The following is my summary of Paharia, R. (2013). May You Live in Interesting Times. In Loyalty 3.0: how big data and gamification are revolutionizing customer and employee engagement. New York: McGraw-Hill.
In Loyalty 3.0, Paharia names the “Three Faces of Loyalty.” These faces refer to customers, employees, and other companies. According to the author, the traditional practices that have been used by business to build loyal customers have not actually worked to build true loyalty. They discuss Loyalty 1.0 programs such as frequent flyer programs and punch cards. They claim that there is not much motivation or real loyalty with these programs, since the payout is minimum for the work. Loyalty 2.0 is where we see an increase in direct mail and email campaign programs.
These also fail, because they are only serving to reflect customer data back at them. Loyalty 3.0 combines motivation, big data, and gamification to motivate and entice loyalty. Paharia also provides an interesting discussion on the age of distraction, social media changing power dynamics. This chapter discusses four tiers of loyalty, which are Inertia Loyalty, Mercenary Loyalty, True Loyalty, and Cult Loyalty. These four tiers reflect actual loyalty experiences. Inertia loyalty programs succeed because they make it difficult to exit the program. Mercenary loyalty programs work like bribes, with the sole motivation for customers being free or discounted products or services.
True loyalty is when a customer has a trusting emotional connection to the brand. Finally, cult loyalty plays to cultural values, but is difficult to develop inorganically. This is where customers distinguish themselves through product choices, for example with Mac vs PC. I think these are interesting cultural takes on how customers interact with businesses.