Video of this here: http://allegoriedesign.com/?p=485
Gamification takes the methodologies used to make video games extremely engaging and applies them to businesses, products, and ideas to make them engaging and driver customer loyalty.
Video games build in specific methodologies to make them more engaging and create loyalty. Beyond the basic necessities of things like food, people crave status, access, power, and stuff. Games are built to give people these things all the time. If you as a business give your customers these things, they will be much more likely to come back to purchase again and maintain an ongoing relationship.
Another benefit of implementing the Game Mechanics used in Gamification beyond increased customer loyalty is also cost savings. For example, rewarding customers with social status instead of a discount can cost the business significantly less. To maximize this opportunity, a long term strategic plan and a bit of creativity is required.