What makes customers truly loyal to a brand? It has nothing to do with one-time discounts or promotions. Creating enduring relationships through remarkable experiences is what genuinely raises customers' loyalty. According to studies, more than 90% of consumers have a higher possibility of making another purchase after receiving a satisfactory service. Without a doubt, tiered loyalty programs play an essential role in promoting long-term engagement. So how could we build up a successful multi-tier loyalty program? Let’s begin to find out and elevate your sales.
Why is Building a Multi-Tier Loyalty Program Important
Implementing a multi-tiered loyalty program brings a sense of exclusivity and accomplishment to customers. Merchants who build a comprehensive program will significantly gain more repeat purchases. Following are two main reasons why it plays such a crucial role:
1. Increase Brand Loyalty
It tends to motivate customers' engagement with your brand by creating a game-like experience. A well-built tiered loyalty program offers a clear progression path, so when customers interact more frequently with your brand, they unlock exclusive rewards and benefits which give them a feeling like they’ve just encountered a new task in a video game. Merchants can improve their connection with customers and build long-term relationships with them.
For instance, Nike implemented its tiered loyalty program, NikePlus, to engage customers and build long-term relationships through a game-like experience. Their program offers members personalized product recommendations, early access to new releases, and exclusive promotions. These perks make customers feel valued and create an emotional connection, similar to leveling up in a game.
2. Generate Higher Retention Rates and CPV
Customers tend to feel more connected to the brand while they’re receiving specialized rewards through loyalty programs. For this reason, adding a tier loyalty program to stores not only increases the perceived value considerably, but also the retention rates. Customers can see more value in their relationship with your brand as long as they interact more thoroughly with tiered programs.
How do brands achieve this? Let's take a look at the hotel brand- Marriott Bonvoy. When their members advance through the tiers, they would receive free room upgrades, lounge access, more bonus points for future booking discounts.
These benefits have significantly increased customer retention rates by helping them feel valued and appreciated, which further leads to higher CPV in the long term. With the help of these strategies, the brand has reached the top five of all hotel and hospitality rewards. It has a portfolio of 30 brands ranging from long-stay to luxury and over 7,000 locations worldwide.
How to Design and Implement a Multi-Tier Loyalty Program
From the case of Marriott Bonvoy Hotel, they expanded with the thorough planning of a tiered-loyalty program. To achieve a higher conversion rate, we could start by enhancing CLTV through progression, including establishing distinct tiers such as membership levels and points earned.
However, what kind of benefits can customers get if they advance through your store’s tiers? Customers will love rewards such as early access to sales, unique discounts, and personalized services. Below, let’s learn about the steps to design and implement a multi-tier loyalty program:
1.Define Your Tier Name and Number
Before starting, merchants should determine the structure of their loyalty program. Ideally, a loyalty program’s structure looks like this: entry-level, mid-tier, and top-tier rewards. In fact, most successful loyalty programs only have three to five tiers. It’s the perfect balance. First, it provides them a sense of progression. Second, it makes them feel less overwhelmed.
A simple tip that often gets overlooked is to use clear names for each tier. The most common labels would be bronze, silver, gold or member, platinum, diamond. To learn more about naming your VIP membership tiers, you can check out this blog here.
2.Define Your Tiers Criteria
Now that you have named your tiers, the next step is to focus on attracting your customers. The best way to do this is by having a clear entry requirement. Tiers should be accessible by meeting specific criteria, such as:
- Spending thresholds (e.g., spend $100 to enter Tier 1, $500 for Tier 2).
- Points accumulation (e.g., earn 100 points to reach Tier 2).
- Activity-based (e.g., log 10 purchases or interact with the brand through social media or apps).
Once the entry requirements are all set, you can think about the rewards per tiers. For example:
- Tier 1 (Basic level): Offer entry-level perks like discounts or free shipping.
- Tier 2 (Intermediate level): Provide enhanced benefits, such as early access to sales, exclusive products, or more significant discounts.
- Tier 3 (Top level): Include high-value perks like personalized experiences, VIP customer service, or invitations to exclusive events.
Take Marriott Bonvoy, as an example. They set up 5 tiers for their loyalty program. What’s the extra benefit visitors would like to get when staying at hotels? Definitely exclusive services and more comfortable stays. By earning more points customers will unlock exclusive benefits such as higher discount point rate (up to 75%), more personal services and priority to room upgrades.
3.Keeping Customers Engaged
Whenever the brands notice a drop in customer engagement, they can consider introducing new incentives to keep customers engaged with them. Without a doubt gathering feedback from customers is helpful for brands to understand what their audience really wants. By combining insights and data, brands can make adjustments to emerging brands and identify strategies for improvement, enhancing more program precision which will further boost customer retention rate and generate more profit for their store.
Let’s take a look at a Taiwanese brand Line Friends. By building up a partnership with customer service app Judge.me, they successfully reach deeper acknowledgement with customers. The store could automatically offer bonus discount points to customers that are more actively reviewing their products through the app. In this way they reach a higher feedbacks rate and help their brand collect more reviews which further help them with the marketing strategies.
Conclusion
In summary, establishing a multi-tier loyalty program for your store is vital for brands due to the help it brings to the store in significantly increasing long-term customers loyalty and engagement. Offering a well-organized rewards program will give your customers a sense of accomplishment which encourages them for further repeat purchases. Regularly collecting data and making thorough analysis are essential for upgrading the programs in order to bring more customized rewards, which are based on your customers preferences and it will continually be a beneficial resource for your brand.