The systematic bestowment of prizes to steer human behavior has been done since Antiquity. For instance, the Corona Muralis (mural crown) was awarded to the first Roman soldier to climb a besieged fortress and successfully plant the army's standard upon it. In business, the adoption of reward systems took nearly two additional millennia: Early nineteenth century merchants began awarding patrons with tokens, tickets or trading stamps for their purchases. When enough of the former had been collected, they could be traded in for merchandise or prizes. The rationale behind these programs was twofold: first, they stimulated repeat purchases, i.e. customer loyalty, and increased long-term profitability; second, they differentiated merchants that implemented them from competitors.
Though two centuries have since gone by, and loyalty programs are now delivered through cutting-edge technologies, their fundamental premise remains unchanged. Loyalty programs have also become quite common, perhaps even a given, as evidenced by the myriad of virtually identical credit card and frequent-flyer programs. As Loyalty 3.0 author Rajat Paharia explains, pp. 9-10:
When you think of the word loyalty in the context of business, what comes to mind? If you're like most people, the first thing that will pop into your head is a typical loyalty program, where you earn points for your purchases and can redeem them for rewards. These programs are meant to drive customer loyalty, and according to studies1, you're probably a member of 18 of them. And yet I'm willing to bet that you're deeply ambivalent about all of them and, if given a better offer by another business, would gladly defect. These programs, on which billions of dollars are spent annually, aren't generating loyalty to a business; they're generating loyalty to the best deal and so are completely failing at their fundamental purpose.
What is that purpose? It's to give customers a compelling reason to patronize the business and to resist competitive offers. If a new store opens across the street or a competitor slashes prices, businesses with loyal customers won't lose those customers because they've elevated their relationship from a transactional one to something more meaningful. They have engaged those customers[…]
Loyalty 3.0 is about taking back the word loyalty and making it actually mean something. It does this by combining the latest research on human motivation with the big data generated by your customers, partners and employees as they interact with you to empower your business to motivate, engage and create true loyalty.
Loyalty 3.0 thus provides actionable advice regarding the design and implementation of gamification programs. That is, it entails using gaming principles such as levels, rewards, and competition, all within highly engaging contexts, to create deep and long-lasting customer relationships. The book is the result of author Paharia's extensive experience in the field, his gamification company, Bunchball, having served a series of corporate clients like Ford, Mattel, ABC, and T-Mobile, among others.
Loyalty 3.0 is structured into ten chapters. Its first, May You Live in Interesting Times, provides an overview of how customer loyalty programs have stagnated and the need for more engaging models. Chapter 2, Whoever Figures Out Motivation Wins, addresses five intrinsic motivators driving consumer behavior (autonomy, mastery, purpose, progress and social interaction), above and beyond conventional monetary incentives. Chapter 3, The Next Big Thing is Big Data, discusses the sources and potential uses of today's massive amounts of consumer data for motivation and loyalty purposes. Chapter 4, Gamification – The Engine of Loyalty 3.0, explains how gaming principles, combined with human motivation and big data, can be used to steer consumer behavior. Chapters 5, 6, and 7 each offers a series of case studies showing how gamification has been successfully applied in the consumer, training and employee arenas. Chapter 8, Planning Your Loyalty 3.0 Program, provides an overarching framework for the creation of engaging gamification programs. Chapter 9, Bringing Your Loyalty 3.0 Program to Life, addresses the specifics of program design and implementation. Chapter 10, Forward in All Directions, recaps fundamental gamification principles and provides some closing considerations. Loyalty 3.0 ends with an Appendix, where a final gamification scenario is thoroughly developed, a section on Notes, where sources for each chapter are offered, an Index, which allows readers to conveniently find topics, and a short blurb About the Author. Disclosures, Table of Contents, Acknowledgements and Introduction precede the book's chapters.
Loyalty 3.0 should enjoy broad appeal. Academics might require more theoretical depth and rigor. However, the insights and discussions offered are bound to interest academics, update them as to what is being done in industry, and perhaps even spur further inquiry into the subject. But it is practitioners who should find Loyalty 3.0 most useful. From small entrepreneurs to large corporate executives, the book offers fundamental gamification principles applicable across different contexts. Particularly appealing is Loyalty 3.0's logical structure: The first four chapters (Part 1-Vision) present the necessary conceptual foundations. The next three chapters (Part 2 – Execution) illustrate how these have been successfully applied. The last three chapters (Part 3 – Direction) provide step-by-step guidance as to how to create and implement gamification programs. Going from theory, to examples, to practice certainly improves understanding. Also appealing for practitioners is Loyalty 3.0's concise and to-the-point nature. Chapters are furthermore split into short sections, sprinkled with bullets, graphs, and sidebars. This breaks up the reading, making it even more fluid.
The book's style is casual and personal, as if speaking directly to the reader. All of this keeps the train of thought light and engaging. Because of the above, Loyalty 3.0 should also be of value to students. The issues raised provide good food for thought and are bound to enrich any branding, CRM, or internet/social media marketing class.
In sum, Loyalty 3.0 is a solid and engaging primer bound to satisfy anyone looking into gamification. Definitely worthwhile, highly recommended.
