What is Gamification? (& Why It's Essential in 2024!)

If you asked ten people to define gamification, you’d get a variety of definitions.

But, if I asked you instead:

• If you ever got a free product, like coffee, from a loyalty program?
• If you participated in an online fitness challenge?
• If you used apps with a leaderboard or points?

The answer would certainly be yes to at least one of these questions. Chances are excellent that gamification is part of your day-to-day life as it is.

That’s right, you’ve been gamified, my friend!

So, how does gamification work, exactly?

Read on, and we’ll explain!

What is Gamification?

The term “gamification” was initially coined in 2002 by Nick Pelling, whose definition was “a tool to improve user interface (with game elements) to make electronic transactions more enjoyable.”

While there’s still no standard definition, references to gamification have broadened since then.

One of the more popular definitions of gamification today is “to add game elements to non-gaming activities.”

In a practical sense, gamification is used to make mundane tasks more enjoyable or to encourage someone to take a particular action, like purchasing a coffee from one shop versus another.

In a marketing sense, it is commonly integrated with social media so users can earn rewards for actions they take on Facebook or Twitter, like sharing their attendance at an event or getting points for posting about a milestone.

Businesses that are marrying game elements with their marketing campaigns and other aspects of their business are seeing big returns in key profitability drivers, like employee engagement and customer loyalty.

An important note is that gamification can be digital or analog. Ever get a stamp on a simple card for buying a sandwich or coffee? This is a simple form of gamification in business.

Going way back in history, it’s clear that humans have understood that introducing a competitive edge or reward produces certain behaviors.

Consider the Boy Scouts and the concept of earning badges for activities you wouldn’t normally do.

The focus of this article is on more sophisticated gamification examples in a digital context, but it is important to understand the broad applicability of the concept before moving on from the definition.

The value of gamification is in the achievement of its end goals; whether that be to inspire, collaborate, learn, interact, engage or share.

How Does Gamification Work?

If gamification is all about using game elements in non-gaming activities, what are game elements? Pretty simple really; a game is made up of:

• Players
• A goal
• Rules
• Feedback

In a non-gaming context, players may be customers or learners.

The goal varies, but an example would be to encourage consistent training in the case of a health and fitness app or completion of a course in the context of education.

Rules exist to keep “players” on a predefined path. When they follow that path they receive feedback, such as points for progress, badges, or status on a leadership board, that encourages them to keep going.

Rewards like earning a badge for quitting smoking, checking in at an event or restaurant are great examples of gamification marketing.

Clever really; when someone ‘checks in’ on social media, they are promoting your business to their social network.

In addition to game elements, game mechanics and dynamics concepts are key, so we will explore these concepts next in more detail.

Game Mechanics

Game mechanics are the rules and feedback loops (ie. rewards) that drive enjoyable game-based learning. They are the IF/THEN statements that sit behind an application or system.

For example, if you complete module 1, then you earn a badge. If you complete it before anyone else, then you take the top spot on the leaderboard.

These “loops” dictate how participants engage with a gamification program and receive rewards and next steps as they progress.

Game Dynamics

The dynamics of a game are the behaviors and processes that arise when people play. Some “players” will be motivated by competition, others by social interaction, and all will have emotional reactions to the gameplay.

Gamification considers that players may be motivated by community, surprise, competition, collaboration, or collection.

The behaviors of players will differ depending on their motivation and a gamification program aims to map out alternate rule/reward loops to keep as many players as possible engaged and moving towards the same goal.

Benefits of Gamification

There are many ways that gamification creates business value, such as driving employee engagement or improving customer retention and loyalty.

The effective use of gamification can also serve to differentiate your business, product, site, or service from the competition, both in the eyes of top talent and potential customers.

There are tons of challenges that gamification can help overcome, including:

• Knowledge retention
• Productivity
• Sales or call center performance
• Course completion
• Consistent fitness training
• Customer loyalty
• Recruitment and retention
• Completion of mundane tasks, like chores or timesheets

To put the benefits into context, let’s consider that a company wants to use gamification in corporate training to increase employee engagement.

Increasing engagement is broadly linked to better productivity, higher rates of customer satisfaction, and lower absenteeism. Consider these statistics:

• Companies with high employee engagement are 21% more profitable
• A Gallup study showed that a highly engaged workplace had 41% less absenteeism
• It costs north of $4,000 to hire new talent and $1,000 to onboard them, meaning you lose over $5,000 every time an employee resigns

Increasing engagement is a recognized way to reduce turnover. Gamification is an effective strategy to bolster morale and engagement, thus providing the end benefit of reduced turnover and related expenses.

This makes sense when you think about it. Much of the day-to-day work grind is mundane so making tasks more enjoyable leads to happier and more engaged staff.

In the context of learning management systems, gamification helps to overcome the basic issue that studying is pretty boring!

Companies and course creators alike have a strong desire to see students complete courses, but completion rates are pretty dismal (like 3% dismal).

Learning management systems that have made strategic investments in gamification give their users an edge; providing dramatically higher completion rates.

For a course creator, this translates into higher repeat sales and referrals which leads to increased revenues.

All this interaction with employees and customers through gamification programs offers opportunities to capture data and, over time, gives a better understanding of how people spend their time and what creates interest.

These insights can be incorporated back into the gamification program, meaning better results over a longer-term horizon.

Seeing gamification’s strategic potential yet?

[Editor's Note: Before you start creating your content, make sure you know how to write measurable learning objectives.]

