How Duolingo, Nike, and Amazon use rewards to keep you hooked

Why Duolingo turns streaks into addictive habits while Amazon’s badges gather dust

As 2024 comes to a close, I want to say a huge thank you for joining me on this journey of exploring insights, ideas, and innovations. For this final newsletter of the year, we’re diving into something we encounter almost daily—rewards. From apps to habits, rewards are everywhere, but are they truly effective? Let’s break it down!

The habit loop uses rewards to drive engagement and retention, helping users stay consistent and achieve their goals.

Drumroll, please! I recently sold an item on Vinted for the first time — finally, a win! To be honest, I originally downloaded the app to sell things, but… well, let’s just say I got very good at buying instead. So yes, this was a proud moment.

But just as I was basking in my small victory, surprise! Up pops a screen telling me about an award I could win… 👀

After I sold my first item, Vinted prompted me to sell another four to get an “Star Wardrobe Award”

Rewards have spread across every app over the past few years, driven by the growing popularity of gamification. In an attempt to boost engagement and retention, many apps have introduced reward systems. Usually, that’s how they work: you do something tied to engagement or retention and receive a reward in return.

It’s no surprise this approach is booming — the gamification market is projected to grow from USD 15.43 billion in 2024 to USD 48.72 billion by 2029, at a staggering CAGR of 25.85%¹.

And it makes sense that apps are trying to leverage this mechanism!

Every habit building framework such as the habit loop described in Hooked or the Atomic Habits framework, highlights the importance of rewards.

Although these framework are all different, their core remains similar:

1. I do the action that I want to form a habit around or that participates to that habit

2. I get a reward

The four steps of building a habit according to Atomic Habit from James Clear

Research shows that reward plays a crucial role in habit formation by reinforcing the behavior and increasing the likelihood that it will be repeated. It operates on psychological and neurological principles, driving motivation and habit loops.

The problem is that apps are trying to recreate this in an artificial way. When I go for a run, I usually then treat myself to a delicious smoothie and my body releases endorphins. Together, this forms a great reward and makes me want to do it again.

But it’s really hard to recreate that digitally..

B2C apps started to introduce “rewards” also called “achievements” or “badges”.

They are little gratifications that are the equivalent of school merit medals when you do a good action. Duolingo gives you an unexpected amount of gems and has a section called “Achievements”, Amazon gives some “Badges”, Nike celebrates “Milestones”.

Here are examples of rewards from Duolingo, Amazon, and Nike. As you can see, they share many similarities.

Gradually, as I accumulated various rewards across multiple apps over time, I started to seriously question whether they actually provided value to users.

In many cases, they didn’t feel very genuine, were childish and therefore didn’t act as a great reward.

If rewards are key to building habits but getting them right is tricky, what makes a reward truly effective?

And how do you use them strategically?

I’ll break it down with real-world examples from apps and websites that nail it (or didn’t..).

What Makes a Good Reward?

A good reward feels meaningful, authentic, and tied to the user’s motivation. It doesn’t just nudge them towards an action; it increases the sense of satisfaction they feel when completing it².

In contrast to some of the superficial gratification provided by digital badges or arbitrary “milestones,” effective rewards connect deeply to what the user values.

To create a good reward system, keep these principles in mind::

1. Align rewards with intrinsic motivation

Extrinsic rewards, like points or badges, can be fleeting unless they tap into something deeper.

For example, Strava’s year in review works because they connect to a runner or cyclist’s desire to compete and improve. The reward isn’t just about the badge; it’s about social proof and personal achievement.

On the other hand, I find Strava’s Trophy case quite dull and meaningless. It feels like I’m being rewarded for putting up with irrelevant ads from their partners, and it lacks any sense of personalisation.

Strava’s Year in Review made me feel proud and rewarded because it focuses on the things I care about: progress. On the other hand, the Trophy case feels irrelevant and is disconnected from my specific goal of long-distance running.

2. Tie rewards to actual outcomes

A reward should reflect a tangible benefit from the action. If a language app congratulates me for completing a lesson, I’m more likely to feel rewarded if I can now recall phrases in conversation than if I just earned another badge. Rewards should remind users of their progress or accomplishments in ways that matter to them.

