LoyaltyHow to Increase Engagement and Retain Customers with Loyalty Tiers

Loyalty-Tiers

How to Increase Engagement and Retain Customers
with Loyalty Tiers

In today's business world, where competition is continuously growing, creating loyal customers is of paramount importance for long-term success. One of the most effective ways to achieve this goal is by implementing a loyalty program with different levels, known as loyalty tiers.

This approach is crucial because it not only encourages customers to return but also motivates them to spend more to reach higher levels and enjoy greater benefits.

Creating loyal customers is vital for long-term success.
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Loyalty-tiers diagram

What are Loyalty Tiers?

Loyalty tiers are different levels within a loyalty program that reward customers based on their activities, spending, or other criteria. Each tier typically offers increasingly valuable rewards, encouraging greater engagement and spending.

Benefits of Loyalty Tiers

Through various reward levels, customers are motivated to make more purchases and return more frequently to achieve additional benefits. Loyalty tiers contribute to increased customer engagement.

Customers at higher tiers often receive exclusive discounts, free products, or special services, motivating them to spend more to reach these levels. Tiers are important for stimulating higher spending.

Customers who feel part of an exclusive club tend to be more loyal to the brand and less likely to switch to competitors. Tiers know how to retain customers.

Loyalty programs enable companies to gather data on their customers’ buying habits, which can be useful for customizing offers and improving marketing strategies. Tiers are important for collecting useful data.

How to Create an Effective Loyalty Program
with Loyalty Tiers

Start with clearly defined levels and rewards.

Each tier should clearly define what the customer needs to do to achieve it and what rewards they can expect. Transparency is key to success.

Don’t forget that it’s important for the first level to be accessible.

The initial tier should be easily attainable so that customers can quickly join the program and experience the initial benefits.

Leave room for increasing the value of rewards, because with each subsequent level, rewards should become more valuable and exclusive to motivate customers to climb through the tiers.

It’s important to regularly communicate with members, as regular updates to customers about their progress, special offers, and ways to reach the next level faster help maintain their engagement.

Stay ahead and personalize rewards.

Using collected data to personalize these rewards and offers can further increase customer loyalty.

Loyalty-tiers world brand strategy
Loyalty-tiers world brand
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Most Successful Loyalty Programs Globally

One of the well-known examples is the Starbucks Rewards program, which offers three membership levels: Green, Gold, and Star. Each level provides specific benefits such as free drinks, personalized offers, and exclusive events. This system encourages customers to frequent use Starbucks to earn points and progress through the levels.

Let’s walk through its Loyalty Tiers.

Green Level – All members automatically become Green members upon joining the program. Benefits include free refills on select beverages and the option for free drink customizations.

Gold Level – Members attain Gold status upon accumulating a certain number of stars or points. Gold members receive a free drink or food item for every 125 stars collected, personalized offers, and exclusive rewards.

Amazon Prime is a paid membership program that offers various benefits such as free shipping, access to Prime Video, Prime Music, exclusive discounts, and access to special events like Prime Day. Although it doesn’t have multiple levels, Prime membership is highly valued for its numerous benefits.

Sephora Beauty Insider is a loyalty program created with Insider, VIB, and VIB Rouge tiers.

Insider is the entry-level available to all who join the program. Members receive a free birthday gift and earn points on every transaction. At Sephora, members reach VIP status after spending a certain amount annually, which includes additional discounts, free services, and exclusive events. VIB Rouge is the highest level achievable after even higher annual spending, offering all benefits of lower tiers plus free shipping, access to exclusive events, and special rewards.

Marriott Bonvoy is a loyalty program for about 30 brands like Marriott homes or villas for rental, often for vacation purposes. It features complex tiers such as Member, Silver Elite, Gold Elite, Platinum Elite, Titanium Elite, Ambassador, where the base level provides basic perks like free Wi-Fi. After a certain number of annual stays, members also receive benefits including late checkout, extra night credits, and priority check-in.

Gold Elite, for instance, is a higher tier with perks like complimentary breakfast and upgraded rooms. Platinum, Titanium, and Ambassador Elite represent the highest levels with additional exclusive benefits such as guaranteed more comfortable and luxurious rooms, early check-in, late checkout, and a number of free nights, even a personal travel assistant.

Delta SkyMiles is a loyalty program by Delta Air Lines with levels like Member, Silver Medallion, Gold Medallion, Platinum Medallion, Diamond, where the base level offers basic benefits like earning miles for flights. For example, Silver Medallion provides benefits such as complimentary seat selection, free additional baggage, and expedited check-in.

Gold, Platinum, and Diamond Medallion as the highest levels of this loyalty program also offer additional benefits such as priority service, upgraded seats, free access to airport lounges, and additional miles that can be used to “pay” for entire flights.

Example of an unsuccessful loyalty program

Identifying the “least successful” loyalty program can be subjective, but there are examples of loyalty programs that have not met expectations. One frequently cited example is the American Airlines loyalty program called “AAdvantage.”

American Airlines’ AAdvantage program has faced significant criticism due to its complexity, devaluation of miles, limited availability of rewards, frequent rule changes, and poor communication. These factors have contributed to reduced customer satisfaction and loyalty, causing the program to lose effectiveness.

Therefore, it’s important to remember that a successful loyalty program should be easy to understand, transparent in its rules, consistent in delivering value, and adaptable to customer needs.

Loyalty programs with loyalty tiers can significantly contribute to customer retention and increased engagement.

If you wish to implement this strategy to establish a long-term and profitable relationship with your customers, please contact us for a free presentation.

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We know that the future lies in a comprehensive loyalty program that inspires, attracts and recruits new customers while personalized benefits secure that the existing ones will return and repeat their purchases.

Do not miss this chance and entrust the profitability to a proven strategy you can rely on that certainly yields results.

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