In the first chapter of his recently published book, Loyalty 3.0: How to Revolutionize Customer and Employee Engagement with Big Data and Gamification, Rajat Paharia shares what he characterizes as “The Three Faces of Loyalty.” Here is a briefing on the key ideas:

Loyalty 1.0

“We all know Loyalty 1.0 programs; they’re the frequent flyer programs, cash-back credit cards, and ‘but ten and get one free’ punch cards from the local sandwich shops that have been around for years. These are purely transaction, completely focused on customers, and absolute failures at generating the kind of loyalty that businesses actually want.”

Loyalty 2.0

“In the early 1990s, 1-to-1 marketing emerged, focused primarily on making the loyalty experience more targeted through segmentation and personalization, with the big emphasis on direct-mail and e-mail campaigns. Data had a bigger role here as businesses took the information they were learning about their customers and used it to ‘speak to their interests.’ While this was effective for a while, open rates on these communications plummeted as the overall level of direct [widely viewed as junk] mail and e-mail [widely viewed as spam] increased. Consumers were overwhelmed by the sheer amount of noise, and the problem has only gotten worse.”

Loyalty 3.0

“Loyalty 3.0 has three major enabling components that, when combined, are much greater than the sum of the parts”: Motivation (what consistently and honestly compels and motivates human behavior), Big Data (especially data generated by interaction with consumers and data perceived as being most important by them), and Gamification (competitive experience that offers autonomy/control, challenge/skill mastery, purpose/meaningful objective, progress/improvement, and social interaction/membership).

Paharia explains all this in much greater detail in his book (Pages 9-15).

Widely recognized as the father of gamification, he is the founder and Chief Product Officer at Bunchball. Since creating the gamification industry in 2007, he has parlayed his unique understanding of technology and design – along with a preternatural ability to recognize patterns – into the creation of a company whose market-defining solutions have helped engage customers and motivate employees at a wide array of companies, including Toyota, Mattel, T-Mobile, Bravo, VMware, ESPN, BOX Technologies, and Kimberly Clark. Before founding Bunchball, Rajat had built a technology design career at world-renowned design firm IDEO, Philips Consumer Electronics, and IBM Research. Rajat earned a master’s degree in Computer Science (with a focus on Human Interaction) from Stanford University, and a bachelor’s degree from the University of California Berkeley.