Brands have embraced “gamification,” or using game-like behavior in non-game applications, as a way to engage their audiences. That is why gamification vendor Badgeville has more than 165 customers and is announcing today that it has raised $25 million in a new round of funding. Kris Duggan, chief executive of Badgeville, says gamification will let brands engage and retain their audiences. It also enables companies to inspire employees to collaborate or compete. Badgeville has a “behavior platform” to enable companies to measure and influence behavior by using game techniques. You can give salespeople rewards for hitting targets. Companies can embed the platform in web, mobile, social, and enterprise applications. Duggan’s team focuses on six “frameworks,” or templates that enable companies to improve behavior. Those include core gamification programs for web sites; programs for rewarding community experts; competitive pyramids; gentle guides for completing tasks such as tutorials; incentives for collaboration; and challenges to create competition with company departments. We caught up with Duggan for an interview on gamification. Here is an edited transcript.
GamesBeat: How many customers do you have now?
Kris Duggan: Over 165.
GamesBeat: How are you serving them? You must be past the time of customizing solutions for every account?
Duggan: We use what we’re calling the Gamification Frameworks. We believe that we’re the first company to publish a set of frameworks for how to implement gamification in a sophisticated, yet turnkey way.
We’ve actually identified six frameworks that we think constitute the vast majority of the types of use cases that our customers want. This is really where most of our thought leadership is and most of the excitement.
Is every single deployment its own kind of beautiful snowflake, or can this stuff be productized and still be done in a sophisticated way? I think there’s something there. Our company continues to grow. We’re on fire. We’ve got three offices now around the world. We’ve got 70 employees. We think we’ll be at about 200 by the end of next year. We’re adding about one to two a week right now. We’re doing lots of customer-facing deployments as well as lots of employee-facing deployments. It’s a really healthy mix between the two today in terms of the types of deals we’re doing. We’re doing almost 3 billion requests a month on our API servers by now.
GamesBeat: What does that number of requests signify?
Duggan: Every time the system gets hit in order to track a behavior or deliver some type of experience, that’s the volume of interaction that we’re supporting with our hosted SaaS (software as a service) offering. We’ve always been fairly open about revenue. We expect, consistent with what we said at the beginning of the year, sales between $10 million and $20 million dollars this year. We launched the company in September of 2010. So this is our seventh quarter.
GamesBeat: What kind of customers are coming in now?
Duggan: A whole variety. It’s really a combination of companies that are customer-facing and have lots of users and large-scale consumer experiences. Barnes & Noble is one of those. Actually, on our homepage you can see quite a lot of logos rotating. But we’re also starting to see brands and Fortune 1000 and enterprises want to incorporate these experiences for their users or their employees. We’ve even been signing up companies like Saba and Marketo, which are B-to-B software companies that are now incorporating our capability into their experience.
Some of those we can’t talk about, but it’s very consistent with some of the logos you might see on our website, like Dell, Deloitte, and others. I think the biggest breakthrough over the last year is the applicability of gamification. It turns out it’s very applicable any time you have an audience, whether it’s customer-facing, partner-facing, developer-facing, or employee-facing. If you need a technique to drive engagement or drive behavior, you can use gamification to do that, and it turns out it’s applicable to lots of different things.
GamesBeat: I see you guys have some kind of stat on the Google search term. How often does “gamification” show up there?
Duggan: A year and a half ago it was like 700 results, and now it’s like 3.3 million a month. If you want to find a category to bet on, usually the pace in adoption of the terminology is probably a decent indicator.
GamesBeat: Yeah. What is the reason why it’s catching on so well, then?
Duggan: I think there’s a bunch of macro trends in play. We’re kind of at the intersection of those trends. People are expecting modern experiences, whether they’re on websites, a mobile app, an enterprise app, or whatever it is. Social is driving a lot of that.
You could talk about how big data is and how collecting data and acting on data and having insight from data is also kind of a major trend.
