Asset Management

01:55 PM
Rajat Paharia
Rajat Paharia
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Three Engagement Strategies That Pay It Forward in Finance

When you can leverage status, education, and big data to engage your customers, interactions not only become more frequent, but also more productive.

Gamification has gotten a bad rap over the past year under a common misconception that it is all fun and games. However, some of the most serious players in the financial industry, where analysis is especially focused on ROI, have used gamification tactics as a means to drive revenue, engage new customers, educate existing customers, introduce them to new services, and keep them from jumping ship every time a competing bank offers free checking, or a competing investment firm offers free trades.

So how does gamification work, and why should it be taken seriously? Gamification combines the latest understanding of human motivation with big data, in order to help companies meet specific business goals. In fact, many of the components of gamification have been driving business success for decades. A lesson in American (Express) history helps explain how it was driving customer acquisition and revenue before the term “gamification” even existed.

Keeping up with the Joneses
In 1958, American Express debuted its first charge card, with a marketing strategy focused on status and exclusivity, and it paid off. Within five years, there were a million people carrying it and 85,000 merchants accepting it. Today, the ultra-exclusive Centurion (a.k.a. “Black”) Card -- which is not advertised to the public -- is the pièce de résistance of the card-carrying world.

We crave status. We strive for it, work very hard for it and, when we have to, we pay for it, which is why status is one of the motivators at the core of gamification.

Beyond status, people are motivated by autonomy, mastery, purpose, competition, and rewards. Credit card companies generally offer cash and a variety of discounts as rewards, which generate loyalty to the best deal -- but not necessarily loyalty to the brand. While gamification also provides the ability to offer users cash and discount-based rewards, it goes much further to create an entire rewards ecosystem that encompasses status, recognition, early and exclusive access, personal empowerment, and new social opportunities.

Knowledge is power
Another aspect of engagement often overlooked is the power of education. Many products and services require a certain level of education to unlock their true value, especially in financial services.

Take, for example, workplace retirement and savings plans. Many employees find them complicated and overwhelming, which causes them to miss out on the opportunity to invest strategically. Younger employees especially find it challenging to prioritize when retirement is decades away.

Sun Life Financial created money UP, an online education platform that breaks down retirement and savings information into a series of missions that are progressively challenging, yet attainable. Participants complete short quizzes to move on to new levels, and a leaderboard allows them to compete against colleagues and share their completed missions through Twitter and Facebook. Since its implementation in December 2013, money UP has driven increased participation in workplace retirement programs. In the first six months, 33% of employees who finished Level 1 increased their contributions and/or added a new product. Of those who added a new product, 88% also added assets. Also compelling were the demographics. Not only have Millennials been among the highest proportion of players in money UP, they are also taking action: 44% of employees who increased contributions or added product were Millennials.

“Plan members are not only learning about retirement planning and investing, they are taking action when they participate in money UP,” says Nadia Darwish, VP of market development for Sun Life’s Group Retirement Services. “And younger employees -- who have always been challenging to reach when it comes to retirement education and planning -- are particularly active.”

Similarly, Wall Street Survivor, a financial education company, is also driving financial literacy with a sort of fantasy football, stock trading edition. The company enables participants to manage their own fantasy stock portfolios while competing against friends, peers, and colleagues for the chance to win prizes. Participants can learn about investing in financial markets by trading fake stocks of real companies in real-time and, through that process, gain the skills necessary to direct their own investments.

The gamification platform offers a series of missions that guide participants through a wide range of concepts, from portfolio basics to investment strategies. Leaderboards show the most adept traders in real-time, creating a hierarchy within the community. Those at the top, whose virtual portfolios earn the highest returns, get the status and reap the rewards.

“We’re effectively reinventing the financial education market through deep engagement, social connectivity, and gamification,” says Rory Olson, the company’s CEO. “We use gamification to create a community of market-savvy investors who are learning to trade stocks like pros, and it’s been very effective.”

The bigger picture with big data
Whether you’re a bank, an insurance company, or a stock broker, you’ve probably collected a lot of financial data about your customers. While that’s incredibly relevant, you only understand one facet of your customer. By keying into supporting information and context, you can drive customer relationships much further.

The popular financial monitoring tool Mint, for example, collects data from more than five million users. The company uses data like spending patterns to get a glimpse into the everyday lives of its users and then translates data into money-saving suggestions tailored to each individual.

But Mint went further. It took their collected data and provided a point of financial comparison. Users can compare their finances with others through filters like demographic or location, driving users to work towards their goals. Big data isn’t just about collecting information. It’s about analyzing it, modeling it, and using it to create a deeper level of engagement between your business and your customers.

Getting invested
When you can leverage status, education, and big data to engage your customers, you will find that customer interactions not only become more frequent but also more productive. People are always searching for value on both the business and consumer ends of the spectrum. If you can tap into your customer base and get them truly invested, both parties ultimately benefit.

Rajat Paharia is the founder and Chief Product Officer at Bunchball. Widely recognized as the father of gamification, he founded Bunchball in 2005. Since then, he has parlayed his unique understanding of technology and design – along with a preternatural ability to ... View Full Bio
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KBurger
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KBurger,
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8/18/2014 | 2:14:13 PM
Not always a game
Interesting examples, Rajat. There definitely have been some productive uses of gamification in the insurance industry, although some of that has been more around education (e.g., wellness games in health insurance) than needs analysis and potenital selling. It's also important to note that gamification, or game techniques, don't always have to be applied to a game -- it can be used to show different risk/reward outcomes, for example.
Becca L
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Becca L,
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8/31/2014 | 2:48:04 PM
untapped potential of game mechanics
Rajat, this is a great read. As you say, many companies are scared away by "gamification" in financial worlds - probably because of the term's association to Nintendo and candy crush, but you provide solid examples of how its being subtally applied in real-world outcomes. Game mechanics hold so much potential to educate customers and employees and drive engagement. It's also a powerful way to better understand your audience. Thanks for sharing!
Becca L
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Becca L,
User Rank: Author
8/31/2014 | 3:00:26 PM
Re: Not always a game
Gamification not only makes the task more more engaging (unsurprising) but also has better retention rates. I recently covered another example of game mechanics from True Office, which is predominantly testing employee's knowledge of compliance with scenarios played out on a tablet or destop. Adding that big data element, users are scored and data is sent to internal departments to see where they need to fortify their training. Really jazzes up an otherwise snooze-fest.
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