Clocking In or Not? Optimal Design of a Novel Gamified Business Model in Online Learning

An emerging gamified business model in the online learning industry has recently caught widespread attention where users are entitled to a full refund of course fee after finishing certain tasks consecutively for the required number of days (i.e., the time window). Some examples of finishing such tasks (referred to as clocking-in) are completing a required daily learning task, posting progress updates via social media platforms, etc. We refer to such a gamified business model as the clocking-in cash-back (CIC) model. We formulate this model to examine how the firm should set the optimal time window, which directly determines the difficulty level of the gamification system (i.e., the CIC model). Using this gamification system, the firm can better track users’ efforts through the clocking-in process and segment them into two different groups, namely winners and quitters, depending on whether they complete the clocking-in process for the required time window. We examine the tradeoff faced by the firm between shortening the time window to generate more revenue from winners and extending the window to generate more revenue from quitters. Counterintuitively, we find that it is not always optimal for the firm to shorten the time window when users incur a higher clocking-in cost or are able to learn more rapidly. In addition, contrary to conventional wisdom, we find that when the firm can generate more marginal future revenue from winners, it may be better off extending the time window. Another interesting finding is that the marginal word-of-mouth effect can have a positive or negative impact on the optimal time window depending on the value of users’ clocking-in cost. Our findings generate several important insights that can help online learning firms improve their design of the CIC mechanism to maximize profits