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Loyalty is Dead! Long Live Loyalty!

Loyalty is Dead! Long Live Loyalty!

Rajat Paharia


By Rajat Paharia, Founder and Chief Product Officer

If you’re like most people, you’re a member of 18 different loyalty programs.  That number may surprise you, but as studies have shown, memberships add up fast: pet store rewards cards, cash back credit cards, frequent flier programs. Companies collectively spend billions on these programs in the hopes of establishing a meaningful relationship with their customers.

So are those investments paying off? How truly loyal are you to those 18 brands? Put more explicitly, would you turn down a better deal from someone else?

The reality is that traditional loyalty programs are dead. Why? Because they’re built on a foundation that hasn’t evolved to meet the needs of 21st century businesses, technology and people. The relationship they cultivate is largely transactional: your status and progress within the program is driven only by frequency or size of purchases. And they do little to build an emotional bond with the customer – the bond necessary for true loyalty.

The demise of loyalty programs has been hastened by the digital tools consumers wield all day, every day. We now have the always-on ability to hunt down and acquire the best deal, no matter who is offering it.  So the vast majority of those 18 programs aren’t making us loyal to a business at all. But as many major brands are learning worldwide, the same digital technologies that consumers are using to kill loyalty programs can be instrumental in resurrecting them. This is one of the many realizations I arrived at while researching and writing my new book, Loyalty 3.0: How to Revolutionize Customer and Employee Engagement with Big Data and Gamification

Loyalty 3.0is a guide to help companies foster loyalty that’s meaningful and sustainable. The book explains how companies can leverage the big data that’s generated constantly by all of us today and then gain insights from that data by using the latest science on motivation.  It then describes, using real-world case studies, how companies can make practical use of these insights through gamification.

Loyalty 3.0 is available June 18 from McGraw-Hill. But by reserving your own pre-release copy today, you’ll receive several bonus items, including a chance to chat with me about how to apply the fundamentals of Loyalty 3.0 to customers, employees and partners in order to motivate them to join, participate, share, learn and collaborate more.

Read Loyalty 3.0 to learn:

  • The five intrinsic motivators that you can use to shape the behaviors of customers, employees, partners and social communities.
  • Why people tell you what they really want every time they take action online.
  • Specific ways companies are using big data to drive business results – from encouraging customers to buy more, to motivating employees to work smarter.
  • The steps every company must take to implement a successful Loyalty 3.0 program.


I hope you’ll check it out – and join the growing ranks of innovators who are successfully resurrecting loyalty to help build their businesses, brands, communities and cultures, and generate a competitive advantage in their markets.

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