You could talk about games and how social gaming has revolutionized experiences and what people spend on their time on nowadays. This understanding that games and the behavior around games is becoming more pervasive in our society. I think those are the big three: social, modern experiences, big data and insight, and games, the rise of social gaming.
Those are the macro trends, but there are also two major problems which gamification addresses. These are timeless problems, but probably are more exacerbated. The first problem is, customer loyalty is fleeting, and so businesses need to do whatever they can to retain and engage customers, particularly in this ever-growing, competitive landscape.
Secondly, employee performance is not where it needs to be in terms of employee productivity. We could spend a lot more time talking about that if you like, but if you look at the last five years of enterprise software, there has been a trillion dollars worth of software that’s been sold over that period, and [analyst firm]Forrester Research claims that only 50 percent of the software is being adopted by employees.
In fact, in some categories like social software, only 12 percent of that software is being adopted. And so imagine on the employee side, you’ve got all of these technologies, all of these employees, all this chaos, and you need to drive performance and productivity. It turns out that gamification is a very effective weapon against those issues. Improving customer loyalty and employee performance are age-old challenges, and it turns out that we’ve got a solution to solve those problems.
GamesBeat: I see there’s a wave here that’s lifting your competitors BigDoor as well as Bunchball.
Duggan: Yeah, I think that’s right. A rising tide raises all ships. We do think that we are synonymous with gamification. We do think that we’re the clear leader in the category, the gold standard if you will. But I agree, this is good for everyone in the category, and we should all celebrate that.
I do think we have the most employees, the most expertise, the most customers, the most revenue, the most deployments, and the most funding… The only thing we don’t have is “been around the longest.” (That belongs to Bunchball). And actually I don’t think you want to be the winner in that category. One of the other companies was a good company, but with totally wrong timing. We like to think that our timing was impeccable.
GamesBeat: So what’s an example of a framework?
Duggan: So now let’s talk about gamification frameworks. We have 150 customers, a ton of deployments, and what we learned is that you can slice and dice those into, obviously, as we’ve been talking about, internal and external. And then the other dimension is about the degree of competitiveness, collaborativeness, or solo experience that you’re trying to drive.
Companies can self-diagnose. They can now determine what type of gamification they should deploy. Obviously we provide technology beyond the just the cloud leadership. We even give you prepackaged widgets to rapidly create these experiences on your website, mobile app, or enterprise app. We just go through a couple of examples.
We really want to focus on building community. And we call that the community expert framework. Physically, you would orient that around a forum or experience or a discussion type of experience. Rather than just doing the good old-fashioned badging and achievements and missions, that kind of stuff, what actually works really well here is to allow users to demonstrate expertise by creating quality content. This is probably more oriented around reputation than it is around gamification, but it’s very a clear use case that is about earning status and demonstrating expertise than it is just unlocking achievements.
GamesBeat: What’s another?
Duggan: We have the internal-use case and solo-driven. It’s not social or community-oriented, and it’s not competitive. It’s what we call a gentle guide. A gentle guide is being very clear on guidance and direction. A gentle guide allows you to take monotonous, redundant tasks and organize them in a game framework that encourages compliance around those things.
Imagine you’re at Safeway and you wanted the store manager to do tasks. Every single day you have to go out and check things, start the inventory, set up the floor displays, pay the employees, and file these things. Gentle guide would be perfect for that.
And then we have what we call that company challenge. That is perfect for things like sales teams, where we’re going to add a layer on top of SalesForce.com or whatever customer relationship management (CRM) software they’re using, and we want to really drive competition, performance, and management around key metrics, and services performing or not performing.
GamesBeat: Do you see more use of gamification for company competition or company collaboration?
