Incentives Gone Wrong

5 gamification myths that trip up smart entrepreneurs… and what to do instead

Amy Jo Kim


At the Game Thinking Academy, we help product & game teams increase retention & find product/market fit.

And we find that our clients all have one thing in common: they want to do great work, but face demanding deadlines & the constant pressure to ship.

Sound familiar?

Now, in many situations, shipping fast & learning from the market is exactly the right thing to do.

But not always. When you’re building incentive systems, shipping too quickly can backfire 🧨

Incentives are TRICKY. When you get ’em wrong, it’s hard to unwind the damage.

Better to avoid these problems in the first place ! Today I’m going to show you how to navigate around these misguided myths, & find product success 🚀

Here are the 5 most common — and deadly — patterns we’ve seen that trip up even brilliant startup founders — and cause promising products to fail.

1: Gamification = competition

Throughout history, competitive games like chess, polo, & Risk have engaged us and delivered big-time fun. You can identify these zero-sum games because there are winners & losers who’re competing for a scarce resource.

Gamification techniques like leaderboards, contests and ranked competitions are zero-sum mechanics too.

And in terms of engineering — zero-sum mechanics are relatively easy to build & deploy. That’s why they’re so popular in games, and in gamification.

But I’m gonna let you in on a little secret…mechanics aren’t where the magic is.

And for a lot of people, zero-sum gaming… isn’t that compelling.

There’s another kind of gameplay where people to band together to accomplish something they can’t on their own.

These cooperative, “positive-sum” games deliver a “winning together” teamwork experience — in contrast to the “I win, you lose” dominance & status game that zero-sum mechanics deliver.

If you want to look beyond leaderboards, study games like Left for Dead…Portal 2… Covet Fashion… Minecraft… & Tiktok duets & stiches. That’s where you’ll find inspiration for creating your own cooperative gameplay.

Myth 2: Gamification is magic pixie dust

Let’s see… if I sprinkle some points & badges onto my app, engagement will magically happen. Right? RIGHT????

Hey, I’ve been there. I embraced this idea, and learned a painful lesson: while this approach can juice your stats initially — it won’t help your long-term engagement. If your mechanics don’t support a meaningful customer journey — you’ll just end up with clutter & confusion in your customer experience.

To create a compelling journey, you need to know who it’s for and what motivates them.

Take my client Replika. They’d built a chat bot with millions of downloads — but struggled with engagement. They tried adding points and badges — which gave them a short-term lift.

But those gamification mechanics didn’t improve long-term retention… & more importantly, didn’t help us figure out who the app was serving.

So we worked together to identify a high-need, active subset of customers — which turned out to be people struggling with anxiety & mental health who loved the convenient, friendly chatbot format.

Once we focused on serving that niche… and building an experience that helped them thrive… everything else fell into place.

Myth 3: The magic is in the mechanics

Though it was painful, that failed gamification experiment taught all of us that defaulting to Points, Badges & Leaderboards is NOT always the right approach — especially if you’re not clear about who you serve.

It can fool you into thinking you’re succeeding — while actually screwing up your audience targeting and long-term engagement.

So what did the Replika team do instead, to turn things around?

They connected with their audience and developed meaningful mini-missions and a media-rich Avatar system that gave people something fun to do while encouraging good mental health practices.

As a result, Replika was able to target their marketing far more effectively — improve their retention and app store rankings — and introduce new monetization opportunities.

The best designers know that mechanics are NOT where the magic is.

That happens where you can’t see it — underneath the surface, in the systems that help your customers make progress.

Myth 4: Gamification should look like a game

Many visual thinkers (including me) kick off projects by sketching out their ideas. While developing Happify, for example — we drew sketches of an isometric 2D world that looked kinda like a theme park.

Those sketches helped us communicate the vision and raise initial funding.

Coming from the gaming industry, we thought, “Yeah, that looks like a great way to engage people with the amazing content we’re developing” — and developed an initial UX.

But when we tested it on our hot-core early customers.. tney hated it. Said it felt like “too much work.”

They wanted something that felt more like Pinterest & less like a game.

It was SO tough to hear. But we listened… sucked it up… & made those changes. And now… Happify is a major hit and digital therapeutic that’s covered by insurance.

We NEVER would have found success if we’d stuck with our original idea that it had to look like a game.

Instead, we listened to our customers… and followed the market.

Myth 5: External rewards unlock lasting engagement

This is might be the most persistent & damaging gamification myth. Can external rewards actually unlock lasting engagement?

Oh how I wish this was true! My life as a designer would be SO MUCH easier.

But sadly — it’s not.External rewards can narrow your customer’s focus — help them stay on-task — and give your stats a short-term lift.

But watch out: you can kill your retention without even realizing it.

In his seminal book Drive, Dan Pink tells the story of a motivation study conducted on a classroom of first graders.

Some of the kids already loved to read in their free time. Some didn’t.

For one month, everyone was rewarded for the number of pages they read. Then, at the end of the month, the rewards stopped.

What do you think happened? The kids who used to read for pleasure… stopped. Once they’d be trained to read for rewards — that experience extinguished their internal motivation.

So…. right about now, you might be wondering “Well, if I can’t count on external rewards to drive engagement, what CAN I count on?”

Incentives that work: Autonomy, Mastery & Purpose

Self-Determination Theory, or SDT is a psychological theory about what motivates humans. SDT identifies 3 core elements of human motivation:

  1. Autonomy — our desire to be self-directed.
  2. Mastery — our desire to make progress & improve ourselves & our situation.
  3. Purpose, or relatedness — our desire to find meaning and connection through being part of something larger than ourselves.

If you want to drive retention, meaningful progress & social connectedness are FAR stickier than any badge or bribe.

To free yourself from relying on external rewards, take a look at SDT and think about how to apply it to your work!

For more tips on how to do Gamification right, watch this short video 👇🏽