A Guide to Building Tiered Memberships for Your Loyalty Program

Tiered loyalty programs are structured reward systems that offer customers various levels of benefits based on their engagement and spending with a brand.

These programs typically include multiple tiers, such as bronze, silver, gold, and platinum, with each tier providing more significant benefits than the one below it.

These programs aim to incentivize customers to increase their loyalty and spending by offering progressively better rewards as they move up the tiers.

Example: Marriott Bonvoy is a comprehensive travel loyalty program with multiple tiers that offer increasingly attractive benefits to members.

• Member: The entry-level tier where members earn points for every dollar spent on stays, dining, and other services at Marriott properties. Benefits include free in-room Wi-Fi and mobile check-in.
• Silver Elite: Achieved after 10 qualifying nights in a year. Benefits include 10% bonus points on stays, priority late checkout, and dedicated elite reservation line access.
• Gold Elite: Reached after 25 qualifying nights annually. Members enjoy 25% bonus points on stays, room upgrades based on availability, a welcome gift of points, and enhanced internet access.
• Platinum Elite: Attained after 50 qualifying nights in a year. Benefits include 50% bonus points on stays, room upgrades including suites based on availability, annual choice benefit, guaranteed late checkout, and lounge access.
• Titanium Elite: Achieved after 75 qualifying nights per year. Members get 75% bonus points on stays, all Platinum Elite benefits, a dedicated elite support line, and additional annual choice benefits.
• Ambassador Elite: The highest tier, reached after 100 qualifying nights and $20,000 yearly spending. Benefits include all Titanium Elite perks, a personal ambassador to assist with travel planning, and Your24?, which allows members to choose their 24-hour check-in and check-out time.

These tiered loyalty programs in the travel and retail sectors illustrate how escalating rewards can drive customer engagement and loyalty. By offering increasingly attractive benefits at higher tiers, brands like Marriott create strong incentives for customers to continue spending and engaging with the brand.

Benefits of Tiered Loyalty Programs

Boost in Customer Engagement

Tiered loyalty programs are designed to motivate customers to interact more with the brand to achieve higher tiers and unlock better rewards. By creating a sense of progression and achievement, these programs can significantly increase customer engagement.

According to McKinsey, such programs can lead to a 20% increase in customer engagement. The tiered structure gives customers clear goals and milestones, encouraging them to participate more actively in the program.

Better Customer Retention

Providing valuable rewards and making customers feel appreciated enhances loyalty and retention. Customers who feel valued are likelier to remain loyal to a brand, reducing churn and increasing long-term profitability. A study shows that a 5% increase in customer retention can lead to up to 95% profit growth. Tiered loyalty programs create a sense of belonging and exclusivity, making customers more likely to stick with the brand.

Example: Starbucks Rewards

Green Level: The basic membership tier where customers enjoy benefits like free refills on brewed coffee and tea and earning stars for every purchase. This entry-level engagement encourages frequent visits and initial loyalty.

Gold Level: After earning a certain number of stars, members reach the Gold Level, which offers more significant rewards such as free food and drink items after collecting a specified number of stars. This higher tier motivates customers to continue spending to maintain their status and enjoy these premium benefits.

Increased Spend and Lifetime Value

Tiered loyalty programs encourage customers to spend more to achieve higher tiers, which directly impacts the average transaction value and overall customer lifetime value (CLV). By offering progressively better rewards, customers are incentivized to increase their spending and frequency of purchases.

Example: Delta SkyMiles

• Silver Medallion: Basic tier with benefits such as priority boarding and a free checked bag.
• Gold Medallion: Mid-tier offering benefits like expedited security, complimentary upgrades, and increased mileage bonuses.

• Platinum Medallion: Higher tier with benefits including even higher mileage bonuses, choice benefits like upgrade certificates, and Sky Club access.

• Diamond Medallion: Top tier offering the most exclusive benefits like complimentary Delta Sky Club membership, personal assistance, and the highest priority for upgrades. These escalating rewards encourage frequent travelers to book more flights with Delta to reach and maintain their status.

