# Gamification: What It Is, How It Works, Risks

## What Is Gamification?

Gamification describes the incentivization of people's engagement in non-game contexts and activities by using game-style mechanics.

### Key Takeaways

*   Gamification is the use of game elements in non-game activities.
*   Employing gamification can enhance customer and employee engagement, boost sales, and cut costs.
*   Gamification may have some pitfalls, depending on how it is implemented.

## Understanding Gamification

Gamification [leverages](https://www.investopedia.com/terms/l/leverage.asp) people's natural tendencies for competition, achievement, collaboration, and charity. Tools employed in game design, such as rewarding users for achievements, "leveling-up," and earning badges, are carried into the real world to help motivate individuals to achieve their goals or boost performance. There are many examples of gamification, the most well-known perhaps being frequent flyer rewards programs offered by airlines. The important measurable [metrics](https://www.investopedia.com/terms/m/metrics.asp) of success from gamification include the level of engagement, influence, brand loyalty, time spent on an activity, and the game's ability to go viral.

Gamification describes the incorporation of game-style incentives into everyday or non-game activities. Any time game-like features or aspects of game design are introduced to non-game contexts, gamification is taking place. In other words, real-world activities are made game-like in order to motivate people to achieve their goals. Frequent flyer programs, loyalty rewards points, and frequent shopper points are all good examples of the everyday use of gamification. In all of these examples, customers are incentivized to keep "playing" and racking up points by rewarding ongoing consumption.

Not all examples of gamification encourage people to spend. Nike+ is an app that encourages users to exercise by turning personal fitness into a game. Various nonprofits [sponsor](https://www.investopedia.com/terms/s/sponsor.asp) friendly competitive events (-a-thons) in order to increase [charitable giving](https://www.investopedia.com/charitable-donations-4689691). Biological science has been advanced by encouraging gamers to fold proteins.

> **Fast Fact**
>
> Educational platforms can encourage learning through gamification, unlocking various levels and badges based on successful completion of learning outcomes.

One important avenue of gamification is in the workplace. By introducing game elements to a job, employers can help workers track their own performance, set goals, and engage in friendly competition that can enhance the working environment and improve business performance. It can encourage employees to give their best effort and provide them with rewards that are directly tied to their effort level.

## Risks of Gamification

Gamification is useful and successful because it takes advantage of the same human psychology that causes people to enjoy winning at games and to dislike or even fear losing. As a result, it can also have some downsides too. 

Choosing the right mechanisms and metrics can be a challenge. Since these are what participants will focus on, it is important that the game elements actually encourage the desired behavior. Poorly designed or implemented gamification can become a distraction from other priorities, encourage people to literally game the system, or result in players engaging in [zero-sum](https://www.investopedia.com/terms/z/zero-sumgame.asp) or even negative-sum competition against one another. Any of these outcomes can mean wasted time and money.

Games can also sometimes become notoriously addictive, as has been seen with immersive video gaming and compulsive gambling. This raises possible risks when using gamification for commercial purposes. From the point of view of a commercial entity that benefits from employees or customers developing an addictive compulsion to work or consume (and pay for) a product, this is a positive feature. But for workers and consumers it can easily be seen as manipulative or exploitative and raise potential ethical issues.