Is Gamification Ruining Rewards And Loyalty Programs?

Loyalty programs used to be simple. You’d buy a coffee, maybe ten, and then you’d get one for free. It was a straightforward trade, no guesswork, no games, no pressure to log into an app every day like your morning cup depended on it. But somewhere along the way, loyalty started looking more like leveling up in a video game than being appreciated as a customer. And honestly? It’s exhausting.

Let’s talk about gamification. That buzzword has been thrown around for years now, especially in the marketing world. In plain terms, it just means taking game-like elements, things like points, badges, and leaderboards, and layering them onto real-world tasks. Loyalty programs were prime targets. After all, who doesn’t want to feel like a VIP by unlocking exclusive tiers, right? In theory, gamification should boost engagement. In reality, it’s often just more hoops to jump through.

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The Gamified Loyalty Experience

Take a look at how this plays out in both retail and online casinos. In the retail world, brands like Starbucks use gamified programs where you earn “stars” with every purchase. Rack up enough, and you hit gold status, fancy, right? Sephora has its Beauty Insider program, which features levels, birthday gifts, and exclusive events. These perks are designed to keep you coming back, but they also make earning rewards feel like a mission.

Now zoom into the online gambling space. It’s turned into a full-blown quest. The most popular sites often have some form of reward system, daily spins, leveling tiers, achievement badges, and other mini-games.

In this context, gamification can actually work well. For players who are already engaged, the added layer of goals and progress tracking can make gameplay feel more dynamic and fun. It betters the sense of progression and gives users reasons to keep returning beyond just the games themselves. As a result, it’s a smart way to build retention and loyalty, especially when rewards are meaningful and clearly tied to player activity. Done well, these mechanics can add a great deal of value.

Where Gamification Misses the Mark

The problem is, not everyone wants to play to be rewarded. When did spending money become a game in itself? You shouldn’t need a strategy guide to figure out how to get 10% off your next purchase.

Studies show that while gamification can increase short-term engagement, it often leads to fatigue. The study surveyed 407 people and found that gamification elements like competition and interactivity can lead to feelings of social overload and privacy concerns.

These stressors contribute to gamification fatigue. Interestingly, users in better health were less affected by these negative effects, suggesting that personal well-being can influence how gamification is experienced. People join loyalty programs to feel valued, not to collect badges like they’re working through a digital scavenger hunt.

What Do Customers Actually Want?

Customers want to feel that their repeat business is appreciated, and they prefer rewards that are both clear and achievable. Points should be easy to understand and redeem, not something that requires digging through fine print.

A well-timed surprise, cashback offer, early access to deals, or even a genuine thank-you can go a long way. The experience should feel personal and straightforward. Avoid countdown timers, forced daily logins, or manufactured urgency. Most importantly, the system shouldn’t come across as manipulative.

Better Loyalty, No Games Needed

There are ways to do loyalty right without turning it into a game. Some brands are ditching complex systems in favor of transparency. Think: clear discount thresholds, occasional VIP bonuses, or simply a punch card that works without an app.

For businesses operating online, strategies for scaling loyalty digitally offer ways to reward customers meaningfully without relying on gamified elements. Simplified tiers, lifetime points, or automatic cashback systems all help maintain trust and reduce friction. When in doubt, keep it customer-first. That’s the whole point of loyalty, isn’t it?

Gamification vs Loyalty Programs

Here’s where it gets interesting. The gamification industry has been growing fast. In 2019, it was valued at about $6.33 billion, and it’s expected to hit $37 billion by 2027. That’s a huge compound annual growth rate of nearly 25%. More recent estimates show it ballooned to around $20.4 billion in 2024 and could even reach $178 billion by 2033. Other projections put it at $29 billion in 2025, growing to $92 billion by 2030.

Now compare that to loyalty and reward programs. The global loyalty management market is also growing, but more steadily. In 2024, it was valued around $12 billion and is forecast to reach about $20 billion by 2030, with a more modest growth rate of roughly 10% per year. Specific sectors like travel are even bigger. Travel loyalty programs alone were valued at $26.9 billion in 2023 and could rise to nearly $89 billion by 2034, thanks largely to points systems and frequent traveler perks.

Even outside those broader numbers, you can see glimpses of just how valuable loyalty really is. In Australia, for example, the retail loyalty arm is reportedly a $7 to $8 billion industry, and customers in those programs spend, on average, about 20% more per transaction. In the airline world, loyalty programs have grown into financial juggernauts. In 2023, major U.S. airline loyalty schemes were valued at around $73.8 billion in total, and they generated over $25 billion in annual revenue all on their own.

Gamification isn’t all bad. It can be fun, until it’s not. The danger lies in overcomplicating something that should be straightforward. Loyalty shouldn’t feel like a game you’re forced to play. It should feel like appreciation for being, well, loyal. So let’s ditch the grind. Give people value, clarity, and a little gratitude. That’s a reward worth coming back for.