Duggan: I think it depends on the application in each case. If you came to me and said, “We have Lithium and now we want to extend that concept into over applications across our enterprise,” or, “We have Jive and we want to extend that concept and collaboration spirit across other applications,” then I think company collaborator, which is the internal version of community expert, would be perfect for that. Let’s create a reputation system that doesn’t foster competition but actually fosters expertise and recognition around really being a quality contributor. Or I’ve got a sales team or a support, help desk team, and these are really clear metrics. We just want to recognize the top performers and shame the non-performers. Then I would say company challenge would be a perfect use case for you. I think this is a big breakthrough.
GamesBeat: Why is it a breakthrough?
Duggan: Up until this point, some providers have only had one game. Or it’s the other extreme, where every single deployment is its own unique kind of major development effort. Full custom. And so imagine having, now, the ability to solve 90 percent of these use cases with these six game frameworks.
GamesBeat: Yeah, that seems like an easier way to get customers on board. They can more easily figure out what they want to do.
Duggan: It’s almost like a restaurant, you know? Before it was like we only had one meal. Everybody had to eat the same meal — and I’m talking about the industry, by the way, not us — the industry had either one meal, or everything was like, “Well, tell me what kind of food you like.”
Duggan: Right. Everybody would have to go through that, right? “Well, tell me what kind of food you’d like to eat. Do you like hot food, cold food, spicy food?” And it would take a long time to implement things. Now we just say, “Here’s the menu,” and you can choose from number one through six.
GamesBeat: How do you put these into effect, then? Are all of these sort of modules that have an equal cost to them, or are they very different in terms of how much they cost?
Duggan: These all come with our platform. It’s more of a question of: Which capabilities do you want to leverage when you implement? This isn’t just like a packaging exercise. This was a very large development effort because every single thing, every feature that goes into being able to deliver one of these six game frameworks, had to be built into our core platform. Like the ability to assign tasks to a store manager at Safeway, and then to visualize tasks, and to make them actually reset every day or every quarter or every month. The ability to create teams, like sales teams, by region. All of those features are now implemented into our platform. You don’t have to worry about all the deep features. All you have to do is say, this is the package of solutions that we want to apply to our problem. We provide all of the widgets and visuals as well beyond just the core feature set. Per framework.
GamesBeat: If the customer then says to you, “Alright, what’s the average return I get from gamification?”, what do you then say?
Duggan: We could spend a good half an hour on that. We have a whole set of metrics, actually, organized by verticals and by use case and by behaviors, where we look at what behaviors they’re trying to drive and what kinds of lifts we can deliver for those types of behaviors.
A year and a half ago it was kind of like, “Who even knows if any of this stuff will work?” We talked about that a long time ago. “Will this even work?” And then we built enough data to show that it’s very effective. But then the question was, “Well, it works on that, but does it really work on these other kinds of things as well?” And it turns out, by the way, it works on those things as well.
And so, depending on the types of behaviors, we can show the lift by either engagement, retention, or conversion. And some example lifts that we’ve actually delivered, that we could send to you if you’d like to see that.
GamesBeat: Yeah. It looks like you guys are in an interesting growth market here. What would you say about your road map, I guess? How the rest of the year is going to look?
Duggan: The one thing that we are really excited about is the guy that we’ve hired to be VP of product. You probably remember, I was the VP of product for the last year and a half. I interviewed over 50 people, and I ended up hiring Chris Duskin. It’s funny, he sounds like Kris Duggan, but it’s Chris Duskin. We hired him from Adobe. He ran all of their recommendation products, testing products, AP testing products. And now we’re just going to go deep into the platform. We’ve got lots of customers, lots of data, lots of capabilities, and we want to continue to invest in all of the things that we believe allow us to measure and influence user behavior.
GamesBeat 2012 is VentureBeat’s fourth annual conference on disruption in the video game market. This year we’re calling on speakers from the hottest mobile, social, PC, and console companies to debate new ways to stay on pace with changing consumer tastes and platforms. Join 500+ execs, investors, analysts, entrepreneurs, and press as we explore the gaming industry’s latest trends and newest monetization opportunities. The event takes place July 10-11 in San Francisco, and you can get your early-bird tickets here.