STCO 426: Blog Post #1

Madeline Grace Erk
3 min readAug 28, 2022

The first page of the first chapter of Paharia’s (2013) book Loyalty 3.0: How Big Data and Gamification are Revolutionizing Customer and Employee Engagement hooked me in by opening my eyes to this concept: loyalty programs that are generally used do not actually create loyal customers. Paharia (2013) wrote, “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” (p. 9). Once I became aware of this problem, I wanted to know the solution and hear what Paharia would propose to constitute a more successful alternative. The problem only deepened for me as I was reading when Paharia (2013) expanded into the current issues with employee loyalty and partner loyalty.

Paharia (2013) also gave an example of what true loyalty looks like for customers which made me think. Paharia (2013) wrote, “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” (pp. 9–10). This book’s description of loyalty had me thinking about how different it must have been with more smaller family-owned businesses back in the day when people had real emotional connections and relationships with the people behind the business. Before big corporations took over, I wondered how much more loyal people were to businesses naturally. Now, loyalty may have to be more consciously sought.

Paharia (2013) outlines what marketers have done in the past in an attempt to gain loyalty with what he refers to as Loyalty 1.0 and Loyalty 2.0. Paharia then shares Loyalty 3.0 as the new frontier of loyalty initiatives that actually works. Loyalty 3.0 is his proposed solution to creating loyal customers, employees, and partners (Paharia, 2013). Paharia details three parts that come together to create this strategy which are motivation, big data, and gamification. Paharia writes about how using these three together are meant to create true loyalty, an idea that was written about previously by Paharia’s colleague Kirk. Paharia writes about four levels of loyalty which are, in order, inertia loyalty, mercenary loyalty, true loyalty, and cult loyalty, and he gives credit to his colleague Kirk who wrote about the levels before him. Cult loyalty is said to be unable to be replicated, so true loyalty is as good as it gets by utilizing strategy (Paharia, 2013). Inertia loyalty is when the customer is staying due to how complicated it is to go to another brand, and mercenary loyalty is about the discounts (Paharia, 2013). True loyalty is what keeps the customers engaged and coming back regardless of what the competitors are doing and retains employees and partners (Paharia, 2013).

In the final part of the first chapter, Paharia (2013) details eight major trends of today’s changing business environment. Paharia writes about the high amount of noise, the high percentage of unproductive workers, the shift to customer voice with social media, the effects of consumer technology, the traits of Generation Y, the difficulties of remote work, the amount of learning that can be done, and how software has hijacked the business world. Due to the age of Paharia’s book, the up-and-coming generation is no longer Generation Y. To find current information to supplement my reading, I looked to Cora’s (2019) article titled “The Effects of Characteristics of Generation Z on 21st Century Business Strategies” which discussed his findings on how Generation Z is unlike the past generations, specifically in ways that are relevant to businesses. Those of Generation Z “want flexible working hours” (Cora, 2019, p. 923). They “are very self-confident” (Cora, 2019, p. 923). Also, Generation Z “would be more successful with the opportunity of individual work” (Cora, 2019, p. 924). These are some general characteristics to consider about Generation Z.

After reading this chapter and interacting with the text, I already feel more knowledgeable on the subject of affiliate loyalty than before and look forward to learning more.


Cora, H. (2019). The effects of characteristics of generation Z on 21st century business strategies. Faculty of Economics and Administrative Sciences, 10(20), 909–926.

Paharia, R. (2013). Loyalty 3.0: How big data and gamification are revolutionizing customer and employee engagement. McGraw-Hill.