Aleksandra Velkova on July 02, 2021
If you’re growing a business in the e-commerce space, having a healthy brand community can mean a lot of things: top reviewers, top brand advocates, top spenders! Whatever is the composition of your community (maybe it’s a blend of all of the above) these people all have one ting in common: they’re emotionally connected with your brand.
It is imperative to keep your community engaged with your brand and that’s where a tool like a super attractive VIP tiered program comes into play.
The benefits of offering an exclusive VIP program for your best customers are many, but probably the highest of them all is the feeling of belonging to a special group of like-minded people. People have an intrinsic need to belong to a group, and to feel special is a cherry on top.
When they do, they’re way more likely to be even more engaged with your brand, spend more and to advocate for your business.
So, who is part of your special group?
How do you design a program for them that will strengthen the bond, increase engagement and ensure their long-term loyalty to your brand?
In this guide, we explore the different ways to start a tiered loyalty program for ecommerce, tips on how to structure super attractive rewards and analyze a few popular examples to draw inspiration from.
In this guide:
Who is eligible to be part of your VIP program?
The power of exclusive rewards - how to choose the type of reward and determine its value
Types of rewards to offer
3.1. Entry (welcome) rewards - what is it and how to determine its value
3.2. Lifetime rewards - exclusivity, incentive to spend more and aim for higher tier
3.3. Experiential rewards - events invitations, special gifts, access to a resource, access to a special sale event etc.
How well is your program performing?
Examples of awesome tiered programs
Let’s be honest; not all of your customers will be super engaged with your brand. There will be people who check out as guests and people who bought only once from you and then disappeared.
The focus of this topic are the people who buy from you frequently, turn to your brand for all their related needs, trust your advice and guidance, and follow your social channels for news, announcements and relevant content.
They simply love your brand.
There are really 2 ways you can determine who is eligible to join your VIP program:
Based on the number of points they earn
Based on the amount of money they spend at your store.
Which criteria you choose will largely depend on your business objectives.
For example: are you also launching a reviews campaign and it’s important for you to receive as many reviews as possible? Maybe trying to connect with your customers on social media channels where you share all the cool events connected with your brand?
Then you would totally base the eligibility criteria on points earned, so you can structure the program to incentivize people to perform all the relevant actions and in return get closer to a VIP membership at your store.
Depending on your industry, sometimes points may not be relevant to your customers. Configuring your VIP program based on the amount spent may be more resonating in this case.
Lootly tip: make the entry criteria for your first tier slightly larger than the average order value.
By raising the entry requirement for the second tier and offering more attractive and valuable rewards, you can push your customers who spend around the AOV to spend a bit more and gain access to valuable rewards, such as a welcome fixed amount off on their next order.
A VIP tiered program is all about exclusivity - perks only this special group of customers can enjoy. It’s up to you to make the program and its structure perceived as super exclusive, and knowing what to offer as a reward, how and when is essential.
Let’s explore the different types of VIP rewards.
If you’re running a points and reward program, the point multiplier can be a distinctive reward that only tier members can enjoy. There are multiple ways how you can use the point multiplier reward to breed tier exclusivity.
Why would you use it?
Points inspire positive reinforcement - for each purchase made, your VIP customers gain more points than the average customer, instantly gaining access to rewards. Not just that this tactic makes them feel special, but it also makes their journey to your rewards much easier and faster, thus boosting that repurchase rate.
Great job for you if your customers are earning a VIP membership! It means they love your products and have come to rely on you for all their related needs. This is a great chance for you to welcome them to the different loyalty tiers with some super valuable entry rewards.
Entry rewards are one-time rewards, meaning they can only be used by the customer once.
Why would you offer an entry reward?
A valuable reward that’s a bit over your regular rewards is a super powerful incentive for customers to place another order at your store and keep climbing the tiers.
It creates an experience for your customers and strengthens the relationship with your brand
How to determine the welcome reward?
It will largely depend on your financial abilities, your rewards structure for non-VIP customers and also your goal with the VIP program.
For example, if you’re looking to increase sales, you can offer a 50% off on orders over AOV as a welcome reward. Then make sure the next tier entry requirement is a little above 2 orders with AOV, so that you inspire people to place another order to climb the tiers.
There are really tons of different tactics you can use to increase sales with the VIP program. What you decide to go with will depend on your customers, their buying habits and cycles and your abilities.
