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Building Customer Loyalty: The Value of Tiers

Building Customer Loyalty: The Value of Tiers

Building Customer Loyalty: The Value of Tiers

April 28, 2019

Today’s loyalty landscape is saturated with the typical spend and get model. With “86% of loyalty marketers us[ing] points and 75% us[ing] instant cash-back or discounts in their program1,” customers are yearning for brands to “wow” them with a differentiated experience. In order to win, brands need to think beyond the status quo to elevate their customer loyalty.

Brands can waste a ton of time and energy on low valued customers when they should be focusing on the “right customer,” and the customers most valuable to their business. With only 23% of consumers happy with brand personalization today,2 a tiered program is one way in which brands can increase personalization and differentiate from competition through offering recognition and status to their members. Tiers help brands maintain and increase customer value by influencing desired customer behavior, which in turn adds business value.

Benefits of Tiering

Inspire desired customer actions: Strategically determined tier thresholds and desirable benefits, can incentivize “striving” transactional and interactional behavior, motivating members to increase frequency and spend.

Provide added customer value: Offering tangible rewards and benefits make your customers feel valued and important and helps to build an emotional connection with your brand. The perception of tiers in the eyes of the consumer should make all customers feel valued, even if you are providing more exclusive benefits to higher tiers. Brands must find a balance of elevating high valued customers while not excluding other tiers or customers.

Deliver added business value: Aside from increases in spend, tiers can help provide a tangible return on investment and drive advocacy for your brand. Additionally, tiers allow brands to be smart about the benefits they provide; based on returns, some benefits can “pay for themselves.”

With these benefits in mind, brands should consider their business objectives and structure, as well as their current customer data and assets to determine if a tiered program is the right approach.

Determine Your Tier Structure

The chart below can help you determine what tier structure may best suit your customers:

Tier Structure for your Customers

Additionally, brands must explore the frequency, longevity and interactional touchpoints with their customers to define their tier qualifying criteria. Ask yourself these questions:

Define Tier Qualifying Criteria

Tier Qualification Structures

Tier Qualifications Structures

Tiered programs designed with the right mix of benefits will attract customers to spend with your brand and create a FOMO (fear of missing out) effect leaving them wanting to change their behavior to reach the next tie, ultimately allowing brands to break through the status quo and provide meaningful experiences to recognize their most valued customer to win.

 

Resources

1Forrester: Advance Your Approach To Customer Loyalty by Emily Collins
2https://www.forrester.com/report/Marketers+Leverage+Your+Agency+Ecosystem+To+Take+Loyalty+Beyond+The+Program
3As per internal Kognitiv benchmarks across US programs 2016-2018

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