Badgeville's Radical Idea: Tell Customers What You Want Them To Do

12/15/11Follow @wroush

For about six months now, I’ve been trying to get Kris Duggan to change the name of his company. To me, “Badgeville” manages to be both faddish and inaccurate: it tries to snag a little of Zynga’s (fading) Farmville glory, while also suggesting that the Menlo Park startup’s business is all about gamification and virtual badges, à la Foursquare—which it’s not, as the CEO is the first to emphasize.

Alas, it looks like Duggan has dug in about the name. “I’ve gone back and forth, but my current outlook is that we are going to be 100 percent married to it,” he told me this week. “If you were the first person to see the name ‘Batman’ you would think that was a little weird too, but once you hear it, it’s kind of cool.”

So I guess I don’t have a future as a startup name consultant. But I’ve enjoyed getting to know Duggan and the company, which appeared out of nowhere (Duggan co-founded it just 14 months ago, in September 2010) to become one of the leading providers of technology for enhancing Web-based communities with loyalty, ranking, and reputation systems. That includes both customer communities and employee communities: fitness company The Active Network, for example, uses Badgeville’s widgets to let users log workouts and share achievements with their friends, while one large enterprise with 100,000 employees (Duggan can’t say which one) uses Badgeville to recognize workers for completing social media training programs.

Kris Duggan

In that big-company example, the recognition actually does come in the form of a virtual badge, which shows up alongside an employee’s name in the corporation’s online directory. But the badge is just a symbol, Duggan says—the startup’s technology is really all about motivating behavior. “We track the behaviors you want to reward, give users credit, and surface that reputation or status wherever you want,” he says.

Badgeville is one of a group of young companies staking out a new space that goes by names like gamification, behavior modification, and social commerce. Competitors include BigDoor, Bunchball, Gamify, Gigya, and Seriosity (proving that Badgeville isn’t alone in having a silly name). But one of the things that makes Badgeville unusual in this group is that it offers a broad platform of services, including a game engine that supports missions and rewards, customizable widgets, analytics software, and a Facebook-like “social fabric” complete with activity streams and friend notifications. The company’s philosophy is that almost any online operation, be it a big enterprise or a consumer-facing retail, education, publishing, or entertainment site, can benefit by putting known motivational techniques to use.

In Badgeville’s world, that means identifying the behaviors an organization wants to encourage among customers or employees; devising rewards and incentives that play on the basic human need for recognition; analyzing how the rewards are working; and continuously tweaking the program maximize the wanted behaviors. When the test prep site Beat the GMAT added Badgeville badges like “Thought Leader,’ “Strategy Guru,” and “Problem Solver” to its site, for example, it motivated some users to spend up to 8 hours a day on a giant crowdsourced project to tag and organize the site’s 70,000 pages of content. Duggan calls the whole incentivization process “behavior lifecycle management.” “It’s a closed loop,” he explains. “You influence and measure and influence and measure again.”

Another thing that makes Badgeville unusual is the torrid pace of its growth. It’s already got 100 customers, including big names like Samsung, Deloitte, CA, and Rogers Communications, Canada’s largest wireless carrier. It has 50 employees—twice as many as when I first visited the company in May—and has raised $15 million in venture funding, which is probably more than all of its competitors put together (except for Bunchball, which has raised $17.5 million). Duggan says Badgeville will collect “somewhere between $5 million and $10 million” in revenue in 2011, and twice that in 2012.

You can chalk up a lot of that growth to plain old economic pressures: companies are looking for ways to keep their existing customers engaged, because that’s usually a lot cheaper than recruiting new ones. “I asked Kris how he was adding customers so quickly, and he said, ‘We’re good at sales, but we’re not that good—it’s the market,’” recounts Tom Peterson, a partner at El Dorado Ventures, one of the four venture firms backing Badgeville. “Everyone is in search of revenue, and how you make your site grow and … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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