Failed Gamification

When Gamification Fails: A Case Study in User Motivation and Strategic Pivots 🕹️➡️🛑

How a Duolingo-inspired feature generated a small profit but failed our core mission, leading us to "fail quick" instead of iterating.

The Project Overview

OkCredit's primary goal is to help merchants build a habit of digital bookkeeping. To accelerate this, we formed a hypothesis: could we use gamification to make adding daily transactions fun and competitive?

Inspired by the success of apps like Duolingo, we decided to build a leaderboard and league system. The assumption was that the thrill of competition and the desire to win rewards would encourage merchants to add transactions daily, eventually forming a lasting habit.

My Role & The Team 🤝

As the Lead Product Designer, I handled the whole design process and worked really closely with Mukul, our Product Manager. I was in charge of figuring out feature strategy, doing user research, leading brainstorming sessions, and making awesome high-fidelity visuals.

The Design: A Duolingo-like Game for Merchants 🎮

We designed a comprehensive weekly game built on three core mechanics:

League System 🥉🥈🥇: Merchants were placed into leagues of 30 and would compete on a weekly leaderboard to be promoted to higher tiers (Bronze, Silver, Gold) or be demoted.
XP & Streak Engine 🔥: Users earned Experience Points (XP) for adding transactions. The key incentive was a streak multiplier; a 10-day streak meant every transaction earned 10x the XP, powerfully rewarding daily use.
Rewards System 🎁: We offered a mix of rewards, including virtual badges for achievements and real-world items like a gold coin and electronics for top performers in the Gold league. We also offered discounts on OkCredit subscriptions, which were widely redeemed.

The Results: A Flawed Outcome 📉

The feature launched and we saw an immediate surge in activity. However, a closer look at the data revealed that we had created the illusion of success while failing at our primary goal.

The "Success" Metrics: The game was popular, with 313,864 users participating. It was also financially positive, generating a net revenue of ~$4,435 after subtracting the costs of all rewards and discounts.
The Core Failure: The design had a critical flaw—it rewarded the quantity of transactions, not the quality. This led to users gaming the system.
- Rampant Bogus Transactions: The most damning metric was the Valid-to-Bogus transaction ratio of 3:7. Users were spamming fake entries just to win prizes.
- No Lasting Habit: Transaction volume plummeted as soon as the game ended, proving the behavior was temporary and driven by extrinsic rewards, not a new habit.
- Minimal Net Impact: The project resulted in only a modest ~3.19% net increase in habit formation for key user cohorts (Active Registered Weekly/Monthly Active Users).

The Final Outcome: A Strategic Pivot 🛑

Despite the high participation and small profit, the feature was ultimately scrapped.

This decision was driven by our company culture and strategy. We were operating under a "build quick, fail quick" motto. The data clearly showed that the feature was driving the wrong behavior and failing its core mission of building healthy habits.

The strategic conclusion was that this style of gamification was fundamentally unsuited for our financial domain, where trust, data accuracy, and genuine business utility are paramount. Rather than invest more resources trying to fix a flawed premise, we made the tough decision to pivot.

Retrospective: Key Learnings & Proposed Solutions 🎓

The failure of this project provided powerful lessons. My post-analysis identified two key areas of learning and proposed a new path forward.

Learning #1: Incentivize the Right Actions, Not Just Volume.
- The core flaw was rewarding an easily gameable action. My analysis concluded that a successful system must reward healthy behaviors that signify real engagement. My proposed solution was to reward actions like:
  - ✅ Setting up a complete user profile.
  - 🏦 Adding bank details for online payments.
  - 🗓️ Consistent daily app visits.
Learning #2: Leverage Verification to Build Trust and Revenue.
- My strongest recommendation was to tie incentives exclusively to transactions with verified customer accounts.
- This would trigger an SMS to the merchant's customer for each transaction, making it impossible to add bogus entries and building trust.
- This also creates a natural business opportunity: we could offer a limited number of free verified SMS notifications and then prompt users to upgrade to a premium subscription for more, tying the feature directly to a revenue strategy.

Author: Jagadeesh Punna

Like on Linkedin