Posted on Mon, 03/16/2015 - 14:41
As the new year has begun and we are moving toward Q2, it seems like a good time to broach a subject that is often the skeleton in the closet when it comes to training games – at least for those trying to sell training games products to clients. “ROI.” “Return on Investment.” “ROI = (Gain – Cost) / Cost.”
You get the idea, you know what ROI is. More importantly, you know how much it figures into the business decisions your company, educational institution, firm, manufacturing facility, business or agency makes about funding expenditures. Especially with the misunderstandings still out and about in the marketplace when it comes to serious games – “What, we’re going to pay our employees to play video games on the clock!?” – demonstrating the value gained from serious games far outweighs the costs of serious game production can go a long way towards getting the sign-off from the C-Suite for the investment in this fascinating milieu of training and educational tools.
But there’s been a lot of discussion, and not a great deal of consensus, on how to measure such things as motivational enhancement, brand empowerment, and skills augmentation via serious games. There are plenty of anecdotal stories, testimonials and claims from human resource pros and sales managers, yet these don’t always translate into concrete statistics and measurable figures. Sometimes they do, and we’ve reported on those occasions with much gusto. Yet sometimes they don’t. So, we’re going to present content on ROI and gamification from time to time – more from an epistemological perspective (how to look for results) than from a statistical perspective (what those results are in a numerical format).
We found an article from Gigaom.com from several years back that references research done by noteworthy Forrester Research. What we found interesting from a predictive ROI perspective is that the article points to more of the ‘hidden’ ROI inherent in serious games. As the piece by Wagner James Au explains it, “Forrester cites the ‘green revolution,’ which is pushing major corporations like IBM and SAP to experiment with virtual world technology as a way of saving on energy and operational costs, as well as the pervasive popularity of technology, especially among the Net-savvy Generation Y: ‘This comfort with virtualized workspaces has opened the door for the use of video games to help reduce long-term expenses in other cost centers, like training, learning, and team building,’ the report reads. (Forrester’s authors distinguish persistent virtual worlds like Second Life from serious games, which are developed for specific goals in a limited time frame.) Because of this, Forrester argues, companies, government agencies and others will increasingly turn to serious games, with traditional game developers, software giants like Microsoft, and other players vying for their dollars.”
So ROI for training games according to this research is about energy savings and operational costs saving at facilities, as well as the popularity of the digital format for younger workers – which can translate into better comprehension and participation for training and learning. These aren’t necessarily P&L figures an accountant will zero-in upon, yet they are valuable business advancements for those thinking about Big Picture developments. Read the entire article from Gigaom.com here.
How do you measure the increased efficiencies of your employees, or the value of clientele who enjoy your serious games, or the extra time they spend on your websites engaged with gamification while ads pass by their eyes and search engines record that extra engagement time on the website? These also, to be fair, should be considered as aspects of the ROI for gamification, shouldn’t they? Are these even metrics that your business considers? Smart companies consider them.
As a gamification insider explained to Toni Bowers, award-winning blogger and Managing Editor at TechRepublic, “Gamification, used properly, ties directly into a company's key business objectives to drive high-value customer and employee behavior. These techniques can be used to help improve efficiency of your sales teams, increase the LTV of customers, or increase overall engagement within a media property for increased advertising revenue… Our customers have experienced a 20 percent to more than 200 percent increase in these key behaviors, across very diverse experiences and audiences.”
There’s also the social aspect of gamification to consider – the enthusiasm for learning and training that comes through competition with others and oneself as well as the promotion of that competition. (After all, what game would be complete without some competition?) Although the social aspect of serious games may be the hardest to measure, it can’t be denied that morale and company atmosphere and socialization are important aspects of an enduring company. These too are aspects – albeit nebulous – of ROI.
As Juliette Denny writes in an article on eLearningIndustry.com, “In a previous article I spoke about the 70:20:10 problem and how it relates to return on investment. The reason that L&D plans sometimes fail to report a good ROI is that they focus on the wrong parts of knowledge – or at least, the smallest proportion of knowledge. As the ratio explains, only 10% of what we know is gained through formal training – yet L&D departments often funnel 100% of their resources into it! Clearly the sums won’t add up. Luckily, gamification helps to access the remaining 90% which occurs through observation of others (20%) and learning on the job (70%). It does this by tying rewards into social interactions. What Ms. Denny is saying is that gamification can serve the same function that bonuses and raises can achieve – motivating workers and students to do better, but for fun and competition – not monetary reward. You can read her entire article on gamification and ROI here.
Clearly, or as clearly as we can explain it here, there’s a great deal more to measuring the ROI for gamification initiatives than just metrics on product sales, grade scores or decreases in work absences. The modern company or learning institution is a multi-textured and multi-faceted zone of individual interactions united for communal purposes. Understanding those many nuances are essential for determining the true ROI brought about by serious games and their effects upon individuals and corporations of many kinds.
We hope you’ve enjoyed this food for thought about the true measure of ROI when it comes to the benefits of serious games and gamification in the modern learning or workplace. We’d love to answer any questions you might have about our serious games development process. You can contact us here, or take some time to explore some of the serious games we’ve made for past customers on our Serious Games Portfolio page.