Providing a definitive edge over the benefits typical customer loyalty programs bring along, a tiered loyalty program is focused at leveraging the potential of behavioral science to boost customer loyalty and brand value. Tier-based loyalty programs tempt customers to alter their spending patterns by offering them the opportunity to become a part of a special group that includes other customers.
Industry research has revealed that “50 percent customers agree to altering their purchase behavior or increasing their spending to attain a higher level in a tier-based loyalty program”.
Businesses looking to enhance customer loyalty and accelerate revenue generation thus need to have a robust strategy in place for launching their tiered loyalty program. Let’s explore the top strategies and benefits of tiered rewards program to help you get a better understanding.
Table of Contents
What is a Tiered Loyalty Program?
A tiered loyalty program is a customer ranking based loyalty program that allows customers to leverage specific program benefits on the basis of the tier they are placed in. Under this type of loyalty program, customers are categorized into different groups – with each group having its own set of criteria for customers to fulfill in order to leverage the special benefits/rewards available under that specific group.
The powerful tier-based loyalty programs work by establishing a strong emotional bond with the customers which further fosters loyalty and keeps them engaged for many years to come. It requires you to strategically identify your most valuable customers and offer them better, more exciting rewards to express how special they are for your business.
5 Best Strategies to Formulate a Successful Tiered Loyalty Program
Here’s the Golden Rule for a successful Tiered Loyalty Program –
The success of your tier-based loyalty program moreover depends on how successfully you motivate your customers to constantly climb up your loyalty program ladder.
So, how to create a tiered loyalty program that engages your customers and delivers the profitable returns you expect from its implementation. Here, we explain the 5 best strategies that you must consider following to ensure implementation of a successful tiered loyalty program:
1. Don’t Make it Complicated
Your customers should be able to easily earn & redeem rewards. Moreover, moving to the next level should be straightforward too. Consider using a tabular representation of the offered tier-wise benefits to ensure optimum ease of understanding. Be it about qualifying for the higher tiers, or description of potential rewards available with each tier, all information should be crisp & clear for the customers. Any scope of ambiguity should be eliminated as it would divert your customer’s attention to another much simpler loyalty program from your competitor.
2. Focus on Offering Value based Rewards
You need to provide rewards that offer specific value to customers as a generic reward system may not be effective to influence them. This can be made possible by analyzing your available customer data and offering diversified rewards accordingly. An excellent example of this type of reward is- exclusive expedition opportunities as offered by The North Face.
3. Bring in a Touch of Exclusivity
Customers are driven by exclusivity and hence that’s precisely what you must offer them via your tiered loyalty program. Choosing an impressive name and new color scheme (that resonates with your brand) for the program and the various tiers will make your customers feel privileged to be a part of your program.
4. Blend Gamification into the Program
Allow your customers to earn more points and attain higher tiers by involving slight Gamification into your tiered loyalty system. This brings in exciting elements of fun for the customers while ensuring that they get to earn something with every win, thereby keeping them more engaged and connected. Leading coffee giant Starbucks involved Gamification in their program to allow their gold card owners grab extra points.
5. Make Use of Experiential Rewards
Your customers would be encouraged to get placed in a higher tier if you offer them experiential rewards. Some of the finest experiential rewards examples include inviting customers to product launch, arranging celebrity meeting, and more. Focus here should be predominantly on creating a memorable experience for the customer.
Top 5 Benefits of Tiered Loyalty Program
Besides boosting revenues and growth, a tiered rewards systems brings in several benefits for your business. Let’s consider the prominent benefits tiered loyalty programs bring along –
1. Enhanced Customer-brand Relationships
A tiered rewards system allows you to establish long-term stronger relationships with your customers. When you express your customers that they are being recognized and offer them place in the tiered system as a privileged member, it connects with them at an emotional level. The customer realizes how staying up with your brand benefits them in the longer run, and so they continue to be loyal to your brand.
2. Elevated Competitive Spirit
Customers in a specific tier are naturally inclined to use more of your products/services under the competitive spirit to find place in the higher tiers and enjoy the benefits/rewards assigned for those tiers. This makes it essential to systematically assign higher-value rewards & perks to the top tiers.
3. Simplified Customer Segmentation
A well-structured tiered loyalty program allows you to perform more comprehensive, natural segmentation of your existing customers. Identifying your most valuable customers and assigning them the top tiers in your loyalty program further empowers your brand to drive customer retention more effectively.
4. Add “Social” Element to Loyalty Program
By adding tiers, you allow your customers to have a social status when they have a higher rank/level compared to other customers. People are naturally concerned about knowing their position relative to others in an identical situation and this tendency boosts motivation for your program. To make the most of it, you need to ensure showcasing your customers the percentage of program members in different tiers to fetch their interest.
5. Opportunities to Stay Connected
A tiered loyalty program provides you opportunities to naturally connect with your customers. By sending a range of personalized communication like exclusive offers & bonus, program updates, level-up opportunities, benefits reminders, usage summary etc., you can connect with customers and boost revenue considerably. You can even consider setting up automated email campaigns to encourage customers to successfully move up your loyalty program ladder.
Create your Unique Tiered Loyalty Program to Enhance your Customer Lifetime Value
Global brands in diverse industry verticals need to understand that –
The key to making your existing customers loyal to your brand lies predominantly in customer satisfaction and constant engagement on a long-term basis.
Tier-based loyalty programs provide the leverage to not only constantly engage your customers but also maintain them optimally satisfied, which renders these programs a must for adoption in your customer retention strategy. In case you want to learn more about the high-performance tiered loyalty solutions for B2B and B2C, or want to know about creating your own tiered loyalty program, feel free to contact our team.