What is it good for?
The general consensus is that incentive systems are good at activating new users and at driving productivity amongst power users. There is little experience or common knowledge with incentive programs that take average users and turn them into power users.

Types
Choose your type, or combine -
Most common: point accrual systems and redemption or reputation increases.
More difficult: a currency system based on an actual economy where distribution is transactional from peer to peer.

Principles

Drivers behind systems seem to be 1) completion, inclusion, and equality, 2) connection and authentic communication, 3) accumulation and hording, and 4) status and reputation.

Peer given incentives tend to be more motivating than company given or automated ones. Authentic, positive peer feedback is most valuable.

Systems must be tangential to the core product, featured in sidebars or headers.

Reputation or value can generally not come from outside the system, but projecting reputation or value within the system to outside the system is highly motivating.

Design

A good strategy for activating users is to create a "discrete onramp" with a series of next steps (calls to action) with a baseline reward package, generally symbolic (starting currency amount, enabled minimum features unaccessible to blank slate users).

A good strategy for increasing the productivity of power users is to give them the "special treatment" and have them redeem their incentives for recognition. The system should not be completely transparent or there will be systemic gaming. Symbolic rewards that distinguishes them from their peers seem to be more effective than tangible/real rewards. Competitions combined with a leaderboard drives the top few users to be extraordinarily productive.

Avoid Abandonment - Don'ts
Don't introduce real valuable rewards when symbolic rewards were expected.
Don't change rules without transparency.
Don't let spammers rig the system.

Notable Practices

• influence over actual decision makers
• indicators of status and rank
• personal contacts and gifts with brand loyalty
• authentic compliments, receive and collect
• authority scores
• build a virtual collection
• earn and give virtual gift

Any questions or suggestions contact Michael Staton, mpstaton@gmail.com, or just friend him on friendfeedor last.fm or something.

Key Takeaways:

1) Accrual & redemtion vs. communication economy (scarcity)
2 ) New users need a discrete on ramp & minimal commitment to want reward
3) Powers users respond to the "special treatment" & reputation displays