Gamification and Growth Hacking

Yesterday, I was contacted about designing a large online service that involves gamification of learning, and that really got my creative juices flowing.

It also inspired me to write about a launch I managed in 2006 for a product that essentially did the same thing as scripts that other people gave away as free bonuses.

The gamification in that launch was so revolutionary at the time, that the sales letter and techniques were still being discussed and studied by Internet marketers a decade later.

The day before the launch, nobody had heard of me. I had no list to market to at all, and only a handful of connections in the Internet Marketing world, which I had cultivated at conferences the preceding year.

Under a week later I:

  1. Had sold 1,500 copies of software for $150 to $250.
  2. Completed a $295K launch out of nowhere.
  3. Had a responsive list with over 10,000 names on it.
  4. Was being booked to speak at marketing conferences.

I also did an additional $555K in residual sales that year with no further marketing. Other gamification techniques employed later got the product over 100 testimonials in a few days, and got the product voted the top Internet product of the year, beating out products produced by well-known marketers.

Growth hacking involves combining creative marketing with technology to increase sales and adoption, and to create evangelists for your product. In my last post, I wrote about how I once invented a new type of software to remove a significant barrier to entry, which also falls under growth hacking. To gamify this launch I also invented new marketing techniques and new software to automate them.

For example, all of my sales came from affiliates so I designed and wrote my own affiliate program so I could get them competing against themselves and each other.

Every time a sale happened, affiliates got an email like:

Congratulations Nana! You have now sold 28 copies. If you sell just 22 more, your commission on all of them goes up from 30% to 40%.

Congratulations John! You are now in 2nd place. If you sell 30 more, you will pass Frank Kern as top affiliate and win the grand prize.

Hey Frank. Quick note that John Reese is only 30 sales away from taking your spot as top affiliate. Thought you would want to know.

Hey Frank. Quick note that John Reese just passed you, and you slipped to 2nd place. There’s only 329 copies left, but there’s still a little time to beat him if you promote now.

These automated emails used six of Yu-kai Chou’s eight main gamification tactics for motivating peoples to take action:

Sense of Accomplishment: The emails included the concepts of Progress notifications, High fives, Quest lists, Progress bars, Status points, Fixed action rewards, Overcoming challenges, and Badges. There was the constant challenge to reach the next goal or to beat challengers.

Ownership & Possession: Once they reached the top 10, it was hurtful to their pride to drop out. They wanted to protect and maintain their position that they worked hard to get.

Social Influence & Relatedness: The emails inspired competition and envy to drive affiliates to beat each other. Naming the affiliates who were beating them created social proof, and when an unknown affiliate passed a guru, that was totally unacceptable to the guru.

Scarcity & Impatience: There were a limited number of spots to sell period. They couldn’t wait until tomorrow to promote again and beat their friends. The scarcity got them to drop what they were doing and promote now.

Unpredictability & Curiosity: Nobody had ever seen anything like these emails before, and there was enough unexpected variety in the types of emails they received, that people read each one. They needed to know who was catching up to them or passing them, especially more so when they didn’t recognize the name.

Loss & Avoidance: There was always the risk of losing progress, losing the top prize, falling out of the top 10, and losing face. These people were the best, and wanted to maintain their reputation.

This was all new and the effect was exactly what I hoped. The biggest affiliates in the world couldn’t stand to be in anything other than first place, so they kept emailing out, writing frequent emails to try and outdo each other.

I also used some of these techniques on the sales letter to make the most out of all the traffic they were sending me. (While these tactics are common now, at the time, most of this had never been done before.)

With each sale, a countdown moved closer to zero, with the advanced version of the product to be sold out for good after 1,500 people bought.

Every 500 sales, the price went up by $50, with a countdown until the next price increase.

With each sale, another bonus got closer to being sold out, with a list of bonuses they already had missed out on. The bonus was a DVD with recordings from a marketing conference. The first 300 people bought more to get the DVD than the product, and the scarcity felt very real because it was a limited pressing of a physical product.

At any given time, there was a message at the top of the page with never more than 200 spots left before something bad happened. After each sale, that number went down. If you didn’t buy right then and there, you knew you would lose out in one way or another.

The result was that for the top affiliates, about 50% of the people they sent opted into my squeeze page to see the full sales letter, and 50% of those bought the product. That means several affiliates had a 25% conversion rate at a time when there were hundreds of product launches a year and a 2% conversion rate was considered really good.

The combination of the repeated promotions, scarcity, and the newness of it all made this the must have product of the year and many people bought it without taking the time to read the sales letter to find out what it was. (But, then they used it and loved it, and many of them still use it today.)

There were also very few refunds, as I made sure everyone knew that the second they gave up their copy, it would be offered to the people on the waiting list, and they couldn’t get it back.

These particular gamification techniques may still work today in some markets where the audiences haven’t been overexposed to them. However, they were copied so much in the Internet marketing space that they became distrusted and don’t work nearly as well any more.

But, gamification can be used in many different ways beyond sales. Growth hacking is much more than sales as well. Both can dramatically increase adoption and continued use of products in very positive ways.

I don’t always have the budget or time to explore adding them into the minimal viable products that are first released, but it’s something that is ever on my mind. Looking for gamification and growth hacking opportunities should be part of UX design whenever possible.

What do you think?