Companies around the world are expected to spend $540 billion dollars in advertising this year. And yet 99% of those offers will be ignored.
OfferCraft co-founder and CEO Aron Ezra was pondering this a few years ago, as he brainstormed what problem to tackle with his next company. Ezra had dedicated most of his career to helping organizations influence their target audiences, inside advertising and PR agencies, as a strategy consultant, and as the CEO of a mobile software company.
That company, MacroView Labs, helped a wide range of organizations create relevant mobile apps, which remains a huge challenge for many marketers. Ezra built MacroView into a multimillion-dollar business and in 2011 sold it to Bally Technologies (now Scientific Games), one of the biggest casino technology and gaming companies in the world. He then led the company’s mobile and interactive initiatives for three years.
Ezra wanted his next company to build on the work he had done in the past. But this time, instead asking how he could improve mobile or another niche, he found himself asking a far bigger question: Why do most incentives fail?
“Most organizations struggle to get their target audiences, whether they’re customers or employees, to actually do the things they’re trying to convince them to do,” Ezra said. “It’s such a massive problem that many marketing and HR executives don’t even see it as a problem anymore. They see tiny redemption or participation rates as a given, and they celebrate improvements of fractions of a percent.”
Working in the world of casinos, Ezra saw firsthand the powerful impact that games had on people’s energy levels, mood, memory and willingness to pay attention and engage. He wondered if he could build software that systematically used games and contests and rewards to create incentives that more effectively inspired people to take action.
Ezra explained his idea for a new type of gamification software to Keith Michel and Slav Kulik, computer scientists and fellow entrepreneurs who had started MacroView Labs with him. Michel and Kulik immediately began brainstorming how to build motivation software that could measurably change behavior. “Our first conversation lasted several hours,” Michel said. And with that, OfferCraft — a company dedicated to crafting better offers and incentives — was born.
The team began tapping into social-science research on how people make decisions and what motivates their actions. They reviewed research findings across multiple fields, from behavioral economics, to cognitive psychology, to game design and game theory. There was a lot to read—academic researchers in those fields had been studying people’s inherent biases and motivators for many years. But even with all those findings, there wasn’t a great software platform to operationalize those insights.
Michel and Kulik recruited Pierre Darbouze, a former Cisco engineer, and the team set out to build a platform that would help companies make their incentives more memorable and effective. How they did it was the secret sauce behind the platform — a mix of gamification tools, dynamic rewards, sensors, algorithm-driven analytics and more. That became OfferCraft’s unique selling proposition and their competitive advantage.
The team recruited a number of folks who had worked for MacroView along with several new faces as well. “It was like bringing the band back together and adding new friends,” Michel said. “We had a great experience before, and we wanted to do it again.”
The team began running pilots to test the platform.
One client, for example, complained that their outgoing emails suffered chronically low response and open rates. OfferCraft designed a game that could be embedded in the emails to grab recipients’ attention. Everyone who played won a discount off of something — and the prizes then became interactive after a customer received it. That way, if a customer didn’t use the discount, the prize could be traded for something else that the customer preferred. Open rates and redemption rates skyrocketed, and the business was able to collect powerful insights about customer preferences.