Gamification in Loyalty Programs: Beyond Points and Badges

Gamification in a loyalty program uses game elements such as progress, streaks, challenges, badges and chance to change specific member behaviors; it works when each mechanic is tied to a behavior the business needs and measured against a control group.

Most loyalty programs already have something game-like: tiers, points thresholds, the occasional challenge. The harder question is whether those mechanics change what members do, or simply decorate purchases they would have made anyway. This guide covers the behavioral research behind the mechanics that work, eight mechanics and how to design them, five design failures that cause fatigue, the rules that apply to chance, sharing and review rewards, gamification in B2B programs, and how to measure real lift. The gamification overview on the Brandmovers site covers the basics.

Key Takeaways

Why do game mechanics change behavior?

Game mechanics change behavior mainly by making progress visible, recognizing effort, building habits and adding uncertainty, but rewards can also crowd out genuine interest if they are poorly designed.

Four findings from published research are directly useful for loyalty design:

• Progress pulls people toward the goal. In a study of a real café reward program, Kivetz, Urminsky and Zheng (Journal of Marketing Research, 2006) found that members "purchase coffee more frequently the closer they are to earning a free coffee." Customers given a 12-stamp card with 2 preexisting "bonus" stamps completed the 10 required purchases faster than customers given a regular 10-stamp card, and a stronger tendency to accelerate toward the goal predicted greater retention and faster reengagement.
• Habits take time and tolerate the odd miss. In a study of habit formation, Lally and colleagues (European Journal of Social Psychology, 2010) found the time to reach 95% of peak automaticity "ranged from 18 to 254 days," and that missing a single opportunity to perform the behavior did not materially affect habit formation. The study tracked simple daily behaviors among 96 volunteers over 12 weeks, and the longer times were modeled rather than observed, so treat it as directional.
• Expected rewards can crowd out interest; positive feedback does not. A meta-analysis of 128 studies by Deci, Koestner and Ryan (Psychological Bulletin, 1999) found that engagement-contingent, completion-contingent and performance-contingent rewards "significantly undermined free-choice intrinsic motivation," while "positive feedback enhanced both free-choice behavior... and self-reported interest." Earlier meta-analyses reached different conclusions, which the authors address directly, but the design lesson is sound: for activities members already enjoy, recognition is safer than paying for every action.
• Uncertainty adds interest, and legal obligations. In four studies with real rewards, Shen, Fishbach and Hsee (Journal of Consumer Research, 2015) found that people "invest more effort, time, and money to qualify for an uncertain reward" than for a certain reward of higher expected value, though only when they focus on the process of pursuing the reward rather than the reward itself. Deci and colleagues also found that unexpected rewards did not undermine motivation, with the caveat that people may begin to expect them if they come too often. When a chance element is tied to a purchase, it becomes a sweepstakes (see the rules section).

Which gamification mechanics drive results?

Eight mechanics recur in effective programs: visible tiers, streaks, challenges, badges, progress displays, time-limited events, scoped leaderboards and shareable milestones, each tied to a specific behavior.

1. Tiers with visible progress

Tiers give members a longer-term goal between purchases. The goal-gradient finding suggests effort rises as members near a threshold, so show the distance to the next tier at every touchpoint, make each tier's benefits clearly better than the last, and avoid qualification windows where members spend most of the year with no realistic target. The guide to tiered loyalty programs covers tier structure in detail.

2. Streaks

A streak counts consecutive days, weeks or purchase occasions, and members work to avoid breaking it. Duolingo's own published data, from its January 2022 blog on streaks, is one of the few examples with published figures: learners who reach a streak of just 7 days are "3.6 times more likely to complete their course" (an association, since committed learners are more likely to keep streaks), and adding a streak freeze "increased the relative number of active learners on Duolingo every day by +0.38%." For loyalty programs, streaks suit high-frequency categories such as coffee, fuel, grocery and quick-service dining, and the streak period should match the category's natural purchase cycle, which for most categories means weekly rather than daily. Build in a freeze or recovery option, since Lally's study suggests one missed occasion does not break a habit, and reward milestones rather than every day.

3. Challenges and missions

Time-bound challenges ("three purchases in home decor in 14 days") and multi-step missions ("complete your profile, download the app, make a first purchase and redeem once within 60 days") drive specific behaviors such as category trial or onboarding. Set targets a meaningful share of the segment can reach, show progress and deadlines clearly, and refresh challenges often enough to stay interesting without turning tracking into work.

