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Gold, Silver and VIP: Free and paid loyalty tiers (Part 1)

Loyalty Tiers

Loyalty Tiers

Adding loyalty tiers in your loyalty program is an excellent way to engage customers through gamification—making your program feel that much more exclusive. This type of loyalty scheme was initially used in the travel industry (such as Air Canada’s Altitude program and VIA Rail’s Via Preference), and can now be found in such industries as retail and restaurants.

Since brands are always looking for ways to personalize their offer and stand out from the crowd, providing a multi-tiered program can be a great way to attract and keep customers’ attention.

Free loyalty tiers

Programs that come with multiple levels, called loyalty tiers, are attractive to consumers since they provide exclusive rewards based on a customer’s individual behaviour. To move up to the next tier, members need to reach a pre-set goal (number of purchases, visits, online interactions, etc.) in order to be rewarded. This can include a faster way to earn points/miles. Customers can enjoy a higher tier for a pre-set period of time (a year, etc.) or for the duration of their membership, depending on the program scheme.

Segmentation

Adding tiers to traditional loyalty programs not only adds a touch of fun and excitement, it also enables you to further personalize the journey of every customer segment. By having customers attain certain financial or relational goals to reach the next tier, you can further segment your customer base and get to know them better for use in future endeavours.

When it comes time to define your program tiers, be sure to include benefits that increase in value per tier so customers will continue to engage with your brand.


Personalize the experience

Attaining the next tier in a loyalty program not only rewards customers, it also provides them with a distinct status as privileged program members. It’s important for you to give each higher tier the distinction it deserves.

The segmentation created by these tiers will enable you to create campaigns and personalized journeys for each level. Since these higher tiers represent your most engaged customers, you will be able to adapt your frequency of communication, message, offer, shopping experience, and more for these exclusive members.

It is vital that you communicate these higher tiers to your membership base. Plan campaigns so that they always highlight the benefits of each program level—especially to customers who have almost reached the next tier. This will provide your customers with an additional incentive to make a purchase with you, since they will benefit from more exclusive program membership and all the rewards that go along with it. You can also provide tips and ideas for how they can more quickly move up to the next tier.

 

How many loyalty tiers is enough?

The number of tiers you include in your program can vary, depending on how often the tiers are reset, the program scheme, and your business goals. For example, a program in the entertainment industry that resets its program tiers every year may want to offer three or four tiers, while a company with high-frequency services that does not reset tiers can offer a dozen or more. Customers must feel like they can progress along the path to higher tiers, while only a select number actually achieve them.

Frequent analysis of data, such as the number of purchases or online interactions by customer, can serve as a basis for determining how to divide your program tiers. Each tier must be set up with the goal of enticing members, which will also ensure customers remain interested in and engaged with your program.

No matter the data you select to create your tiers, be sure to understand the value of customers in each tier in order to offer rewards that hold and reflect their interests. You can offer such rewards as:

 Stay tuned for part 2 of this blog article, where I’ll share ideas on paid tiers for loyalty programs.

Are you thinking of launching or reviewing a customer loyalty program in light of these tips? Our loyalty experts provide strategic and operational support to companies who want to stand out with your loyalty tiers and customer experience. Contact us for more information.

 

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