By dividing your program into tiers, you get to incentivize loyal customers with better incentives, saving your budget on the less profitable ones. You also add gamification to your loyalty program and motivate the customers to move up the tier ladder.
You can set loyalty tiers based on either minimum or maximum points earned in the program.
The loyalty program rules that apply to each tier could differ in various ways:
- The rewards available – offering some rewards only to higher tiers. For instance, you could be offering physical prizes for the bottom level, points for the second, and cashback for the highest tier.
- The reward value – offering different discounts to different tiers (5, 10, 15% off).
- Different points multiplication– giving 1 point for an X spent for the bottom tier, 1.5 points for the same amount for the middle tier, and 2 points for the VIP tier.
- Expiry dates – for example, VIP clients could have longer expiry dates for their rewards.
Setting up different points multiplication for different tiers makes it clear what is possible to get back by belonging to each tier and motivates the customers to move up the levels of your loyalty program. Offer differentiation helps manage the marketing budget better and to spend more on the truly loyal customers who spend more at your store.
- You can offer bonus points for the VIP tier. For example, basic members get 1 point for each 1$ spent, VIP get 2 points for each 2$ spent.
- You can choose to set the loyalty tiers based on another differentiator than loyalty points, for example, based on the customer’s age and offer different rewards for different customer groups (segments).
- Research your customer spending habits to determine the tiers and the amount of points (discount) you can offer to them.
- Offer a customer cockpit where they can see their current number of points, possibilities to earn them, tier level and how many points or purchases they have to make to enter the next tier level.