A tiered loyalty program is a type of membership program in which clients receive different benefits based on their rank. Unlike conventional loyalty programs, multi-level loyalty programs rank members in certain groups based on certain metrics. 

A 2022 Global Customer Loyalty Report revealed that organizations with tier-based loyalty programs have reported a 1.8x higher return on investment compared to programs that do not offer tiers. Having tiers strikes a competitive chord in your customers and encourages them to spend at your store to reach new levels, enabling them to move up the loyalty ladder.

In this article, we’ve compiled five reasons why you should implement tiers within your loyalty program. Thinking about other key reasons? Share them with us in the comments!

1. They drastically increase customer engagement and spend

As members move up each tier, they are rewarded with benefits continuously increasing in value.

For instance, a customer in a bronze tier could get a one-time special gift, while a member reaching the silver tier could get a monthly discount on their favorite items and a customer belonging to the gold tier can get a free item of a high value to congratulate them for getting to the last tier as well as a percent off their bill every time they visit.

In this context, regularly keep your members posted on their tier and available perks to ensure they visit your locations to redeem and spend more to move up the ladder and receive better privileges. The 2022 Global Customer Loyalty Report states that customers in higher tiers spend on average 2.1 times more than one-time shoppers.

2. They simplify customer segmentation

A tiered loyalty program allows your business to identify and segment your most valuable customers easily. Once members are split into tiers, your business can collect data on their purchase history and target them with the most relevant offers and perks according to their preferences and behavior.

Having a tier system also enables you to communicate different messages at a different pace to your customers. As an example, do not hesitate to engage on a more regular basis with your top-tier customers as they are likely to be your biggest fans.

3. They make customers feel exclusive

Ensure that each level of your tiered loyalty program offers customers unique perks and experiences that don’t appear as “classic” gifts. This will increase your customers’ sense of belonging, exclusivity, and loyalty to your business.

For example, Sephora’s loyalty program, Beauty Insider, is well-known for its tiered approach with three levels: Insiders, VIB (Very Important Beauty Insider), and Rouge. All members receive points per dollar spent or end-of-year discounts, while only the Rouge members get to enjoy free custom makeovers, a unique perk for the higher level that allows members to have something to feel exclusive about.

4. They turn customers into brand advocates 

Reaching a special status allows members to feel a sense of accomplishment. Offering them a way to share their progress with their family and friends – for example on social media – by sending them a personalized notification, email, or SMS when they move tiers, is always relevant.

Indeed, according to Invesp, 88% of consumers place the highest level of trust in word-of-mouth recommendations from people they know. As a result, make sure to encourage members in-store to take a picture of their tier gifts and share it online.

5. They shield your business from the competition

Under the competitive spirit of ranking up and enjoying the benefits of higher tiers, customers will naturally use more of your products and services instead of going to your competitors. Done well, it will set you apart from the competition and make your brand your customers’ favorite. Your members feel rewarded at fair value and in return, they come back for more.

A highlight of a bunch of Como’s Tier-Based Loyalty Programs

Check out four amazing businesses that have leveraged tiered loyalty programs with Como!

Paul Arabia

With various locations across the Middle East, Paul Arabia’s tiered loyalty program consists of four levels: Beige, Gold, Platinum, and Black. If a member wants to reach the next tier, they need to achieve a certain number of visits within a year. Depending on the tier they reach, they receive a voucher for a complimentary main course and a discount on each bill if they belong to the higher levels.

Kyochon

Members of the Malaysian restaurant chain’s loyalty program, named Kyochingus, can enjoy up to 8% cashback for every transaction on the next visit for every transaction. With three membership levels, members must spend a minimum amount to upgrade to the next tier. For instance, Bronze members need to spend $223 to upgrade to the Silver tier while Silver members need to spend $445 to reach the highest level.

Lemoncha

Headquartered in Switzerland, this tea brewery’s loyalty program comprises three tiers: Teabestie, Tealover, and VIT (Very Important Tealover). Once the member creates an account and makes the first purchase, they automatically join the lowest tier (Teabestie) and will need to earn certain points or TeaBuds to climb up their level. All tiers have perks, such as a free drink on your birthday, referral perks, and a welcome gift. In addition to these benefits, the VIT members receive cashback and are the first to try out their new drinks before anyone else!

Aoki Group

Aoki Group has several renowned restaurant concepts owned by restauranteur Kevin Aoki. The points earned from your annual spending will unlock each tier: Bronze, Silver, Gold, and Emerald. Upon reaching the level, each member will receive a gift and enjoy special perks. For instance, to get the gold tier, the member needs to spend $10,000 and will receive a Rindo 2016 Bottle!

To conclude, offering tiers will boost customers’ desire to improve their status within your loyalty program and thus visit and spend more. Providing positive experiences, exclusive rewards – monetary or not -, and consistent communication will be key in the implementation of your tier strategy. This will undoubtedly lead you to build passionate brand ambassadors who proudly share their achievements within your program with their loved ones!

Want to implement a tier-based loyalty program? Contact us to get started!