Enhanced Customer Experience

Tiered loyalty programs can significantly improve the overall customer experience by offering personalized rewards and exclusive benefits that make customers feel special and valued. This enhanced experience can lead to positive word-of-mouth referrals and increased brand advocacy.

Example: Hilton Honors

• Member: Basic tier with benefits like free Wi-Fi and exclusive member rates.
• Silver: Additional benefits such as a fifth night free on reward stays and elite rollover nights.
• Gold: Mid-tier with perks like complimentary breakfast, space-available room upgrades, and milestone bonuses.
• Diamond: This is the top tier, offering premium benefits like executive lounge access, premium internet, and the highest priority for room upgrades. This personalized and exclusive treatment enhances the customer experience, fostering strong brand loyalty.

Tiered loyalty programs effectively increase customer engagement, retention, spending, and satisfaction by creating a structured system of escalating rewards, ultimately driving long-term business success.

Strategies for Creating an Effective Tiered Loyalty Program

Value at Every Tier

To keep customers motivated to progress through the tiers, ensure each tier offers unique and desirable rewards. These rewards should be meaningful and valuable to your customer base, incentivizing them to strive for the next level.

Examples:

• Entry Level: Basic rewards such as earning points on purchases and small discounts.
• Mid-Tier: Enhanced perks like exclusive promotions, early access to sales, and additional points.
• Top Tier: Premium benefits, including personal shopping services, exclusive event invitations, and substantial discounts or free products/services.

Aspirational Tiers

Design higher tiers to be aspirational, offering significantly improved benefits that encourage customers to aim for them. The exclusivity and superior rewards of the higher tiers should make customers feel accomplished and valued when they reach them.

Examples:

• Basic Tier: Simple perks that are easy to achieve.
• Intermediate Tier: More attractive rewards that require moderate effort.
• Premium Tier: High-value benefits that provide substantial motivation to reach and maintain this level.

Engaging Communication

Implement targeted communication strategies to inform customers about the benefits they can unlock at each tier. Personalized messages, reminders of how close they are to the next tier, and updates on new rewards can enhance engagement and motivate customers to keep progressing.

Examples:

• Emails and Notifications: Regular updates about current tier status and benefits.
• Personalized Messages: Tailored communications based on customer behavior and preferences.
• Exclusive Offers: Special promotions for members of specific tiers.

Analytics

Utilize data analytics to optimize the loyalty program continuously. By analyzing customer data, you can identify trends, preferences, and areas for improvement, ensuring the program meets customer expectations and drives desired behaviors such as increased spending and loyalty.

Examples:

• Customer Insights: Understanding purchasing patterns and preferences.
• Program Performance: Tracking engagement metrics and reward redemption rates.
• Adjustments: Making data-driven adjustments to rewards, tiers, and communication strategies.

How Can Custom Travel Solutions Help??

Having a custom solution platform, like custom travel solutions tailored to your brand's specific needs, is crucial for the success of a tiered loyalty program. A custom platform allows you to design, implement, and manage the program effectively, ensuring it aligns with your business objectives and customer preferences.

Benefits?

• Flexibility: Tailored features and functionalities that match your brand’s unique requirements.
• Scalability: Ability to grow and evolve the program as your business expands.
• Integration: Seamless integration with your existing technology through APIs.?
• Custom Dashboard: A centralized platform where you can monitor program performance, manage member tiers, and analyze customer data.
• Marketing Support: Streamlined processes for new member onboarding and marketing.?
• Real-Time Analytics: Access up-to-date insights and metrics to make informed decisions and optimize the program.

By incorporating these strategies and leveraging custom travel solutions’ private labeled platform or travel benefits,? you can create an effective tiered loyalty program that enhances customer engagement, retention, and satisfaction, driving long-term success for your brand.

Conclusion

Tiered loyalty programs are an effective way to enhance customer engagement and retention. By providing escalating rewards and creating aspirational goals, brands can motivate customers to remain loyal and increase their spending. Successful programs like Ulta Beauty, Sephora, and Nordstrom demonstrate the power of well-structured tiered loyalty programs in fostering long-lasting customer relationships.

Want to know more about adding travel benefits to your loyalty program? Book a demo now.?