STCO 426 Blog Post #7

Madeline Grace Erk
3 min readOct 24, 2022

I feel like I learned a lot from Paharia’s (2013) Loyalty 3.0: How Big Data and Gamification Are Revolutionizing Customer and Employee Engagement. I knew almost nothing about loyalty programs before, only what the casual observer would know from lived experience. For example, I have seen how my mother is a very loyal customer to Kohl’s as she loves their rewards and deals. She loves saving money and is a big fan of Kohl’s cash. Now, I know much more about loyalty programs and, specifically, how to make an effective Loyalty 3.0 program because of Paharia’s book.

Chapter 10 of Paharia’s (2013) book summed up his book and provided a look into the future of Loyalty 3.0. His bullet-point summary less explained the details of what he taught and more went over the topics he covered in his book. Paharia writes about how he began his book analyzing the loyalty programs out there which he did not find to be very effective. Second, Paharia listed about how his book went over the macro trends that are demanding change in the interactions with various people connected to a business. Third, Paharia lists, “We learned about human motivation and identified five key intrinsic motivators” (p. 241). I actually found a study by Kim and Ahn (2017) who looked at motivation in a real-life setting regarding a loyalty program. They write, “this study examined the effects of external rewards on undermining customers’ intrinsic motivation to engage in a retail loyalty program” (p. 842). The study by Kim and Ahn revealed that intrinsic motivation is decreased from extrinsic rewards.

Fourth, Paharia (2013) lists about how he taught about big data in his book. Fifth, he lists how gamification was taught which is “fueled by motivation and big data” (p. 241). It is all building on top of each other. Sixth, Paharia mentions the case studies he went over which were varied. Seventh, he mentions about his book concluding with how to have your own effective Loyalty 3.0 program. His final chapter gave a quick wrap-up for everywhere his book has gone with the perspective of the topics being what his audience has come to understand.

Paharia (2013) also talks about where Loyalty 3.0 is heading in the future. Paharia writes about how it is expanding quickly and will enter more industries soon. I wonder how this would work with products that are for more long-term use. Paharia also writes about how Loyalty 3.0 is going to be part of more products rather than just having a loyalty program, giving Photoshop as an example. He writes that this will be “especially in businesses that have complex products and where customers are paying a subscription fee and can defect with low switching costs” (p. 242). Paharia mentions that Loyalty 3.0 can also help people become customers after a free trial.

Another trend Paharia (2013) believes will happen is large companies having teams devoted to Loyalty 3.0. According to Paharia, these teams will help the whole company and make wonderful Loyalty 3.0 programs. Paharia writes on another rising trend, “As more systems integrate Loyalty 3.0 principles, both participants and businesses are going to see the value in tying the systems together so that users have a single multifaceted ‘reputation.’” (p. 243). He adds how in the employee space this could include many things coming together to have information on employees with what they are skilled in. Paharia’s last prediction is about the vital importance of using Loyalty 3.0. He writes that businesses who do not “are going to be left behind” (p. 245). Paharia concludes his book by reiterating the problems with loyalty programs and explaining how Loyalty 3.0 leads to “true loyalty” (p. 245).

References

Kim, K & Ahn, S. J. (2017). Rewards that undermine customer loyalty? A motivational approach to loyalty programs. Psychology & Marketing, 34(9), 842– 852, https://doi-org.ezproxy.liberty.edu/10.1002/mar.21026

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

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