Lootly tip: we recommend that you always add a welcome reward in your VIP programs. The idea of receiving a reward for making it into a tier is super attractive to customers and it incentivizes them to continue shopping with you. Plus, you can use the welcome reward in your marketing efforts to create highly converting email marketing campaigns.
What if your customers reached a VIP tier, took advantage of the welcome reward and are no longer inspired to maintain their tier membership? They would get out of the VIP program and will continue earning just like regular customers - which is not a good idea if you’re looking to really express your most true gratitude to loyal customers.
That’s why lifetime rewards exist. They have no expiration date, and their purpose is to make sure tier members always have a rewarding experience when they shop at your store.
Unlike entry rewards, they don’t have to have a big monetary value, but enough to make people remember that they get something in return if they buy with you.
How to choose the lifetime reward?
Consider your financial abilities first. The lifetime reward is available to all tier members on all their orders during their membership.
What resonates with your customers? Is it a perk like free shipping? Or maybe store credit? Percentage off?
Experience is king!
Research has shown that 79% of millennials value the experiences a brand can provide for them more than the material things.
So how can you implement this in your loyalty program? Through experiential rewards.
This is where you can be super creative and design an experience campaign for your most loyal customers.
This can be anything that your customers find valuable: a call from the CEO, a personal shopping assistant, an invitation to an annual party, a donation to a cause in the customer’s name, entry into a contest or knowing first about new product launches, sales events and more - your community management team would have tons of ideas on what to offer here and in which tier.
The benefits from offering custom rewards come in various forms, but if done right, the most important one of course is spreading the word about your brand and building that brand popularity in your industry.
Regardless of how you choose to deploy an e-commerce VIP program, it’s imperative to give it its own identity. People should remember it, it should be easy for them to talk about it and reference it in conversations.
If you’re using Lootly to deploy a VIP tiered loyalty program, you can create that program uniqueness through several elements.
Give each of the tiers in the program their own name. Make it catchy, on-brand and relevant to your niche. Make it the identity of the group of people who belong to it.
Customize the icons that represent each tier in the program widget. Custom icons that are different for each tier capture customers’ attention nudging them to explore what each tier is offering. Plus, it looks so much better!
Source: The Dharma Door
The VIP program is designed for your most loyal customers, but in that group, there may be some segments that you may want to exclude from participating in or create a tier especially for them.
As an example, this can be wholesale customers, resellers, affiliates or any other group based on your customer structure.
Source: Sweet Legs
If people don’t know about the VIP tier they earned, or the rewards that they can use with their membership, your program will not perform at its best.
Customize the notifications to represent your brand, clearly communicate that the customer is now part of a VIP tier at your loyalty program and of course, state the available rewards that they can immediately take advantage of.
There are few metrics you want to track to determine if the VIP program is performing well:
Number of new members weekly/monthly - if this number is rising steadily, it means it’s fairly easy for people to earn membership. That’s great! If it’s stagnant or rising super slowly, it means it’s either very hard for people to earn membership or the perks are not attractive enough.
Number of members who move up the tiers weekly/monthly vs. number of people who move down the tiers - if the first number is higher than the second number it’s an indicator that your program resonates with people and it’s easy for them to earn new tiers. It also indicates that the repurchase rate is growing. If it’s the opposite scenario, you may need to change the entry criteria of the tier where most people seem to lose interest; it may mean it’s too much effort to earn that next tier so they decide not to proceed.
A tiered program is a rich source of data which you can use to create relevant marketing campaigns for your customers.
Let’s not forget; information relevance is key when doing email marketing.
Since you have customers’ VIP data in your loyalty platform, you can leverage it in your email marketing provider to create segments and send campaigns on various topics.
For example, send a personalized product recommendation email based on customers’ VIP tier membership. If you know how much members in a VIP tier spend with you yearly, you can customize the product recommendation to match their spending habits and preferences.
The benefit of using this information in your email marketing campaigns is the increased engagement with your loyalty program as well as the incentive of customers to spend a bit more and climb the tiers.
A tiered loyalty program is a great way to reward your most loyal customers for their trust and also, to build that special brand community who advocates for your brand.
The perks you offer in the tiered program play a crucial role in its appeal; make sure these rewards are valuable to the customers and also, within your financial abilities.
Finally, customize the VIP program on your website; give it an identity, brand it and communicate its value effectively.
Aleksandra is the Customer Success Manager at Lootly