The Benefits of Tiered Programs for Customer Loyalty

What makes healthy partnerships endure?

Naturally, I won’t surprise you by using the word « love » but in my opinion, any long-term happy marriage, agreement, or purchase is always the result of a genuine emotional connection. Marketers are the only ones who can truly understand a customer’s emotional connection to a brand.

This connection fosters loyalty, which is essential for the same person’s frequent and repeated purchases as well as his recommendations. Similar to interpersonal relationships, building and sustaining an emotional connection between a brand and a customer requires a lot of work.

This is how the phrase « relationship marketing » was created, which emphasizes client retention and satisfaction initiatives above invasive sales tactics. A successful, long-term tiered incentives scheme is one of them.

The psychology of tiered incentive schemes

Make your consumer climb the ladder in your loyalty program if you want to keep him. A customer obtains prizes by using tiers in accordance with your game’s rules. However, the consumer receives a status that helps him stand out and feel more valued and linked to the company rather than just continuing to accumulate loyalty points forever.

More significantly, it gives the consumer something to aim for, giving him an incentive to remain interested in your loyalty program for longer. Consider video games where you defeat monsters and get prizes to advance to new levels. More fantastic goodies become available for you after you achieve that higher level. Because it allows you to experience a number of milestones, you kind of become dependent on this game mechanic.

How a rewards program’s levels can affect client loyalty

  1. Exclusiveness that separates you from rivals

Start with some specific instances. The most well-known casino rewards program in Las Vegas, MLife Rewards, is a tiered program with five tiers. Take note of the phrase « MLife Rewards » used to describe their loyalty program. Receiving the Gold rewards makes the cardholder feel more superior and adds exclusivity to him.

A client who receives sapphire privileges will work to advance through the tiers in order to do more and reach the higher level. Inconspicuously preventing your consumer from selecting your competitor’s loyalty program is how a tiered rewards scheme works.

2. Level designations with wacky names that foster a sense of camaraderie

The name of your program shouldn’t, however, halt the flow of invention. To improve brand engagement, find creative level names that both capture the essence of your company’s character and really communicate with your target market.

The level titles, for instance, can be Rookie, Hardcore Builder, Shredded Superstar, etc. in the context of a nutrition supplement store. Be as enjoyable and interesting as you can. Just take a look at how Marvel, who recently introduced their loyalty program, Marvel Insider, complies with this wise advise.

3. Value and exclusivity have an impact

At their core, all customers are children who want to be recognized for their good deeds. Consumers therefore assess their worth in comparison to that of other consumers. Therefore, as a wise brand parent, you want to emphasize and illustrate the many advantages that your clients may experience. Greater rights than lesser membership categories must be granted to those with gold status, at least 1-2 more.

It’s also important to keep in mind that clients may check out the loyalty program of your rivals. Don’t let your customers down when you’re designing perks and rewards because if you do, more customers can wind up knocking on your rivals’ doors.

Once your benefits are listed, you may arrange them in a table. In this manner, incentives are unambiguous, succinct, and simple to compare.

4. The influence of a status based on membership fees

When you fail to acknowledge yet another of your child’s squiggly drawings, unlike other parents, the consumer, even one with a lengthy history of regular purchases, can easily switch from your brand to a rival. Because of this, your rewards program has to offer enough gifts, advantages, points, or services to surprise, please, and ultimately keep a repeat client.

Furthermore, a recent survey found that 65% of millennials believe it is worthwhile to sign up for a fee-based loyalty program if the owner provides more personalized benefits. According to Pamela Sullins, there is also benefit in fee-based loyalty programs.

  • Faster ROI delivery because, instead of generating income over a longer period of time, money enters the program as soon as a member joins up.
  • Pay-to-play incentives encourage users to continue playing since they don’t want to waste their money.
  • With qualified membership, you can keep your loyalty program free of one-time signups from those who aren’t really interested in it.

Everything is well thus far. But use caution! For many years, it was said that the movie theater chain AMC Theaters had the best-performing fee-based loyalty program on the market. But! They began providing free registration for loyalty members in the summer of 2016 (the program is still under testing). There is no doubt that you must be aware of your competition and target market if you want to implement a fee-based loyalty program. What is effective for Amazon Prime might not be the best tactic for your company.

5. Gamification that boosts consumer involvement

Starbucks, our all-time favorite coffee shop chain, is another fantastic example. In addition to having a gold status, they also include some gaming elements into their loyalty program by allowing gold card holders to collect additional points during Monthly Double-Star Days.

Why is it wise of them to take this action? In order to earn points in a loyalty program, more than 45% of consumers purchase a product, according to the 2016 Maritz Study. This study contends that some loyalty programs, which primarily emphasize discounts, don’t truly aid in enhancing consumers’ emotional connections to businesses. In this situation, gamification comes to the rescue by enabling you to incorporate enjoyable components into your loyalty program. Fun brings up emotions, of course.

6. Benefit from dependable recommendations

In a thorough study done by the Bond Brand Loyalty marketing firm, it was found that 73% of reward program participants would suggest companies to others if they found the loyalty program to be worthwhile and fulfilling. So, if you want to increase your customer base by using your present clientele, aim to meet their expectations.

However, you may attract new clients by implementing a tiered program that rewards your existing clients for referring friends or family members who also want to join your private club. These newbies will probably stick around and develop a loyalty to your brand. Naturally, you won’t be able to keep customers who just purchase one thing if the quality of your service or product falls short of their expectations long after your fantastic gifts have expired.

Since word-of-mouth marketing continues to be effective for building a brand’s reputation, consumers from tiered programs frequently send potentially devoted referrals. Because their friends and family have had good experiences, new buyers can help maintain high retention rates.

7. Using customer tiers to personalize emails

Your rewards program will automatically allow you to deliver more specialized offers based on the tier your clients are currently in when levels are included. Take the case of heavy spenders who receive gold membership, the highest level in your loyalty program, for illustration.

Since you already know they are heavy consumers, you may give them a bigger discount (say, 20%) than you usually provide for a limited period to entice them to make a future purchase. Alternately, you may build up automatic email campaigns to nurture silver members. By providing practical guidance and highlighting the advantages of higher levels, the aim is to motivate consumers to interact and advance to the next level.

Encourage them verbally to advance from the present stage of their customer life cycle toward the ultimate objective, true loyalty.

Getting started

It’s essential to go back to the fundamentals and consider how to construct a loyalty program, step-by-step, before you begin organizing your loyalty program levels.

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