How Psychology of Freemium Games Can Improve Your Business

If you’ve played freemium games before, you’d know how addictive they are.

Freemium (free + premium) games are games that are free to download and play, but feature in-app purchases (IAP) that users can buy with real cash. Such games have become really popular recently, and surprisingly, generate more revenue than paid apps. Some users have reported spending hundreds or even thousands of dollars on freemium games!

How exactly do freemium games get users to part with so much hard earned money?

In the super popular game, Candy Crush Saga, players use up one of five lives for each attempt to clear a level. Each life refills in 30 minutes. They can either wait, send a request to their friends to donate lives, or key in their credit card details.

Yes!!

Yes!!

Another wildly popular game, Clash of Clans, has building upgrades that take the same amount of time to grow out my moustache.

And...we'll see you in 2 days, bye!

And…we’ll see you in 2 days, bye!

Players have blamed freemium games for making them late for appointments, skipping meals, or spending a big part of their paycheck on IAPs. They complain that the games have affected their social lives, reduced the quality of interaction between their loved ones, and made them really miserable.

But despite all that, they still end up paying money for that exclusive Dragonfrost Blade that will give them the boost needed to slay the Demon Lord Karroush.

So what can marketers learn from freemium games?

1. Give relevant rewards to your customers.

In freemium games, essential items like lives, energy / stamina, or gems are what most players spend the most money on. These items are instrumental in advancing to the next level, or defeating the next boss.

Different types of freemium games feature different types of IAPs.

  • For Role-playing games (RPG) or other quest-driven games, the items slowly become essential once the player has invested a considerable amount of time and effort in the game. At this point, players see that the only way to not waste the time they’ve already invested is to pay a small amount for a little boost. This is commonly known as the Sunk Cost Fallacy.
  • In decorative games, players can use real money to purchase exclusive items that can be used to decorate their virtual homes or restaurants. This provides tremendous social utility, especially when they’re the only ones who own that particular item!!

Whichever game it is, what matters is that the IAPs are something that players perceive as relevant and essential to their personal agenda.

As a marketer or business owner, it is important to know what your customers would really want, and then provide it. Whatever incentive you provide has to be really relevant to them. For instance, if you are selling shoes online, would you choose to provide free shipping, or a price discount of the same monetary value?

According to research done by Compete, 93% of customers have mentioned that they would be more likely to buy a product online if it came with free shipping. Another study by the Boston Consulting Group revealed that 74% of participants would prefer free shipping to discounts.

The amount of discount might be the same, but it’s the context that separates them.

Remember, perceived value matters much more than actual value!

2. Keep your users engaged

“People will stay engaged until acted upon by an outside force.”

This was used to explain the term ‘Newtonian Engagement‘, coined by Nils Pihl, the founder of Mention LLC, a consulting agency that specializes in engagement design and game mechanics. It explains that users will stay engaged in something engaging (duh) until an external force affects it. This external force can come in any form, such as your nagging mom.

In a talk where Nils talks about Newtonian Engagement, he also refers to the term ‘reevaluation point’: a point where you receive information that changes your perception and future actions. Some information can cause us to reevaluate something well, and keep us engaged. The notification of a new item dropped by a monster we just defeated is one such example. Other types of information, however, might cause us to stop whatever we’re doing.

Imagine you have been playing Starcraft II for several hours, and suddenly a pop-up notifies you that you have just played for 10 hours! Do you think that piece of information would influence your next action the same way another notification like “you’ve received a new item” would?

Now, consider Amazon’s ‘Customers Who Bought This Item Also Bought’ section:

'Customers also bought this' - Amazon suggestions

One of the most devious inventions yet.

When a user is looking at an item they’re interested in, and they see this at the bottom of the page, it is very likely that they will click on any of the suggested items, due to their relevance to that user’s interests. I have, on occasions when searching for a particular style of clothing, spent an hour or so just clicking on similar-looking items!

It is important to maintain your customers’ attention and engagement, and here are a couple of suggestion you can apply:

  • Keep everything within a single tab, and minimize waiting time. When users are redirected to a separate tab or window, those few seconds of loading time could allow them to check their watch, or their phones. Your website’s hold on their attention might be affected. Minimize loading time so that users will remain attentive to your site.
  • If you have an online catalogue, try to list all of your product thumbnails in a single page. All your customer has to do is keep scrolling and scrolling. That can be very engaging. I know, because I’ve been there too. Separating your items into different pages gives them a mental break while loading the next page, and you don’t want to do that.

As you can see, a lot of insight into human psychology goes into creating free games that are designed to make you go “shut up and take my money”, and so should your business!

So remember to:

  • Provide rewards that are relevant to your customers’ wants, and they will perceive that as more valuable, and like you more.
  • Keep your users engaged through effective reevaluation points, such as suggestions for similar items, keeping everything in one window, or listing all your productions in one page.

Now go out there and engage your customers!

On a side note, Nils Pihl gave an incredible talk at the Game Developers Conference China 2013, where he shared a lot of insights into the psychology of freemium games and understanding human behavior. Be sure to check it out!

Also, check out Mention LLC for more good stuff on behavioral engagement and game mechanics!