Increasing Brand Revenue with Physical Product Sales
This opinion piece is about a new profitable merchandising strategy that will be used by some computer game developers in the future. This new strategy can be added to already existing revenue systems, but it's a new thing, and so will take a ton of courage to even attempt. Nonetheless a number of developers in the future will do more or less what is described here.
In the future many game developers will improve their stores and earn considerably more money with their games. Key to these changes in their stores will be a greater understanding of the complexity of purchase dynamics, a dramatic increase in the sale of physical products, and the use of cooperative methods for building a brand.
Emotional Utility and Why People Buy Things
Obviously, people buy things they need, such as fuel, shelter, food and medical treatment. But more to the point of this discussion, people also spend a lot of money to pleasure themselves. Beyond utility, people ask themselves "Will this purchase make me feel better?" This situation could be termed "emotional utility", as many if not most people do have a definite emotional need to purchase products in order to pleasure themselves.
Sales beyond utility is in fact a beneficial service that sellers provide to their customers. Presenting buyers with something they would like to purchase in anticipation of pleasuring themselves is a favor that sellers can provide. So, game developers can do favors for their players/customers by presenting them with a greater number of products that might possibly pleasure those players/customers.
The good news for game developers is the fact that many people have a high psychological need to frequently purchase emotional utility products. And it's no surprise that once a customer makes a first purchase from a seller, the probability of that customer purchasing subsequent items skyrockets. Two decades ago the Philippines' infamous First Lady Imelda Marcos demonstrated this phenomenon when she showed off her collection of 3,000 pairs of shoes. Imelda obviously found some well-stocked shoe stores that she really liked. Emotional utility is frequently a repetitive compulsive experience, and game developers could do a better job of capitalizing on this phenomenon by improving their stores and giving their customers a great many more possible emotional utility purchase opportunities.
An old cliche says that women are apt to indulge in eating a large amount of chocolate or ice cream after a bad romantic experience. The bad romantic experience is the trigger, and the acquisition of the chocolate and/or ice cream is the emotional utility purchase. In fact, all customers, males, females and others, can be described as having a range of emotional triggers that prompt them to seek emotional utility purchases. The range of triggers and levels of compulsion vary between individuals of course, but we all have a fair amount of such triggers. People are known to purchase emotional utility products when they are celebrating, and when they are sad, when they are worried, when they are quite happy with things, when they are angry, and when they feel ignored or slighted. We are all essentially quite well psychologically ready to be triggered into participating in some forms of emotional utility purchase events.
People buy emotional utility products for three main reasons:
1. They trust the seller. They have confidence that the seller will deal in good faith and deliver the product the buyer thinks they are purchasing in a satisfactory manner. "I can trust this seller."
2. The product is interesting. The seller offers a product within a range of products that are interesting enough to appear on a potential buyer's emotional utility radar. "They sell me things that I like."
3. They like the seller. This is similar, but more personal than merely having confidence. To "like" a seller is a broad emotion that basically means one feels quite comfortable with the seller and thinks of them as an interesting co-conspirator who will engage in pleasurable transactions with the buyer. These are like the drinking buddies, friends with benefits, and/or fellow model train enthusiasts with whom a person shares the experience of partaking of emotional utility products. The sellers of the booze, the condoms, and/or the HO Gauge Switch Stand are all co-conspirators in the experience and therefore viewed as friends. "These are good people."
Yes, price is one important factor in purchase decisions, but liking the vendor is the single most important factor. People are quite often willing to pay more for something because they like the vendor. It's like pocketbook politics, where people vote for the people they like.
The discussion about likeability actually has more to do with the person who does the liking than the person or entity that is being liked. To understand the phenomenon of likeability, one first must understand that all people are extremely self-interested. We are all more interested in our individual selves than any other parts of the world. Of course there are many specific situational exceptions, but most of us are most interested in ourselves. We often tend to use the capacity to like things to build our own persona and describe who we are. So, liking something is a way of defining oneself. For example, many people love to identify themselves as being fans of one sports team or another and they take great pride in being an LA Lakers fan or whatever. Out on the lunatic fringe of liking things, every year in the United States perhaps a dozen people are killed during arguments as to whether Fords are better than Chevrolets.
Basic social hygiene also plays a large part in being able to be in a situation where one can potentially be liked. Generally, if you haven't bathed in a while, your chances of finding yourself in a situation where you might be liked is limited. It's the same for stores. Stores with bad customer service, in all its forms, can find themselves difficult to like. Yes, good customer service costs money but it should be looked upon as an opportunity cost rather than a disliked chore.
