It seems some people will do just about anything to earn a trophy, even an imaginary one. In April, Parker Liautaud, a 15-year-old from England, became the first to earn the Last Degree badge when he used Foursquare from the North Pole. Foursquare, a location-based social network, rewards its users with a wide variety of virtual badges for using the service on their cell phones from various destinations.

Just like the traditional badges used by the Boy Scouts, these digital icons serve as a way to mark achievements. But instead of getting a badge for, say, learning first aid, online users typically earn virtual awards for using a company's services. For instance, if someone uses Foursquare at five different airports, he or she receives a Jetsetter badge. "The idea is that Foursquare wants to reinforce a particular behavior in its users, which is to check in as often as possible," says Amy Jo Kim, CEO of ShuffleBrain, a San Francisco company that helps clients incorporate aspects of gaming into their businesses. It seems to be working. In a little over a year since its founding, Foursquare has accumulated more than 500,000 users and awarded more than one million badges.

Video game designers have long used techniques such as badges and trophies to keep players engaged, says Kim. Now many start-ups are incorporating these tactics to keep customers coming back for more. "Game mechanics like leaderboards and Top 10 lists are psychological tricks that designers use to keep people playing," she says.

Incorporating game mechanics helps Stack Overflow, a community-driven questions-and-answers site for programmers founded by Joel Spolsky and Jeff Atwood, attract some six million visitors each month. As users make contributions to the site, by either asking or answering questions, they build reputation scores. As the score grows, users are given the power to, say, moderate a discussion. Stack Overflow also offers badges to reward behaviors that don't directly tie into a user's reputation score, says Robert Cartaino, the site's community coordinator. For instance, the Strunk & White badge is awarded for cleaning up and editing other users' entries. The badges can sometimes have real value, Cartaino says. Several Stack Overflow regulars have actually landed jobs based on the badges they have earned for their contributions. "Badges are the driving force behind keeping people excited and contributing to our system," he says.

"By handing out rewards like badges, you are creating an environment filled with positive reinforcement," says Gabe Zichermann, co-author of the book Game-Based Marketing. "The more you play, the more you win." That's why Zichermann incorporates badges into his business. His New York City-based start-up, BeamME, makes an iPhone app that lets customers trade contact information with their phones. Users earn badges by networking with other customers.

Zichermann made sure to include a function that lets customers easily boast about their badges on Facebook and Twitter. "Just earning a prize or award isn't enough," he says. "You need to be able to brag about it in some way." Plus, Zichermann gets free marketing as his customers talk up the service to their social networks.

Badges won't work for every business, but Kim of ShuffleBrain thinks they can work for companies in a variety of industries. The key is figuring out what your customers respond to. "What you want to do is, first identify the core motivation of why people are visiting your site," Kim says. "Then, if you can identify what you want those people to do, you can build a badge system to help motivate them to take those actions."

To make sure customers don't grow bored with badge collecting -- or come down with what Kim terms badge fatigue -- it's important to add new badges over time, retire others, and incorporate an element of surprise. James Reinhart, CEO of ThredUP, a Cambridge, Massachusetts, start-up that hosts online swaps of children's clothing, was wary of badge fatigue when he began rolling out badges to his customers, whom he describes as "tech-savvy moms." So far, he has introduced just a few badges, such as the Great America badge for customers who have swapped clothing with users in five other states. He plans to add more badges over time. Instead of posting a list of badges and the requirements for earning them, Reinhart has mostly kept them a secret. "I think it's much more effective when people discover the badges on their own," says Reinhart. "You feel cool for having done something new. I also think there's more word-of-mouth buzz when people discover things no one else knew about."

Many companies hire graphic artists to create the badges, but some do without. Stack Overflow keeps its badges simple -- merely writing the name of each badge in white text on a black background -- in keeping with the company's emphasis on speed and simplicity. Others, like Josh Williams, CEO of Gowalla, think that for badges to be effective, they need to be visually attractive and interesting. His Austin-based company makes an iPhone application that lets users share their geographic locations with friends and collect badges in the process. When a spot becomes popular -- like the Cadillac Ranch in Amarillo, Texas -- Williams, a former graphic designer, and his art team create an intricate icon to mark the spot. "We like the idea of surprising our users when they check in," says Williams. "It's like opening a cereal box and finding a prize."