Winner's Curse

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Banks, retailers, pharmaceuticals, government, public transport, and many more are employing game mechanics such as leaderboards, badges, progress bars to turn otherwise mundane and tedious routines into exciting and engaging ones. This process of bringing features of the gaming world to real life circumstances is the foundation of gamification.
Regaining its popularity in 2010, many companies have capitalized on gamified solutions to increase customer engagement. If there was an activity in which you could track your progress, compare yourself to others, compete with peers, and eventually be rewarded as the winner, the chances are, you would give into your playful and competitive nature. What could possibly go wrong with increasing customer engagement as a way leading to a more fulfilling customer experience? Well, plenty!

One of the fundamental features of most gamified solutions is their ability to tap into our competitive nature and desperate need to feel like a winner. Gamification, if employed properly, increases the customer engagement immensely and can be a rewarding experience. It has brought DSK Bank in Bulgaria huge success, as it helped many people reach their financial goals through a gamified system that encouraged long-term financial well-being. Take saving plans for example. While your personal financial goal may be enough to get you started saving some money, in a gamified world, you will be doing your best to rack up the rewards in the fastest way possible, knowing that there are a number of other people playing the same game as you. As a result, you will save a lot more while enjoying the thrill. A win-win situation for the customer and the bank.




While most gamified solutions are engaging, not all of them produce a win-win outcome. Let’s take online auctioning, for example, which is inherently the gamification of selling process: there’s a pool of people bidding various prices against some pricey, luxurious mid-life crisis type of vehicle, and the excited man behind the computer screen who gets to call this sought-after item his own only experiences momentary excitement, as he realizes after claiming his prize that he has taken a plunge into his life savings in order to feel like a winner.
This enrapturing method is what is commonly referred to as the “winner’s curse”. When he looks back on it later on, that temporary satisfaction he’d achieved when winning an auction, or receiving a bonus incentive from signing on with a particular credit card program at the bank vanishes.



In many gamified systems, the winners feel like the losers while the companies are celebrating their maximized profits and increased customer engagement. What is being ignored here is that higher customer engagement does not equate better customer experience. The designers of these solutions must be mindful of the overall customer experience (including social dynamics) because in the long run, the experience of being a winner isn’t necessarily the same as feeling like one.


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