Tom Caporaso, CEO of Clarus Marketing Group in Middletown, Conn., reports similar enthusiasm after gamifying the company’s coupon site, Freeshipping.net, with features that award badges and levels to users in exchange for voting for or against specific coupons. “The metrics are phenomenal in terms of what we’re seeing [regarding] traffic, repeats and people coming back, gathering badges and voting on coupons,” he says.

Initially, gamification was embraced by consumer websites, especially in the media, entertainment and publishing worlds. Now it’s making inroads in other fields, including software companies that are trying to encourage buyers to use their wares and businesses of all kinds looking to motivate employees. Gamification has been working especially well with salespeople and software training, Scullion says. One automobile company, for example, was struggling to get dealership employees to complete training and to use new software. Then they gamified the training application. “They’ve seen a 400 percent increase in engagement and in getting through the program,” Scullion says.

One of the advantages of gamification is that it can cost less than conventional loyalty and reward programs, which rely on tangible goods. While gamification can employ items such as golf clubs and gift coupons to motivate customers and employees, it relies more heavily on virtual goods such as badges, ranks and other marks of social status.

Another key is the social-networking aspect. Gamification designers’ goal is to build communities of users who not only play the game but also become really engaged when they connect with others on the site. “They want to come back because they’ve found other fans or other like-minded people — there’s a deeper reason than just wanting to collect badges or points,” Meloni says. “That will get old very quickly.”

But there are limits to what gamification can do, says Bing Gordon, a partner at Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers. Gordon, who guided development of the iconic John Madden Football during his tenure as an executive at Electronic Arts, told an audience at a gamification session at this year’s SXSW Interactive in Austin, Texas, that, for the most part, it can encourage people to do only those things they are already willing to do. “It’s an illusion to think extrinsic rewards can be used to turn spinach into a banana split,” Gordon says. “It’s kind of a helper.”

So does that mean that gamification won’t really turn unsuspecting consumers into slavering addicts? Not yet, Caporaso says. “The gaming is a cool way to get them to come back and interact with the site,” he says. “But people aren’t spending Facebook time — hours and hours — on our site.”

Companies that jump into gamification may be entering a system that will require ever-increasing devotion to upping their own game. As the technique becomes widespread, consumers could come to expect everything to be gamelike and will look for even more engaging experiences, says Skey. “Right now, the distraction and interaction and engagement are probably welcome,” she says. “But I think we’ll have to keep leveling up ourselves, because maintaining consumer engagement is a big game.”