THE BLOG
08/20/2013 08:22 am ET | Updated Oct 20, 2013

The Man Who Coined "Gamification" Takes Loyalty to a New Level

We are now living our lives online - community, entertainment, work, finances - virtually everything we do -- by technology and throwing off reams of data (big data) about our activity. Smart companies are feeding this user-activity data into gamification systems which use data-driven motivational techniques to power engagement, high-value activity, and ultimately, to create loyalty.

Gamification in the technology realm is relatively new, but the concept is really quite old. For years companies, like McDonalds have used games (such as Monopoly at the Golden Arches) to increase engagement and (hopefully) loyalty. One can argue that coupons are a form of gamification and those are about as old as retail and grocery stores. One of the "innovations" that former JC Penny CEO, Ron Johnson brought to the company was the end of coupons (making pricing "real"). This "bold move" almost finished the retailer off. The engagement had been reduced, the opportunity to "play the game" of saving had evaporated. So did the store's profits.

Loyalty 3.0: How to Revolutionize Customer and Employee Engagement with Big Data and Gamification (McGraw-Hill Professional; June, 2013; HC, $27.00) attempts to reveal, according to a statement from the publisher, "how to combine this big data with the latest understanding of human motivation to power gamification - the data-driven motivational techniques used by game designers to stimulate engagement, participation, and activity."

Author Rajat Paharia is known as a pioneer in the business use of big data. He is also known for coining the term "gamification." His company, Bunchball, was one of the first social-gaming platforms invited to partner with Facebook. "Marrying" motivational psychology, technology, and game mechanics, his book tries to take the reader into the future by showing "the building blocks that create powerful engagement platforms."

The book begins with a deep dive into the "fundamental building blocks" of loyalty and engagement, and offers case studies from companies like Ford, SAP, USA Network, Kraft, and Adobe. These businesses are already using big data, motivation, and gamification on a significant scale. These elements are combined to innovate around customer engagement, learning and skill development, as well as employee motivation. The book is written with the precision of an engineer, wrapping up with a step-by-step guide on how to plan, design, build, and optimize a loyalty program.

With this combination, businesses now have, what the author calls "a powerful engine for creating true loyalty among their customers, employees, and partners, and for generating a sustainable competitive advantage in their markets."

The book, Loyalty 3.0 has a clear objective: to "redefine how you think about loyalty and will open your eyes to the power of data to engage and motivate anyone, anywhere."

The book is reader friendly and does not require a technology background to navigate through it. It is highly recommended for everyone interested in learning "what's next" in the gamification field and its promise in building loyalty.

Kevin Price is publisher and editor in chief of US Daily Review and Host of the Price of Business on 1110 AM KTEK in Houston, Texas. He is the author of Empowerment to the People and has twice received the George Washington Honor Medal in Communications from the Freedom Foundation at Valley Forge. His column is nationally syndicated and he is a frequent guest on major media around the country, being found on Fox News, Fox Business, and other networks. For more see KevinPriceCentral.com.