So, what's the best thing a store can do to become likeable? Surprisingly, it's not to give customers a lot of "free" extras. Giving away free things is a highly inefficient and often expensive way to encourage fan enthusiasm. Free things are generally viewed as worthless, so giving them away does not produce any excitement or good will from the receivers
In fact, the best way to get someone to like you is to have them give you something. When we give something to someone we make an emotional investment in the receiver. We wish to see them succeed in the future, because we trust our own judgment, and we wouldn't have given something to someone unless we had hope for them. If you give your old sweater to a bum on the street, you will wish that that bum does well in his life, and if a few months later you see that same bum on the street, but now he's wearing nice new clothes and carrying a briefcase and he explains to you that he's really turned his life around, you will be happy, because you will believe that your "investment" in that person had the desired effect, and you will take some partial credit for this wonderful turnabout. It's the same when a patron of a restaurant gives it a high rating on Tripadvisor. Once a person has submitted a rave review, they actually like the restaurant even more than they did before.
People are not going to send you, as developers, their old sweaters, but we do know what we want them to give you: 1. We want them to buy something physical or digital from your store, or 2. We want them to tell a friend about your store, or 3. We want them to post something about your brand somewhere, or 4. We want them to give money to a charity we have suggested, or 5. We want them to display your brand's name somewhere, like with graffiti or on a t-shirt, or 6. We want them to fill in an essay-form questionnaire, or 7. We want them to create fan art and send it to you. Any of those actions will help build your brand.
But the important point here is that when customers either buy from a store or give the store something, they become more emotionally involved with that store, and their desire to see that store succeed increases. By making a purchase or giving something to the store, the customer has essentially made a bet on the store, and that increases their faith in the store and their fondness for the store, and that all increases the chance that they will buy from the store again. Buying something from the store makes them more likely to talk about the store nicely to their friends, and if it was a really good emotional utility purchasing experience, that gives them social capital in the form of a story to tell their friends and network, all of which benefits the store.
Yes, price is one important factor in purchase decisions, but liking the vendor is the single most important factor. People are willing to pay a bit more for something because they like the vendor. It's pocketbook politics, and people vote for people they like.
An Interesting Store
In today's market we have a whole lot of opportunities to buy things, and customers tend to buy things from the stores that interest them the most. Unfortunately, a lot of mobile games have stores that are not particularly interesting, being some variation on one screen with three sizes of in-game currency for sale and a second screen with three sizes of premium currency for sale. Those stores are a bit disappointing, like going to an ice cream parlour that only has two flavors.
The best stores are generally the biggest stores. A more well-stocked set of shelves will allow a potential customer to more easily fantasize about using some of the products. Most successful stores also have a constantly changing array of offers, and offers timed to coincide with current events in the games. The more stuff there is on the shelves, the greater the chance that a potential customer will see an attractive item at the moment they are in an emotional utility mode, and the better the probability that the viewer will consider the store's offerings worthy of purchase.
What is a store? It is not a single location. The cash registers where customers make purchases are just parts of a store, not the whole thing. The word "store" can be described to mean all of the possible encounter and purchase locations in the brand network. Any public appearance of the brand is a part of the store. If a player sees a sales offer after having leveled up, that ad is a part of the store. If a player looks at a video clip of a game, that's a part of that game's store. A store is the sum of all of the instances where a potential customer can encounter chains that lead to potential purchase possibilities that they can consider, and thus begin the process of self-gratification. Even the parts of a gameplay experience that allow players to fantasize about having a certain new weapon or tool are parts of the store.
Just like a trip to any other store, it is often the unusual items that attract the most attention. Players are attracted to the novelty of something that they haven't seen previously.
A few years ago a small developer in Italy published a mobile monster truck game where players needed to maneuver their trucks through courses filled with a range of obstacles like old buses and low-flying airplanes that could be crushed. In an effort to provide an exciting set of shelves for their in-game store, the developer made up a bunch of crazy stuff to add to the roster of typical boosters and equipment upgrades. The developer made up stuff like Helium Mode in which the narrator's voice was made helium squeaky. They added weird products like Change Text to Esperanto, and a Penguin Mode in which all of the obstacles were turned into penguins. The game didn't last long in the app stores but one piece of very interesting piece of data did emerge. Of all of the products in their large store, by far the most frequently purchased item in the store was Penguin Mode. Products don't have to be useful to be desirable, as the high sales of player-character outfits also demonstrates.
Physical Product Sales
The single most important part of this whole idea here is that game developers should sell physical products in addition to the usual in-game items. Although the digital world is huge, the physical world still rules. When most developers think about selling physical products they think about selling t-shirts and caps. The really adventurous developers might think about selling plastic figurines of characters from their games. But those guys are missing about 99% percent of the possibilities of what they could sell.