4. Badges and achievements

Badges mark milestones such as a 10th visit, a first purchase in a new category or a successful referral. The Deci findings suggest that badges work best when they read as recognition of meaningful progress rather than as payment for trivial actions: a badge for every login devalues the whole set.

5. Progress displays

Progress bars and "X away from your next reward" prompts are the simplest application of the goal-gradient effect, and the stamp-card study suggests that progress which feels already started (such as bonus progress at sign-up) speeds completion. Show progress even when the member is far from a reward, and make sure the head start never hides a real increase in what members must do: in the study, the 12-stamp card with 2 bonus stamps still required the same 10 purchases as the regular card.

6. Time-limited events

Double-points weekends, seasonal challenges and anniversary bonuses create urgency. Used too often, they risk teaching members to wait for the next event, and Deci and colleagues caution that people may begin to expect "unexpected" rewards if they are given very often. Reserve them for real moments, such as seasonal peaks, launches and member anniversaries, and keep deadlines honest: the FTC's dark patterns report (September 15, 2022) lists fake countdown timers among tactics that mislead consumers.

7. Scoped leaderboards

Global leaderboards dominated by a few heavy users can demotivate most other members. Scope them with weekly or monthly resets, peer groups of similar members, local or team boards, or a personal comparison against the member's own prior month, so a meaningful share of members can see a path to moving up.

8. Shareable milestones

Tier upgrades, streak milestones and challenge completions can be designed as shareable cards. Sharing extends reach, but if members earn points or entries for posting, the post needs a clear disclosure of that incentive (see the rules section).

Examples in practice

• Metrolink. Brandmovers built a gamified transit loyalty program with an offers hub for Metrolink, Southern California's commuter rail. Riders earn points for every mile traveled, including by submitting physical tickets by photo, barcode scan or code entry, and the program runs sweepstakes, hashtag challenges and seasonal promotions. The BLOYL™ program recorded a 60% active engagement rate among enrolled riders and +15% average monthly transactions among members (disclosed by Brandmovers).
• 31 Days of DiGiorno. For National Pizza Month, Brandmovers ran 31 Days of DiGiorno, a gameboard with a weekly instant win that gave fans a reason to return throughout the month.
• Ulta Beauty's GlamXplorer pilot. Glossy reported in May 2024 that Ulta Beauty tested a mini-game experience, built with a gamification vendor, with 1,000 top-spending loyalty members, and that 86% of players who took part in the mini-games returned the following week. It was a soft-launch pilot among the most engaged customers, so the figure shows what is possible with a highly engaged group, not what a general membership will do.

Which design failures cause gamification fatigue?

Gamification fatigue usually comes from mechanics that reward trivial actions, rules that are hard to follow, contests most members cannot win, novelty with nothing underneath, and too many notifications.

Two more traps are worth naming. Pressure tactics, such as streak warnings that feel like threats or countdowns that restart, can cross from motivation into manipulation. And games directed to children, or general-audience programs that know they are collecting data from children, bring age rules: under COPPA, operators must "obtain verifiable parental consent, with limited exceptions, before collecting personal information online from children" under 13 (FTC), so set eligibility and age screening before launch.

Gamification is also not the right tool for every program. In low-frequency, high-consideration categories there are too few purchase occasions for streaks or challenges to act on, and some premium or professional audiences may read game elements as trivializing the relationship. In those cases, clear benefits, service recognition and well-timed communication may do more than any mechanic.

What rules apply to chance, sharing and review rewards?

Chance-based rewards tied to a purchase need a free alternative method of entry, incentives for reviews cannot depend on sentiment, and posts made to earn a reward need a clear disclosure.

• Chance mechanics. Spin-to-win games, mystery rewards and "chance to earn 5x points" offers are chance promotions. If entering or improving the odds requires a purchase, state lottery laws generally treat them as unlawful lotteries unless a free alternative method of entry (AMOE) gives equal odds. The FTC's consumer guidance on sweepstakes scams puts the principle plainly: "it's illegal to ask you to pay or buy something to enter or to increase your odds of winning." A safer design keeps a guaranteed base reward for the qualifying action, with the chance element as a bonus that also has a free entry route. The guide to promotions compliance covers official rules and state registration.
• Reviews. The FTC's final rule on fake reviews "prohibits businesses from providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative."
• Shares and posts. The FTC's Endorsement Guides FAQ notes that "if your endorsement of a product allows you to enter a sweepstakes to win a thousand dollars, it could very well affect how people view that endorsement," so posts made for points or entries need a clear and conspicuous disclosure.

This is general information, not legal advice.

How does gamification work in B2B and channel programs?

