Business Looks to Win at 'Gamification'

BOSTON (TheStreet) -- Add another business buzzword to the mix: gamification.

"I've been tracking hits on Google(GOOG) for the word 'gamification' for the last two months and I've gone from 19,000 in October to about 140,000 this week," says Byron Reeves, a professor at Stanford University and faculty director of the Stanford Media X Partners Program in early December.

Distilled to its fundamentals, gamification is business looking at the psychological tactics long deployed by successful game designers. It is tapping deep-rooted urges -- to collect, to compete, to exert power -- that make social media and console-based gaming so addictive for so many.

In its infancy, this breed of game theory is mostly an add-on to traditional company outreach, adding a game or competition to promote a movie, book or product. Rewards of virtual- and real-world goods are often the lure.

The success of social gaming has Microsoft(MSFT), Yahoo(YHOO) and AOL(AOL) looking for a way to make the niche their own and better compete with Facebook, ground zero for many of these games thanks to Zynga's ubiquitous FarmVille and Mafia Wars. 7-Eleven has jumped in with special FarmVille Slurpee Cups. American Express(AXP) now allows cardmember rewards points to be applied to the purchase of virtual goods in Zynga's games.

In many ways the concept is nothing new. There were once S&H Green Stamps to reward purchases, and Boy Scouts have long collected merit badges. Contests such as McDonald's(MCD) Monopoly game have been used to attract customers. From Starbucks(SBUX) to Kohls(KSS), free merchandise and cash rewards encourage repeat purchases. Prizes have always been used to not just reward behavior, but to manipulate it.

The twist, made possible by new technology and metrics learned from the social networking revolution, is how to go beyond already plentiful data mining and dig deeper into the psychological motivations of consumers.

How do countdown clocks, such as the one used on Amazon's(AMZN) Daily Deals, force a sense of urgency that close sales? Why is it that we grumble about mowing the lawn, but spend hours tending to crops in the virtual FarmVille? Is there a way to tap into the addictiveness of multiplayer online communities such as World of Warcraft to spur sales, addict consumers and have them come back for more and more and more?