Optimizing Your Loyalty Program: Three Reasons to Offer Different Tiers or Reward Levels

May 30

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5/30/2014  RssIcon

Did you know that more than 60 percent of customers admit that they belong to one of more loyalty programs? Many brands and retail operations now offer customers cards that they can carry with them and scan when checking out in order to earn points that can later be redeemed for merchandise and discounts. Some businesses also implement tiers or reward levels, which gives even better rewards to those customers who spend more. Below we'll take a quick look at a few reasons why you should be offering different reward or incentive tiers to your loyal clientele.

Give the Biggest Rewards to Frequent Shoppers

Frequent customers are the lifeblood of the commercial and retail industries. A customer who is excited about a brand will continually shop at the same store and will be quick to share their experience with friends, family and others via social media. Using a tiered system lets you offer the biggest rewards to those who visit most frequently or purchase higher amounts of product. For example, a store might treat a frequent customer to a 50 percent off coupon while less frequent shoppers receive only a 25 percent off coupon.

Get Customers Excited About Moving up

Instituting a tiered program shows customers that they can save more when they spend more. Traditional reward programs let shoppers earn points and get lower prices on products in the store, but tiered programs let customers earn additional rewards. Many of these loyalty systems award additional points to loyal shoppers. A shopper at the most basic level only earns one point per dollar spent, but a higher level shopper gets two or more points for each dollar spent in the store. Using a tiered system encourages competition in customers as they know that they can move up and gain better discounts and benefits. Many customers will feel excited about earning additional savings and will end up spending more to advance to a higher ranking.

Identify and Eliminate 'Bargain Hunter' Shoppers

Identifying lower quality shoppers is one of the best benefits of a tiered loyalty system. Loyalty systems let businesses record data and keep track of how much customers spend. In a tiered system, company owners can arrange for the top-tiered customers to receive certain discounts and while avoiding shoppers that provide for a very low margin. As marketing to any customer has a cost attached, some businesses find that money is wasted on providing rewards to repeat bargain hunters who provide very little to a store's bottom line. With a tiered system, you can offer better rewards to those top shoppers and less frequent rewards to those on the bottom tiers.

Any type of reward or loyalty system can increase sales and keep customers happy. Utilizing a tiered loyalty system offers a greater benefit to both shoppers and business owners, ensuring that those most loyal to the brand are shopping on a regular basis.

Copyright ©2014 Retail Hero


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