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

12/15/11Follow @wroush

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how you get users more engaged are topics that, especially in a recessionary period, are pretty critical. That’s why this is a market that’s really on fire.”

Badgeville’s origins, like those of so many other Silicon Valley startups these days, go back to Google—specifically, to Duggan’s dissatisfaction with Google Analytics, the free Web traffic analysis tool. The story goes like this. Duggan was a sales director at WebEx, the online conferencing service, when Cisco bought it in 2007. He left shortly after the acquisition and joined SocialText, Ross Mayfield’s enterprise collaboration startup, as vice president of sales. While he was at SocialText, he absorbed a lot about the power of collaboration and social networking, but also got the founder bug, and decided to strike out on his own.

Doing what, he didn’t know at first. With a friend who is a plastic surgeon, Duggan decided to try an unusual experiment. “We set up a completely fake website to see if we could monetize the audience,” he says. “We wanted to see if we could get people to click ‘Buy Now’ rather than building a product first and spending $50,000 on R&D. If we got enough analytics data [showing that customers were interested], we would have made the product.”

It turned out that the product wasn’t interesting enough to convert a lot of site visitors into prospective customers. But in the process, Duggan realized that there’s a fundamental shortcoming in Google Analytics, or indeed in any tool that’s only about measuring traffic. “You set up all these rules for conversion goals in Google Analytics, but those goals are hidden from the audience,” Duggan observes. “I thought, ‘If you have objectives that you want people to do, why not just be clear about them? So we started looking at how we could build a next-generation analytics platform around A, making it social, B, identifying what behaviors we want to drive, and C, incentivizing actions, based on whatever techniques would be effective.” (“We,” at this point, meant Duggan and his co-founder and chief technology officer Wedge Martin, a veteran of IBM, Epinions, and Shopping.com.)

Facebook, LinkedIn, and other social networks have long grokked the power of peer pressure, social reinforcement, competition, and word-of-mouth to build their audiences. Foursquare, meanwhile, was proving that users would go out of their way to obtain seemingly meaningless status symbols like badges and mayorships. Duggan thought there would be a business in helping more Web-based businesses tap into these techniques. “That doesn’t have to mean turning everything into a game, but they’re concepts a lot of brands can leverage,” he says.

It turned out to be a well-timed bet. By the time Badgeville debuted in September 2010, it already had $500,000 in bookings for its software—twice the amount of its seed funding round. “This wasn’t something like, ‘Let’s build it for a year or two and hope somebody will want to buy it,’” Duggan says. “It turns out that whether you are a mobile site, a website, a community manager, a marketing manager, everybody is trying to figure out how to drive toward this intersection of identity and behavior and game mechanics.”

Speaking of game mechanics, my first conversation with Duggan back in May was a little rancorous—not only did I tell him I thought his company had picked a dumb name, but I questioned the general trend toward the gamification of non-game-related services. It wasn’t clear to me, I told Duggan, that adding points, trophies, badges, or rankings to a Web-based service or community would do much to increase user engagement if the product couldn’t stand on its own.

To my surprise, Duggan agreed with me. “This isn’t a magic wand to turn bad content into great content or bad services into great services,” he said. But then went on to present a new perspective.

He argued that Badgeville’s platform isn’t really about gamification, it’s about loyalty and status. “I would argue that loyalty on the Web is an unexplored frontier,” he said. “Why is it that you have a loyalty card to your carwash or your taqueria but not to your favorite website? If you have a thriving community and people who have expressed loyalty and advocacy, what are you doing to … Next Page »

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

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