Thanks to the success of Foursquare, Booyah / MyTown and Zynga, "game mechanics", "badges" and "leaderboards" have become cornerstones of any web marketer's dialect and user-acquisition strategy. What these three companies have done so well is figure out how to apply game mechanics to the core experience... in a way that is fun, on-brand and - most importantly - adds value to the users. As an example, anyone can add badges or leaderboards to their product - but if it is merely a front-end layer, it won't stick. And as more companies race to understand and apply game mechanics, differentiation and core integration becomes even more important. Not to take anything away from Foursquare or Zynga - who I have great respect for - game mechanics are not new concepts. Mainstays like eBay and Amazon have been applying game mechanics to their core businesses for years.
One of the great examples is eBay's seller rating system... which is represented by stars.
It does several things well:
1. Clarity: it clearly and obviously conveys reputation
2. Persistence: it travels alongside the username throughout the entire eBay experience
3. Value-Add: the reputation system adds value to the buyer and to the seller
4. Incents Behavior: sellers fight very hard to foster their reputation and earn new stars. It also fosters communication between buyers & sellers.
5. Drives Activity / Engagement: there are gaps between each 'reward' that drive activity and excitement. But the goal is transparent and well-defined.
6. Marketing Opportunities: for eBay marketers, it is an opportunity to engage customer segments. Your first star, for instance, is welcomed with a congratulations email and certificate.
7. Scarcity: the higher level stars are earned by a select few (1,000,000 ratings!). For them, it is a badge of honor that extends on AND off eBay.
In summary: think about how game mechanics apply to your core product and brand... and how it adds value to your users. Game mechanics are powerful only if fully weaved in to consumer experience and mentality.
For fun: check out the Wikipedia page of Foursquare's badge list.