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How to Design an Epic Tiered Program to Boost Customer Loyalty
Today, a customer loyalty program solution without VIP tiers is like is a smartphone without apps. To ensure your reward program has a high recall value and increase retention rate, you must design a highly rewarding tiered program. This type of program encourages your customers to shop more to earn more points and differentiates low, medium, and high spenders.
In this blog, we have highlighted the best practices you must follow to build an epic tiered reward program for your brand.
So let’s dive in…
Define Your Goals
Enlist your brand goals before designing a tiered program to get the best out of it. These goals could be:
- Improve overall user engagement on the website and social media.
- Increase average order value (AOV) by 5%.
- Boost revenue per customer by 20% annually.
- Enhance the repeat purchase rate by 20%.
Once you define your goals, segment your customer base in 3-5 categories based on their spending pattern or lifetime value.
How to Create Tiers
VIP tiers add gamification to your loyalty program that develops a feeling of competition among your customers. Create a pyramid based on your customer segments and set an annual target for how you want this pyramid to look after a year.
Ideally, your loyalty program should have 3-4 tiers with the aim to move at least 10% customers of each segment to the higher tier in the pyramid over the next 12 months. However, you may create 3-7 tiers depending upon your industry and customer base. The pyramid provides a strong foundation for your program tiers and the related rewards while keeping tabs on the expected ROI.
How to Name Tiers of your Reward Program
Once you decide the number of tiers for your reward program, it’s time to name them. Names should be given to creating an aspiration among customers to reach the higher tier. Even the customer belonging to the lowest tier should feel special. To start simply, you can use Silver, Gold, Platinum, and Diamond.
Moreover, customers who sign up for your loyalty program should automatically become members of the entry-level tier. You can also give points to customers for signing up to increase the participation rate of your loyalty program.
How to Define Points for Each Tier
After naming, you can decide the number of points needed to achieve each tier. Here’s an example of how points can be allocated for multiple tiers:
- Entry-level for all customers even with 0 points
- Make them feel valued even at this level
Customers should have points equivalent to $50 to reach this level
Customers should have points equivalent to $100 to reach this level
Customers should have points equivalent to $200 to reach this level.
After a few years, when customers make a lot of purchases from your brand, you can add them to the “Lifetime” tier. For instance, in the above example, when a customer reaches the diamond tier and spends more than $1000 on your online store, you can say that customers have achieved diamond tier for life.
This strategy will encourage other customers to spend more on your website to reach lifetime tier. Once they get used to purchasing from you and getting treated like a diamond, it will be difficult for them to buy from your competitors while having a lot of points in their bag.
We hope this guide helps your design an amazing tiered program than not only boosts your customers but also increases your sales exponentially. However, if you don’t have a reward program, sign up for free on our customer loyalty program software and launch your own program in a couple of minutes.