Duolingo makes the reward tangible by letting me know how many words I learnt during the lesson that day

3. Keep It Unexpected (Sometimes)

Psychology tells us that variable rewards can be even more motivating than expected ones. Think about apps like Headspace, which sometimes surprises users with delightful animations or a “streak” celebration when they’ve meditated for several days in a row.

The unexpected reward and the promise of earning more by returning daily help me build a habit around language learning.

4. Avoid Over-Rewarding

When rewards become too frequent or predictable, they lose their impact. This is a common pitfall for gamified systems. If every small action results in a shiny badge, the novelty quickly wears off. Reward systems should strike a balance between recognition and scarcity.

Amazon badges are listed in a predictable way, and the actions aren’t very user-centric or personalized to my needs.

Examples of Reward Systems That Work

Let’s dive into a few examples from successful apps and platforms that have struck the right balance:

1. Duolingo’s Streak System

Duolingo has leveraged gamification to grow its Monthly Active Users to over 103 million (a 40% increase from 2023) by integrating rewards into language learning.

While its badges might feel childish to some, the streak system stands out by tapping into users’ intrinsic motivation to stay consistent. Pride in maintaining a streak encourages users to go the extra mile, ensuring they don’t break it. The brilliance of this system lies in its alignment with a meaningful goal: mastering a new language.

2. LinkedIn’s Profile Completion Meter

With over 1 billion users and more than 13,000 connections made every minute, LinkedIn has mastered subtle gamification to drive engagement.

By using a progress bar to encourage action completion, LinkedIn offers an intrinsic reward: the more engaged you are, the better your chances of making connections or finding opportunities. This approach taps into completion bias — the human tendency to prioritize finishing tasks simply for the satisfaction of completing them, even when the tasks themselves may not feel immediately meaningful.

It also taps into completion bias, the tendency for people to prioritize finishing tasks or goals, even if they’re not inherently meaningful, simply because they want to complete what they’ve started.

LinkedIn’s progress bar subtly encourages engagement, with a clear outcome and achievable steps.

Questions to Ask Before Designing Rewards

Before implementing a reward system in your app, consider these questions:

• What does the user value most about this experience?
  The reward should amplify the core value of your app rather than distract from it.

• Is this reward reinforcing the desired habit or behavior?
  A good reward strengthens the connection between the action and the user’s motivation to repeat it.

• Does this feel authentic?
  Rewards should resonate with your audience. A playful badge might work for a fitness app geared toward teens but could feel out of place in a professional productivity tool.

The Future of rewards

As apps and digital platforms continue to evolve, so too will reward systems. We’re likely to see a shift away from generic badges and points toward more personalized and context-aware rewards. For instance, AI could enable apps to offer hyper-relevant rewards tailored to a user’s goals, habits, and progress³.

In the end, the most effective rewards are the ones that feel natural and genuinely motivating. They don’t just gamify; they amplify the core experience, turning everyday actions into meaningful achievements.

If your app’s reward system doesn’t serve that purpose, it might be time to ask the same question we did: is it really adding value?

For instance, last year at my previous company, we decided to test removing badges. These badges had been introduced before I joined, and I never fully understood if they were actually benefiting our users. We ran an A/B test — one group kept the badges, while the other didn’t. Can you guess the outcome?

Surprise… nothing changed. The metrics stayed the same, with no drop in engagement. Meanwhile, we cleared up a lot of space and significantly simplified the app.

Sometimes, less really is more! Curious about how small changes can make a big impact? Let’s connect and discuss!

Sources:

¹ Gamification Market Size & Share Analysis — Growth Trends & Forecasts (2024–2029)

² Motivation in UX/UI Design

³ AI-Driven Gamification: Unlocking Personalized User Experiences with Machine Learning

Here are some topics/websites I recommend going through:

• Gamification gone wrong: stop the streaks from the brilliant Ben Davies-Romano

• Lenny’s podcast with Jackson Shuttleworth

Enjoyed this? 🌟 Subscribe to my newsletter for more deep dives! 🧜🏻‍♀️✨