2013
11.15

On November 5, Peggy Smedley, host of The Peggy Smedley Show, kindly invited me on to discuss the implications and issues surrounding the application of gamification to retail. It is an important subject that will absorb significant investments from retailers and brands across the broad spectrum of consumer products. The entire interview can be heard here.

There will be truly exciting developments in the use of gamification—with its ties to Big Data analytics and social networks—in markets and industries other than retail. One very recent one comes in the form of using gamification to improve recruiting results in the semiconductor industry. Accenture announced on November 11 that it would help NXP, a company that provides NFC-compliant chips making their way into myriad connected devices that comprise the Internet of Things, improve recruiting results through the application of “analytics, gamification, and social media techniques.”

What is exciting about the use of this technology triad (analytics, gamification, and social media) in a human-resources function (recruiting)? It is a brilliant approach to finding technologically empowered candidates for technical positions within a targeted demographic. Watch how this plays out among technology companies fishing for qualified talent in a common pond; early adopters will have a significant competitive advantage, as well as be able to reduce dependency on search firms.

Gartner Analyst Brian Burke’s report, issued a year ago to the day of our radio conversation, has been cited repeatedly to support the projections of retail’s adoption of gamification to grow customer engagement.

My concern about the increasing use of gamification in the retail space is based on one that played out in an older, initially analog, format: The loyalty card.

When loyalty cards were first introduced, they were no more than plastic user identification cards that one placed in a wallet and pulled out at the register in the issuer’s “brick and mortar” store. The physical card developed forward as a magnetic stripe-enabled card. POS (point-of-sale) terminals were being introduced into the retail ecosystem that could read the card and tie the purchase to the customer’s record. Bar codes were added to some cards when scanner capability at POS reached critical mass.

Regardless of the transactional format of the card, transactions were always one way. It was still a card and therefore consumer adoption, meaning participation in a loyalty program, leveled out at about 11 active programs. That was the general practical upward limit of how many cards you could fit in a wallet or purse. It was the “saturation point” for the consumer.

Most of those cards in the wallet turned out to be with merchants that were local to the consumer. With the rise of ecommerce, the customer could use the loyalty program online, and could print out coupons and other value offers to use at the stores, but the positioning of value on the plastic card was never a practical outcome. Some of you may remember that NFC-enabled cards would be the solution (think Japan’s successful early 2000’s network of merchants tied to the Japan Railway pass, which allowed money and other value tokens to be loaded to the physical card). It was not destined to happen here in the United States.

Then along came smartphones in late 2007. Here was the platform that would solve the problem of value delivery and two-way value consumption, but would be the answer to the problem of too many plastic cards in the wallet. The smartphone was positioned to be the electronic, mobile wallet of the highly connected consumer. This platform gave hope to NFC and other transactional formats that mass adoption was feasible.

Brands and retailers moved their loyalty programs into the mobile application space, and putting aside the recession, have, for the most part, successfully retained their core program participants. Yet as smartphones became pervasive, and their use at POS enabled (think barcodes or QR codes on the phone’s display being scanned at POS, for example), the problem of saturation arose—again.

Smartphone-enabled consumers have been changing the nature of shopping, giving rise to the “threat” to brick and mortar retailers called showrooming. A customer goes to a store, sees a product he or she likes, tests it out, and then goes online via the phone to shop for a merchant (ecommerce or other brick-and-mortar retailer) offering a lower price for the item. Retailers such as Best Buy are turning this around.

What is lost is the sense of loyalty. When you stay in a Best Buy store and purchase the item there after doing the showrooming drill, you’ll still be asked if you have the Best Buy program to apply the purchase against. However, did the loyalty program get you in the door in the first place? That is what the application of the triad technologies, the most visible of which is the “draw” that the application of gamification technique will generate, is intended to resolve.

That’s fine, but for “average” consumers, will they now come to Best Buy because of the game’s draw, or because the store remains locally convenient to where they live? It may prove to be some combination of the two.

We also need to be careful about what we mean by an “average” consumer. I don’t think that label is meaningful anymore. Rather, there are different “averages” that apply to the range of demographics retailers’ target. An average consumer in the 15-to-18 year old demographic is very different from one in the 50-to-55 range.