Gamification Best Practices

Gamification is a long game and, as you now know, companies that do it well view it strategically.

Here are additional characteristics of companies that do gamification well:

• Start with good content: No amount of gamification will overcome a user experience that is already lacking. Have a hard look at whether your platforms and training content are appealing and if they aren’t, start by fixing this before you try to gamify a lame duck.
• Consider your timeframe: It takes time for someone to “bond” with your brand. Every interaction can build trust and loyalty and mapping out all of these interactions and figuring out which to gamify and how takes time. Be sure to chart out a reasonable timeframe for your plan.
• Follow the data: Gamification strategies take time to fine-tune and adjust. They must be objectively measured and “tweaked” continuously. Ensure you consider how you will collect and use key data before you implement your game plan (pun intended).

A key consideration will be whether you use internal expertise to develop your gamification program. There are benefits to this, including keeping the technical and strategic knowledge in-house and controlling costs.

However, there’s also a risk you detract from your core competencies and get in over your head.

Tech or software companies often have the in-house expertise to take on the development of their gamification programs, but many other businesses will ultimately outsource.

Finding a strategic partner with a proven track record who understands the importance of these best practices is critical to the successful execution of a gamification strategy.

Limitations of Gamification

Gamification is pretty awesome, but it does have its limitations.

Like any other business tool, it can succeed or fail.

Some common pitfalls include:

• Thinking it can overcome a crappy value proposition: It’s worth repeating — No amount of gamification will overcome a user experience that is lacking. It won’t save the day if no one wants your product or service and it won’t work if you don’t target the right people with a suitable strategy that considers their needs and problems.
• Overuse of badges, levels, and points: If you overfocus on simple mechanics like badges, levels, and points you are missing countless opportunities to motivate a diverse user base. Not everyone is motivated the same way, and your strategy needs to take this into account and use other approaches, like community building or collaboration.
• Not investing enough in gameplay and story: Simply moving through a process and getting checkmarks or badges is still not that fun. You’ll need to get creative and make sure the user experience is awesome enough that people will get a similar joy from your gamification program as they get from actual games.

In general, proceeding too quickly without a full understanding of your target customer, processes, and gamification options is a sure way to fail.

Gamifying a process, site, experience or system takes considerable upfront time to plan and map out.

Given gamification’s transformational potential, wanting to jump in with two feet is understandable.

In the context of gamification, however, the tortoise will overcome the hare!

Real-World Gamification Examples

This all sounds great, but the proof is really in the pudding, no?

Here’s where we prove it to you by highlighting real-world gamification example success stories.

Looking for an excellent example of the effective use of gamification in HR? Wait till you see what FreshDesk was able to do!

Seeking an example of a killer mobile gamification app? Look no further than Nike+, the virtual training app, or the Starbucks customer loyalty app.

Wondering if gamification is effective in teaching? Curious about how gamification improves eLearning? Xperiencify’s use of gamification translates into dramatically higher course completion rates.

1. FreshDesk

FreshDesk successfully used gamification by creating badges, a leaderboard, and multiplayer teams to increase user engagement and productivity in its call center. No surprise, they saw a corresponding increase in customer satisfaction!

2. U.S. Army

The U.S. Army is using gamification on its websites to attract recruits. When you visit their site looking for information on joining, you can play military training games which are intended (and proven effective) at piquing your interest.

3. Starbucks

The Starbucks loyalty program is wildly popular worldwide. The associated app lets customers collect stars that can be put towards free products and other prizes. Users can get a reward in as few as 2-3 visits and these quick hits keep ‘em coming back for more!

4. Nike+

Nike’s super popular app, Nike+, was created to motivate people to be consistent with their training. It has time-sensitive challenges, competitions, leaderboards, and more and has led to big boosts in shoe sales.

5. Headspace

Headspace is a meditation app that uses gamification to encourage completion and mastery of one level of meditation before moving to more advanced practice. Their gamification program shows progress and associated health benefits as users progress.

6. Minecraft: Education Edition

Minecraft is one of the most popular games ever and the Education Edition teaches students coding, math, and problem-solving skills using game mechanics from the original game.

[Editor's Note: If you want to check out more gamification tools like Minecraft: Education Edition, you can find them here.]

7. Reddit

Reddit took a basic blog and turned it into one of the most popular websites in the world! Users get points for writing articles, interacting, and being a member and can buy “coins” and send other users “gifts”, motivating them through building community.

8. Beat the GMAT

What is more mundane than self-directed study? When an MBA student created this website to encourage friendly competition and offered points and badges for study efforts, students jumped at a chance to make GMAT prep slightly less painful.

9. Xperiencify

Xperiencify has invested heavily in gamification and course creators are enjoying a conservative 10X increase in revenues. With multiple ways to release course content, this online course platform has figured out how to get students ethically addicted to courses on their platform.

Looking Ahead: The Future of Gamification

Gamification, at least the word, was spoken for the first time in 2002. It’s an intersection of art and science but as more research happens and more gamification books are written, it will be better defined.

More and more businesses will see gamification in a strategic sense and invest time and resources to answer the question “what is our gamification strategy?”

Those who get it right will offer better products, have a more engaged and productive workplace, and higher customer retention.

Interested in how you can reap the rewards of gamified user experiences?

Start by considering if the companies you give your hard-earned money to are successful at gamification. These companies offer higher ROIs and better user experiences — and who doesn’t want in on some of that?