early and you’ll encourage longer sessions, more attention and greater learning.
- Mix up the rewards. Choose incentives based on the desired behavior changes and their value to you, and use “soft” rewards like badges and leaderboards to increase ROI. Of course, real incentives like miles, points or virtual currencies up the ante.
- Ensure that players understand the ultimate aim of the game. Players may view the knowledge or experience they gain from the game as additional incentive to play. For instance, if the ultimate purpose of your enterprise gamification program is to enhance customers’ financial literacy, players may be just as motivated to play by the education they will receive as they are by the points they earn along the way.
- Keep score on user engagement. Get feedback from users on their experience, and use it to improve future programs.
Many recent surveys have pointed to customers’ reduced branch usage for everyday banking, as they embrace Internet and mobile banking. Many of the leading banks have reported very strong year-over-year growth in mobile banking active users in 2Q12, including Bank of America (+35%, to almost 10.3 million), Chase (+38% to just over 9 million), and Wells Fargo (+ 38%, to 8.3 million). At the same time, many banks are implementing aggressive cost savings programs.
Based on this, one would expect banks to significantly cut back on their branch investment. FDIC data bears this out, with total U.S. bank branch numbers falling by more than 500 in the year to end-March 2012. However, the following chart reveals that this trend is not universal, with many leading banks increasing branch numbers over the past year.
While some banks (such as Chase) have grown their networks organically, the increase in branch numbers for most of the other banks listed above was a result of branch/bank acquisitions.
- PNC grew its branch network following the acquisition of RBC Bank, as well as the purchasing of branches from Flagstar Bank.
- Chase grew its branch network in growth markets like California and Florida. However, it has scaled back ambitious plans to grow its network further in the coming years. Chase has also radically expanded its Private Client locations, from 16 in 2Q11 to 738 in 2Q12.
- KeyBank’s net increase of 14 branches was due to the acquisition of 37 branches in upstate New York, partially offset by branch closures. The bank has reported that branch rationalization is one of the central elements of its new efficiency initiative, and it plans to cut 5% of its branches in the next 18 months.
Factors that impact bank branch numbers include:
- M&A activity (highlighted in the examples above)
- Strategic decisions to increase/reduce presence in specific markets (e.g., grow branch numbers in targeted markets, or reduce branches in other markets where the bank’s branch presence is below a minimum threshold)
- Ability of specific branches to meet performance goals (e.g., growth, profitability)
- Competitive activity
Though surveys indicate that branch usage is declining, a majority of consumers and small businesses still value branches, as they want a multi-channel bank relationship (encompassing physical and virtual channels). This is leading banks to change branch design and staffing models in order to reposition branches to provide a broader role for the bank, in areas like selling, relationship development, product testing, and branding. (See our recent blog on the changing role of the branch.)
For decades, bank branches have been focused on everyday banking transactions. However, with electronic self-service channels now handling a dominant share of these transactions, branches have come under intense scrutiny, with many industry commentators predicting the decline and even extinction of the branch channel. This view has been strengthened by the fact that banks are focusing significant attention on cutting costs in an era where revenue growth remains elusive. And branches represent a significant cost for banks.
Banks are belately beginning to react to this new environment by developing new branch strategies that recognize its changing role. Banks are now putting less emphasis on the branch as a channel for day-to-day financial transactions. Instead, branch investments are being directed to capture the potential of the branch as a key channel for sales, customer relationship development (through the provision of complex and/or sensitive financial advice), and branding (even customers who bank online tend to want the physical reassurance of the branch). In addition, banks are increasingly aware of the research value of branches, both in terms of directly surveying branch visitors as well as testing new product or service innovations in selected branches before full roll-outs.
Some examples of new bank branch strategies:
- In a presentation this week at the Morgan Stanley Financials Conference, PNC outlined a vision of its branch network that involves a more dynamic definition of branches, which includes multiple physical formats, as well as greater integration with both remote sales people and electronic channels.
- Huntington recently reported branch plans driven by both the desire for cost savings (closing traditional branches and opening in-store branches) as well as to leverage the latest technology (such as branch image capture and processing) to drive efficiency.
- U.S. Bank has three branch models, which enables the bank to tailor branch investments to market composition and opportunity.
- Wells Fargo continues to have a strong commitment to the branch channel, as it claims that the vast majority of financial products are bought in a branch. It follows a specific model for branch productivity that is based on both in network density and retail execution, and which is seen in the following chart from its recent Investor Day:
- At its 2012 Investor Day, Chase discussed a number of branch innovations designed to reduce costs and improve the customer experience. These include self-service tellers, paperless tellers, instant-issue cards and access to remote sales specialists through video. It is testing other innovations like next-generation ATMs, paperless sales, and mobile demonstration zones. Chase is also continuing to deploy additional sales personnel in branches; at the end of 1Q12, Chase had more than 6,000 sales specialists (y/y increase of 21%).
As electronic channels continue to change how consumers and businesses interact with their banks, many banks are reassessing the level and type of investments in their branch networks. Though most are still committed to the branch model—noting its importance in sales and understanding that many customers still want to have the reassurance of a physical presence—the role of the branch is evolving and this has important implications for issues like branch sizing, design, staffing, technology deployment, and merchandising, as well as integration with other channels.