While smarter consumers may be less loyal because of the power of smartphones to search out the best deal, the challenge becomes just how many different merchants can you practically check before your make the purchase? People have bandwidth constraints too, and adding and searching merchant apps approaches marginal returns after some number of searches is done. The consumer hits the saturation point. Will a consumer that has a successful game experience trumpet the win to friends and family on Facebook, and not shop around? This is the desired outcome for the retailers and brands investing in gamification.

Merchant and brand competition for consumer mindshare through gaming tied to social networking will no doubt intensify. Will the 2020 forecast in the Gartner report be attained, or will some form of saturation take the adoption rate downward?

What do you think?

2013
11.15

Who knew Under Armour would be a company to watch in the world of M2M and IoT (Internet of Things)? Actually, anyone watching the market closely; or anyone who knows a thing or two about CEO Kevin Plank, for that matter.

This week the sports apparel company announced it will acquire MapMyFitness, the fitness technology company that uses GPS and other technologies to allow users to map, record, and share their workouts. While this news is making headlines today, it isn’t the sole reason I say Under Armour is a company to watch in tech. 

First a bit of context: I love the NFL. But sadly it looks as if this game is slowly dying from the inside out. And if something doesn’t change very soon, our Sunday afternoons between September and February might never look the same. Players today are bigger, stronger, faster; a trend that will only accelerate as we move forward.

The NFL has taken much heat for what some perceive as a lack of action in helping protect the future well being of its greatest commodity—its players. True, the league just spent millions of dollars settling with former players related to concussions. But some see such a move as being more reactionary than precautionary.

In my opinion, if the league truly wants the world to realize it is taking player safety seriously it would embrace the notion of connected technology.
With that in mind, though, I believe this season can be truly monumental for the NFL, and it has nothing to do with what is going on in the field. Never before has news of technology been as intertwined into the fabric of this game as right now.

Earlier this month the NFL announced it was ending an exclusivity agreement with helmet maker Riddell that had been in place since 1989. Beginning with the 2014-15 season players are now allowed to display the name of any company on their helmet, whereas in the past only those with Riddell were granted visibility by the league. The timing of the announcement came just a few days after an event where Riddell officially announced its InSite head-impacting monitoring system. At the event in New York, which our columnist Tim Lindner had the pleasure of attending, Riddell debuted the system that include sensors that monitor and record significant head impacts sustained by the player wearing it, and alert staff to events and even monitor trends.

So here you have a league that just spent millions of dollars settling with former players related to concussions, cutting ties with a company that just announced some breakthrough technology targeted at this matter. Some might question that move.

However, now enter Under Armour. Back in October the company made an announcement with the NFL and GE, forming the Head Health Challenge II, which is an open innovation challenge to award up to $10 million for new innovations and materials that can protect the brain from traumatic injury and for new tools for tracking head impacts in realtime.

Specific focuses of the pact includes technology that demonstrates clear potential to quantify head impact in realtime; detect, track, or monitor biologic or physiological indicators of traumatic brain injury; protect the brain from traumatic injury; mitigate or prevent short or long-term consequences of brain trauma; assist in training to prevent traumatic brain injury.

Among the ideas being discussed are things like the monitoring and integration of directional and rotational impact force into data, systems that monitor biomechanical and physiological responses to detect injury and quantify head impact exposures and that can collect, interpret, and organize large quantities of data in realtime.

So while some might view the fact that the NFL cut exclusive ties with Riddell to be questionable, I think there might be something bigger at play here. Under Armour has the attention of the fan—and even many players for that matter. Everyone from pro athletes to weekend warriors sport the company’s apparel. Plank, who started the company from his grandmother’s basement, has positioned his company well to challenge the big dogs in the sports-apparel market, and has boldly predicted big revenue growth going forward.

While some might scoff at such bold predictions, I think you need to watch out for this company. Who says that growth will come strictly from apparel? Plank is a man who repeatedly talks about the importance of “brand” over “product” and if you look closely you can see him slowly transforming his apparel company into branded technology company.

Look no further than its wearable technology Armour39 performance heart-rate monitor for professional athletes or the fact it operates the Under Armour Innovation Center encouraging next-generation product development, which may or may not include a line of shirts embedded with technology to help cool down the body (a cool long-standing rumor associated with the company).

I talk a lot about the idea of making wearables worth it—designing products with a purpose that people will want to wear. No one can seem to resist the familiar ‘U/A’ associated with Under Armour. And if Plank can take that brand appeal and turn it into an opportunity to improve player safety, he may have just secured his place in the market (sports, technology, apparel, you name it) for years to come. Perhaps the NFL agrees.