B2B gamification rewards commercially meaningful partner actions, such as training, certification, accurate data and sales milestones, and handles competition carefully because partners often compete with each other.

Three differences matter:

• Reward professional behaviors. For a distributor or dealer, the equivalent of a consumer purchase is completing a certification, submitting accurate sell-through data on time or reaching a sales milestone. A "first login" badge means little to a professional audience.
• Handle competition carefully. Partners often compete for the same customers, so public partner-versus-partner rankings can damage relationships. Anonymize boards, segment them by region or size, or compare each partner with its own prior performance.
• Make recognition useful. A certification that a partner can display in its own marketing gives both motivation and a commercial asset.

BENGAGED™, Brandmovers' B2B channel incentives platform, supports rules for training milestones and rewards for training completions and certifications. See B2B loyalty for details.

How do you measure whether gamification is working?

Compare all members offered a mechanic, whether or not they take part, with a random holdout group on the behavior it targets, and track whether participation holds up or decays after launch.

Participation measures attention, not change. A challenge with high participation and no change in purchase frequency has produced activity, not lift. Comparing participants with non-participants overstates the effect, because members who opt in are usually the most engaged already, so hold back a random group from the mechanic and compare:

• Frequency: visits or purchases over a window long enough to include the period after a reward is earned, since Kivetz and colleagues found that purchase rates "reset (to a lower level) after the first reward is earned" and that members were most likely to defect just after earning a reward. A mechanic that only pulls purchases forward shows early lift and no net gain.
• Basket and category: spend in the category a challenge targets.
• Redemption: whether progress displays speed the path to a reward.
• Retention: churn in the following 90 days for everyone assigned to the mechanic versus the holdout, whether or not they reached a milestone.
• Sharing: share rate on milestone cards and conversions from shared links.
• Decay: participation by month since launch. A mechanic whose participation falls sharply after the first month or two is a novelty spike; one that holds steady is more likely to be building a habit.

Where a holdout is impractical, such as for tier benefits members already hold or segments too small to measure, stagger the rollout by region or cohort and compare the groups before and after launch.

Also track costs, including rewards, prizes and fulfillment, so lift is judged against spend. The loyalty KPI dashboard guide covers formulas, and the guide to gamified data collection covers games that collect member preferences.

BLOYL, Brandmovers' loyalty platform, includes gamification modules (scratch-offs, gameboards, instant wins, bingo, auctions, challenges, badges and milestones, surveys and quizzes), a promotions builder for sweepstakes, contests and instant wins alongside the loyalty program, a rules engine that can reward specific behavioral actions, and A/B testing against a control group. See the loyalty platform overview for details.

Conclusion

Gamification works when it makes progress visible, recognizes real effort, supports habits and adds a little uncertainty, all in service of a behavior the business needs. It fails when game elements are added for show, reward trivial actions or rely on novelty alone. Design each mechanic around one behavior, keep chance on top of a guaranteed base reward with a free entry route, disclose incentives for shares and reviews, and measure lift against a random holdout while watching for decay.

Sources

• Kivetz, Urminsky and Zheng, "The Goal-Gradient Hypothesis Resurrected: Purchase Acceleration, Illusionary Goal Progress, and Customer Retention," Journal of Marketing Research (2006)
• Lally, van Jaarsveld, Potts and Wardle, "How are habits formed," European Journal of Social Psychology (2010)
• Deci, Koestner and Ryan, "A Meta-Analytic Review of Experiments Examining the Effects of Extrinsic Rewards on Intrinsic Motivation," Psychological Bulletin (1999)
• Shen, Fishbach and Hsee, "The Motivating-Uncertainty Effect: Uncertainty Increases Resource Investment in the Process of Reward Pursuit," Journal of Consumer Research (2015)
• Duolingo, "How Duolingo streak builds habit" (January 31, 2022)
• Glossy, "Ulta has been quietly testing a gamified loyalty program called GlamXplorer" (May 15, 2024)
• FTC, "FTC Report Shows Rise in Sophisticated Dark Patterns Designed to Trick and Trap Consumers" (September 15, 2022)
• FTC, "Fake Prize, Sweepstakes, and Lottery Scams"
• FTC, "Federal Trade Commission Announces Final Rule Banning Fake Reviews and Testimonials" (August 14, 2024)
• FTC, "FTC's Endorsement Guides: What People Are Asking"
• FTC, "Complying with COPPA: Frequently Asked Questions"
• Brandmovers, Metrolink loyalty program case study
• Brandmovers, 31 Days of DiGiorno case study