Make Your Best Customers Better With a Tiered Rewards Program

Every business has its best customers. The regulars who visit at least once a day, week, or month. It’s often these customers who bring in the most revenue. Loyalty programs aim to give a business’s best customers the benefits they need to keep coming back.

But not all rewards programs are created equal, and if you know what you’re doing, you can ensure that your loyalty programs perform better than your competitors.

Having worked in the loyalty industry for many years, we’ve found one of the most effective models, to be tiered programs. Unlike the standard cashback model that offers the same benefits to all cardholders (e.g. 5% on every purchase), tiered programs offer higher rewards to those who spend more.

This gives customers more reason to visit your store, to earn better deals with you. On tiered programs customers will often get excited about reaching the spend goals you set, and getting better deals for the products they’re always buying. The typical result is you build deeper connections with customers while they enjoy a game where progress means spending money.


The Basics of a Tiered Rewards Program

Rewards program tiers work by creating different levels for your membership club. New members start off on the bottom tier, and performing certain actions will allow them to inch closer to a milestone. Passing that milestone inducts the member into a new tier.

Milestones can be anything you want them to be. It can be spending a certain amount over a lifetime, it can be ordering online a set number of times or it can reaching a set level of purchases in a year’s time.

Being in a new tier means new rewards. Some brands offer accelerated rewards points for upper tiers, such as giving 25 percent more points on every purchase. Others offer special perks like free shipping for online order or access to exclusive products.

Tiered programs can offer many benefits above other types loyalty programs.


Increased Customer Engagement

Suddenly, with a tiered system in place a customer is moving closer to a goal when they make a purchase, rather than just spending money. Tiered programs tend to elicit curiosity to the uninitiated and rampant strategizing for the established members.

Your program serves as a personal challenge to customers to see how accomplished they can be. “Great job!” their first few purchases say. “Look how much closer you are!” Once they reach a new tier the message is: “Congratulations on being such a great customer! You have reached a new level of the program!”

While the rewards offer concrete reasons to want to excel, tier status can become an accomplishment unto its own.

For instance, many people put up messages with #goldlevel on Twitter signifying that they reached the top tier in the My Starbucks Rewards program. Members are sent a flashy gold card in the mail to signify their attainment. They put posts on social media to broadcast the event. Customers seeing someone in line use their gold card may even become envious.

These emotional aftereffects keep customers engaged and thinking about your brand.


Exclusive Statuses Make Customers Feel Appreciated

Perks like free shipping, exclusive items, access to special discounts and visible tokens like a fancy new card all form mental bonds between customers and businesses. Anyone who really enjoys your products — or perhaps just the competitive spirit of your tier program — will have a unique experience compared to the casual patron.

This sense of “eliteness” can enhance feelings of loyalty towards your brand, making customers vocal “brand advocates” on your behalf.


Close the Gaps So Sneaky Customers Can’t Game Your Program

Customers can often try to “break” your reward system by gaining access to the most valuable rewards through unanticipated means. An example would be a reward for making 100 purchases at a big box electronics in a month. Without proper restrictions, customers can just buy 100 packs of gum in separate purchases at the register.

There are many obvious ways to avoid this over-simplified scenario, but the bottom line is that with a rewards program customers have to put in some work before they can gain access to higher level rewards.

They cannot leap frog from retailer to retailer based on any sort of sales gimmick that is currently being run. Instead, customers must have consistent behaviour in order to even approach the rewards that cost your organization the most.


Better Customers Get Better Rewards

With this system, you can offer discounts on high-end items like flat screen televisions without risking too much. Fewer people have access to the top tier reward, and the exclusiveness of receiving the gift grabs the attention of those lower in the system.

As you can see, tiered rewards offer more interactivity with your brand. They also add value to being a member of your loyalty program. Marketing research shows that while customers may have several “membership” cards, only those that offer rewards for continued patronage can create a strong incentive to seek out one brand.

This fact means that while you may not always have the cheapest product at the moment, the allure of reaching a new tier will cause customers to forego the sale and shop with you instead.

Ultimately the goal of every rewards program is achieving genuine loyalty. To learn more about creating a tiered rewards program for your loyalty solution, take a look at our robust loyalty program rules engine.