Integrating game mechanics into business models is the method used by companies to “gamify” their existing offerings, making them more attractive and engaging to their end users, and thus deepening the brand’s connection with its intended audience.

Gabe Zichermann, author of the book Game-Based Marketing gave a compelling speech on the topic of gamification at this year’s Virtual Goods Summit West, entitled “Integrating Game Mechanics Into Your Service,” which discussed relevant applications of game mechanics into various business models.

Gamification, explained Zichermann, is the process of using game thinking and mechanics to engage audiences and solve problems. By paying attention to and utilizing game mechanics, businesses can achieve success with engaging and inspiring loyalty in their end users.

Essentially, what this means is that all of the actions that a business wants end users to complete (fill out a survey, upload a photo) can be compelled through proper utilization of game mechanics. This is the notion of making something “sweet enough” to convince people to do it, and is a method of merging chores with fun.

One common example of this is through the use of badges.  “Badges matter,” stated Zichermann. He explains that just as the letter in front of the number on a Mercedes matters to the Mercedes owner, social badges matter to many end users in the online space. Badges are valuable because they are fun, engaging and look good.

Badges, however, are just one example of the overall concept of loyalty systems. At their core, loyalty systems are about status. The more powerful a company’s status system, the less money the company actually has to spend to reward their users. An example of this is how United Airlines has made Premier Executive a coveted status among business travellers, thus placing the value in the status itself, and not on any benefits actually attached to the status.

As consumers, we are susceptible to any type of reward-based system that meets our need for acceptance, which is why loyalty programs work.  Primarily, game mechanics serve users by fulfilling emotional needs such as rewards and achievements.

Zichermann’s core gamification concepts can be applied to a variety of business models. “Games favor their creator,” he stated at VGS, “Fun is the future.”

Webcast highlights from Zichermann’s speech at VGS can be found here.