5 Ways a Tiered Loyalty Program Can Boost Your Retention Strategy

Aleksandra Velkova on March 14, 2024

Creating loyal customers is more than just offering the program. 

It’s also communication, customer segmentation, analysis of behaviors and drawing conclusions about who they are, what they do and why they do this. 

We can then supplement our program with even more personalized communication, perks and rewards to move customers from one segment to another and effectively drive more revenue. 

To achieve this, we can use a lot of tools and tactics and one of my favorites is the VIP tiered loyalty program. 

Here’s how it can help your retention strategy.

  1. It effectively segments your customers based on your set criteria - your customers will self-segment into the different tiers based on how much they spend with your brand. This is super powerful as it will give you information about exactly who they are, how much they buy and how often. 

  1. It automatically rewards them for their loyalty, motivating them to move up the tiers - the rewards you configure in each tier should work towards motivating your customers to spend more and thus reach a higher tier. You can easily do this by analyzing how much are the customers in the tier spending on average? What would make them spend a bit more?

  1. It gives you quick access to information on your top spenders - think of all the creative things you can do if you knew who your top customers are? The people who spend the most with your brand and you know exactly who they are? Can you use this audience to find more customers like this and target them in your ads strategy? Can you reach out to them to get their feedback, their review and learn why they love your product?

  1. Personalized communication, personalized rewards - once you know who are your top spenders, you’d like to offer them the special treatment. This may include a different email marketing campaign, direct reach out to let them know of early sales or special promotions, and of course, special rewards. You can offer a special reward just for the top tier spenders and not request too much from them in return - allow them to place that next order. 

  1. Data, data, data - the information you can get by offering a VIP program and seeing how people react to it is gold for your marketing initiatives. By knowing who are the top spenders, when they last purchased, how often they buy and how much they spend on average, you can work on your advertising strategy, merchandising, communication and overall retention. 

Wondering what tactics to use to achieve a highly effective VIP program?

Here are a few you can consider implementing in your loyalty program:

  • Add a lucrative entry reward - the entry reward is a one time reward customers can get as they first earn a tier membership. Since this is a one-time reward, make it a little bit higher in value and motivating to place that next order. This higher value fixed amount  discounts or percentages off. 

  • Offer different lifetime rewards in the tier - it’s a common mistake to offer the same rewards in your VIP tiers as you do in your rewards program. You want to offer better, more attractive rewards in VIP tiers to motivate customers to reach them. So if you already are offering rewards in exchange for points, make sure the ones you offer in VIP tiers are higher in value to the customer. 

  • Free shipping - free shipping is a great incentive to offer in VIP tiers, as a lifetime reward. A lot of brands nowadays offer free shipping over a certain spend amount, which gives you a great opportunity to strategize with this and offer it at any spend amount to certain spender levels. 

  • Incentives with minimum order spent - if one of your goals is to increase the AOV of VIP  customers, you should be offering an incentive with a minimum order spent. That way, the customer will be motivated to spend a bit more than what they do on average to take advantage of the reward. 

  • Experiences - depending on your industry and resources, you can always go the extra mile for your top spenders to ensure they’re happy with how you’re treating them. Experiences such as event invitations, early access to sales, calls from specialists in your industry or anything you can think of that would wow your customers should be something you consider including as a reward in the VIP tiers.

If you’re already running a VIP program, think about trying out some of the tips in the article. And if you’re only looking to launch one for your brand, feel free to reach out to us - we’ll be happy to help.

Aleksandra Velkova

Aleksandra Velkova

Aleksandra is the Customer Success Manager at Lootly

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