A good salesman can sell anything to a customer once they have established a buyer-seller relationship. That's hard to do, and it's a shame that so many developers have established buyer-seller relationships with thousands and sometimes millions of customers, but they don't come close to using that relationship as effectively as they could. If you have a customer who has already bought something in your in-game store, you can sell that customer other products as well. You could sell them shoes. You could sell them tires. You should be able to sell them anything from school supplies to underarm deodorant. If customers are already buying in-game items, your brand is a trusted source of emotional utility products for them, and so you should be able to sell them anything you can put on the shelves in your store.
If the best way to make money is to help other people make money, who can developers help make money? In this case, it's the manufacturers and online stores that already have products to sell. What the manufacturers and online stores want is more eyeballs looking at their products, and what a successful game has is a whole lot of eyeballs.
The easiest way for developers to sell physical products might be through fulfillment, which involves the customization of pre-made products. The term "Fulfillment" describes the situation where a first party handles and ships all the products, and a second party is responsible for sending orders to the first party. Anybody can sign up for fulfillment relationships. For example, there's a whole lot of online companies that will print images from a developer on everything from t-shirts to coffee mugs and then ship those products to anybody who orders them. But just putting a bunch of brand merchandise up for sale doesn’t mean it will sell. The sales process needs a critical mass and a delivery pipeline that generates excitement and prepares customers for the cash register.
A developer doesn't need to limit themselves to selling only customized products. Some of the current large online stores with huge inventory systems already have programs that pay 5-15% commissions to agents who send orders to the store. The online store newchic.com is a great example. Developers can check out their site to look at their commission sales opportunities.
The best symbiotic relationships with the manufacturers and stores will be created by developers who act as their own deal-makers. Some manufacturers will even be amenable to adding a game's brand tag to some part of their inventory. That's the way movies like the Lion King managed to earn much more money from selling branded products that they did with the movie itself. Developers could do the same.
Purchase with Purchase
One type of very effective marketing offers are called Purchase With Purchase. An example might be: "Buy these shoes for $27.95 and get 100 Magic Crystals for only $1!" This is the type of offer that targets customers who will be attracted to two things simultaneously.
Imagine the manufacturer sells an item for $10, and you, the game developer, have an arrangement such that you get a 10 percent commission on each sale. And you might sell 100 Magic Crystals in your own store for $7 normally. If you then add highly discounted Magic Crystals to a new sales offer, you can offer customers something like "Buy this item for $10, and you can add 100 Magic Crystals for only $1! With such an offer, it looks like the customer is getting a total of a $6 discount on a pair of items that would normally cost $17. Quite attractive. And of course, the Magic Crystals cost almost nothing to you, so you've made $2 for each sale, and you might have enticed a first time customer, the value of which cannot be overestimated.
Slightly more complicated offers could be like “Buy these screwdrivers and get 10 Blue Bombs for Game X and 25 Free Play tokens for Game Z”, with the revenue being divided between the developers of Game X and the developers of Game Z.
There’s already primordial action on this front, such as the Amazon Moments program in which Amazon cooperates with developers and other organizations to drive user acquisition by dangling free Amazon store credits. Even with their clumsy offer packages, some great results have been obtained.
Cooperation and Critical Mass
A computer game brand is a global product, and in the world of global sales, bigger is better. So what's a small developer supposed to do? A really notable success needs a new way of thinking about things, and that idea might be more cooperation with other businesses.
The biggest and most successful new game brand revenue generators of the future will probably need to be cooperative, and even the biggest developers in the world will need to dramatically increase their cooperation with other businesses. The big winners of the future will be Master Brands that are the result of unprecedented levels of cooperation between a network of businesses who create the master brand together. Each contributor will retain and enjoy promotion for their own brands, as well as contribute to the Master Brand and reap financial benefits from that cooperation.
The ideal game brands of the future will be a network of multiple games from multiple developers with multiple store locations, all with shelves stocked by multiple manufacturers. Multiple other businesses will contribute features and services to the network whose profits are distributed among all of the involved businesses.
How big does the brand need to be to make the sort of big splash needed to really thrive with this new idea? An ideal network would probably be a group of around a dozen or more games, with perhaps six stores and at least eight branded lines of products, as well as a regular flow of glitter apps that are goofy little flavor-of-the-month activities that are not designed to generate revenue themselves but rather function to attract more people to the brand's network.
Best of Luck
Yeah, I'm an old geezer, but one of the benefits of peeing twelve times a day is that one can see the future more clearly. I know this whole idea of game developers becoming major players in the online products sales industry can seem a bit far-fetched. It’s a tall wall to climb, but from where I sit it’s clear that some developers are going to do it and reap the enormous rewards. Computer games are already quite important in the psychology of the world’s population, and it’s actually a only small step for them to move to an even more emotionally exploitable position, one that will be able to generate revenues that dwarf current levels.