In an age of "Digital Darwinism" there is a growing fear of disruptive technologies, such as Uber, stealing the competition and making old business models obsolete. Jeremy Waite, Marketing Evangelist at IBM, questions whether the threat of "Uberization" within the gaming industry is justified or whether the real threat should in fact be "Tinderization" - the changing shifts in consumer behaviour that undermine every loyalty program ever created.
I heard a new marketing buzzword recently. Tinderization. It reminded me of an over-used term from last year, that referred to the threat of a disruptive technology challenging an existing business model ~ Uberization. It referred to the aggressive nature of a business model which was not afraid to fight for market share, either in the marketplace or in the courtroom. I thought long and hard about it because it seemed like a genuine concern many gaming executives had, referring to the (mostly misplaced) hysteria around disruptive technologies such as Uber and PokemonGO! Some of the brands I was speaking to were looking to scale their platforms and grow their customer base as quickly as possible, and were using terms like “fight the competition” and “survival of the fittest”. I thought the sentiment behind these strong words spoke of a much deeper concern, especially since at least half of the executive meetings I attended over the last year seemed to contain a variation of the phrase “… we don’t want to be Uber-ed” at some point during the meeting.
Their fear seemed understandable when I looked at some of the research I had been sharing:
- 55% of consumers say that they are no longer happy giving any data to marketers.
- 20% of brands will abandon their mobile apps by 2019.
- 30% of purchasing will be done via AR by 2020.
- By 2019 there will be 1M devices connected to the internet every HOUR!
- By 2020 up to 30% of browsing behaviour will not involve a screen.
- By 2020 the amount of data in the digital universe will be 40 times bigger.
There are some dramatic and scary statistics there, each one of which creates both a challenge and an opportunity for any gaming brand wishing to beat their competitors and develop into new markets.
So, if Uberization is the threat of a new business model making an old business model obsolete, Tinderization is the threat of changing shifts in consumer behavior undermining every loyalty program ever created, something that the gaming industry lives or dies by. In the early days of Facebook I worked with some of the fastest growing “social brands” who were capitalizing on the explosive growth of the social network, and who were attempting to buy loyalty via Facebook ads. Some of those brands were spending up to $500,000 each day, simply to engage new players so that they could provide them with such an immersive experience that the revenue that their loyalty generated, would far out-weigh any advertising spend. I went on to work on projects that attempted to put an economic value on gaming communities, based upon the number of fans, followers and subscribers that each community consisted of. Needless to say, the results at the time were inconclusive and far from accurate, mostly due to the difficulties in tracking behavior online, offline and instore. Suggesting that an Angry Birds community of 22M players on Facebook for example, may be worth $122M to Rovio was often met with a few raised eyebrows!
IBM has a deep heritage in customer analytics and the recent advancements in understanding cross-channel consumer behavior mean that it is now easier than ever to understand where your customers go, what they are doing and more importantly – what they are most likely to do next. It is also easier than ever to place an accurate value on those actions and manage your customers journey with your brand across every channel, no matter whether it is across social, mobile, web, app, instore, PlayStation network or X-Box live. Looking after your customers and gaining their loyalty and trust as they cross these channels has never been more complicated, but it has never been more important either.
Ever since I entered the marketing industry over two decades ago, I have seen report after report that stated no matter industry you work in, it is considerably cheaper to keep a customer than to find a new one. Over those twenty years, analysts and market research houses such as Forrester and Gartner have estimated that it is between six and seven times cheaper to retain a customer than to acquire a new one. According to consulting firm Bain & Co,
“If you are the loyalty leader, on average you will grow twice as fast as your market. Loyalty leaders have a 15% cost advantage and just a 5% increase in customer retention can generate a 75% increase in profitability.”
So we know that loyalty is one of the most crucial factors in increasing profits, reducing customer “churn” and cutting operating costs, but why is tinderization changing everything? Is it because our attention spans are shorter than ever and we must therefore create intelligent content marketing strategies which help us to “tell stories in swipes”? Many marketers believe this is true but that’s not the real issue.
The issue is that in 2017, loyalty is fleeting, and in the moment it is possible we may engage with whatever incentive is being dangled before us, but we also know that a better offer from a competitor is likely to be just one more swipe away.
Think about the process of using Tinder!
You swipe right if you like the look of the person on your screen, or you swipe left to quickly erase them from your matches. Perhaps you’ve swiped right a few times, and then a mutual match that pops up on your screen. This looks like the ideal person you were searching for. They seem to have many of the same interests. Their location works for you. Their photos look genuine and you like the look at them. Job done. Or is it? Of course it isn’t. What do people naturally do? They continue to swipe right knowing that they are playing against the brutal odds of online dating and the chance of an even better match might only be a few more swipes away.
Many gaming brands are struggling with the same issues. Building loyalty in such a fast paced word is getting harder than ever, and customers know that despite their interest in your brand, their loyalty may only last a couple of swipes, or clicks. In the retail industry, this has been a big issue for travel companies over the last few years, with savvy customers putting trips into baskets, but not checking-out, knowing that they will likely be contacted by a cart abandon email, possibly with an offer encouraging them to complete their purchase. It is behavior which creates a very transactional view of loyalty and reminds me of a great line in one of my favourite TV shows, House of Cards, where the main character Frank Underwood, played by Kevin Spacey uttered a great line,
“You can’t purchase loyalty”.
This has never been more true than it is today, you can’t purchase loyalty, but you can purchase marketing technology that helps you build loyalty faster. At IBM we like to think that our heritage in customer analytics has made us the leading provider in the online Gaming industry, and has allowed us to work alongside some incredible brands such as 888, Dragonfish, Rank, Virtue Fusion (a division of Playtech), Mr Green, Amaya Gaming, Lottoland, BGO, 10Bet, Offside Gaming, Gaming1, Gaming VC and many others. All of these brands have one thing in common. They understand that it is more important to retain their existing customers than it is to try and capture new ones, but they understand something else as well... Just like we are seeing tinder-style mechanics drive changes in consumer behavior, we are also seeing changes in the way that technology works.
It is not enough for a brand to understand how their customers act across email, mobile and social by tracking their clicks and interactions, they must understand their emotions and behavior. More than any other industry, the gaming community is driven by people who act based upon emotions, not transactions or clicks. Knowing for example many commercial attributes about your customer, and then filing those characteristics deep in a CRM database somewhere is useful, but it is MUCH more important to understand the emotional drivers behind those attributes.
This is why IBM embeds cognitive technologies deep within its marketing products, because we believe that it is more important to understand why customers behave like they do, not just how they behave. It’s not enough anymore to just manage and measure web behavior or customer journeys within apps for example, brands must understand what mood their customers are in and how that might affect their purchasing behavior or gaming experience. This is where IBM can help you understand your customer’s behavior better, by embedding cognitive technologies into your products and platforms. This will not only help you build more profitable and loyal relationships with your fans and customers, but with technologies like IBM Watson and his suite of API’s you can build more meaningful relationships as well.
Watson Marketing has many tools to help gaming marketers understand customer behaviour in real-time and personalize marketing messages, but you can also incorporate API’s from IBM Watson to create much richer customer journeys and deeper gaming experiences. A few API’s built for gaming brands include:
- Face recognition
- Tone analyser
- Real-time sentiment analytics
- Personality insights
- Automatic image Tagging
We are living in an age of Digital Darwinism as my friend and marketing analyst Brian Solis calls it. It’s a world where every gaming brand must operate in real-time in order to create “thumb stopping moments”, but the biggest threat is perhaps not Uberization (survival of the fittest) but Tinderization (survival of the fastest).
To visit the IBM Watson Marketing website click here