Loyalty programs are integral for any eCommerce brand if they want to work towards customer retention. They are necessary to build, nurture and sustain strong and meaningful long-term relationships with customers.
However, it is also important for brands to experiment with the structure of loyalty programs to fully utilize them and drive better results.
This is where multi-level loyalty programs come in.
In this blog, we will be discussing all that you need to know about multi-level loyalty programs.
What are multi-level loyalty programs?
A multi-level loyalty program or a multi-tiered loyalty program is a customer reward program that rewards various groups or levels of customers differently. It has a hierarchical structure, with each level offering progressively better rewards, benefits and advantages to customers.
As customers have to move up the levels to gain better rewards, customers will have a sense of importance as they go, cementing a better bond with the brand.
What are the benefits of multi-level loyalty programs?
Multi-level customer loyalty programs often come with their own benefits to brands, owing to their dynamic and engaging structure. Let us look at some of its major advantages and benefits:
Better customer engagement
With the clever distribution of rewards and incentivized level advancement, multi-level loyalty programs can improve customer engagement. Customers will keep engaging and interacting with the brand and carry out actions that will help them move up the levels and unlock better rewards. This is also a great way to promote repeat sales.
Improve customer retention
As the rewards get progressively better as customers ascend through the tiers, multi-level loyalty programs encourage customers to stick to the brand and incentivize them to do so with time. Customers will be investing time and effort to reach higher tiers, and hence they will be hesitant to start from square one with other brands.
Customer data collection
Businesses online require customer data and insights to function in the best way possible. And a multi-level loyalty program provides an easy way for businesses to collect valuable data on customer interests, preferences, behavior and purchase patterns. This data allows businesses to effectively tailor their marketing efforts to meet customer expectations as well as to provide personalized customer experiences.
Increase customer spending
Customers can be effectively encouraged to spend more and spend often with a multi-level loyalty program as level ascension and achieving higher-tier rewards depend on this. This way the overall average order value and lifetime value from members can be improved significantly.
Encourage brand advocacy
Customers who have reached higher levels in the program are generally the most loyal ones and hence they are more likely to promote the brand to their peers. These brand advocates will share their experiences and even convince others to choose the brand, thus leading to organic word-of-mouth marketing and a better brand reputation
Build long-term customer relationships
A multi-level loyalty program can improve customer-brand relationships and nurture loyalty in the most meaningful way. Customers will put in time and effort into multi-level loyalty programs to receive higher-level benefits and when they feel that their loyalty is rewarded, they are more likely to trust the brand and remain loyal to it.
Segment customers better
The leveled-structure allows businesses to better segment their customers based on their loyalty and overall spending. Thus, businesses can better tailor their marketing campaigns and personalize offers deals and discounts for each customer segment while remaining relevant when doing so.
Gain competitive advantage
A unique multi-level loyalty program experience can set a business apart from its competition, differentiating it from other competitors that lack such a robust loyalty system. A brand that has an engaging loyalty system with a compelling value proposition is more likely to be chosen over other brands.
Flexibility and scalability
You can build multi-level loyalty programs with a flexible and scalable design. This allows businesses to modify and adjust rewards, level qualification criteria, benefits etc. as and when market conditions, customer preferences and business goals change. As your business grows, you can adapt your multi-level loyalty program to fit your objectives.
What are some multi-level loyalty program examples?
Listed below are a few great multi-level loyalty program examples that have been able to use the leveled structure to build exceptionally successful customer reward programs.
Snitch
With the help of Flits, Snitch, the popular men’s fashion brand, effectively integrated a multi-level loyalty program with a system that rewards at multiple stages such as sign-up, first order etc. instantly transforming the loyalty experience they provide.
Borosil
Borosil, the global glass production’s reward system that functions at different levels is another great multi-level loyalty program example that cleverly divides the reward experience to get progressively better as the customer completes each milestone such as first sign up, first order etc.
The Man Company
The Man Company, the men’s grooming brand, has a level-based loyalty program that instantly conveys the benefits of the program, building anticipation and excitement in customers to advance up the levels.
What are the steps to set up a multi-level loyalty program
A multi-level loyalty program can be the best step you can take towards a more engaging and fruitful loyalty strategy. Here we have listed all the major steps you need to take to set up your multi-level loyalty program.
Define program objectives and goals
You should know that your multi-level loyalty program will be only as strong as the goals and objectives you set for it and how clear you are about these goals. So, start by clearly determining the specific goals and objectives you aim to achieve with your multi-level loyalty program. Your goals can include things like increasing customer retention, boosting AOV, improving customer engagement, driving repeat purchases etc. With a clear vision of what you want to achieve with your multi-level customer loyalty program, you are ready to begin.
Identify your target audience
Once your goals are defined and you have set your vision for success, you need to identify who the target audience is for your multi-level loyalty program. Identify them by taking factors like customer demographics, customer interests, behaviors and purchase patterns into consideration. Use these insights to better understand customer demands, needs, preferences and motivation. All this information can help you effectively tailor your loyalty program to deliver precisely what the customer wants, thus improving its effectiveness.
Choose a loyalty model
After you have understood your target audience and their preferences, it’s time to finally choose what the structure and design of your multi-level loyalty program will be. There are different loyalty models you can choose from, such as tiered programs, point-based programs, coalition programs and hybrid loyalty models. When choosing the loyalty model for your multi-level loyalty program, ensure that it aligns well with your loyalty program objectives and goals. Also, keep in mind that your loyalty model should also resonate well with your target audience.
Define the loyalty tiers
Next, define the levels in your multi-level loyalty programs and determine how many loyalty tiers will be there in your program. You need to set up the criteria that customers need to meet to advance through each of these levels. Generally, factors like customer purchase frequency, total amount spent, loyalty points acquired, order value or other relevant metrics can be considered for setting the level advancement requirements.
Select rewards and benefits for each level
You should also cleverly incentivize level advancement by defining the rewards and benefits you will be provided to customers at each level. So, choose the rewards and benefits offered at each level in a way that customers will want to climb up the levels. The rewards should offer compelling value and align well with what your target audience expects. Rewards can include benefits like free discounts, free products, special VIP events, personalized offers and coupons, early access to new products or sales, free shipping, one-day delivery etc.
Establish program rules and terms
Set clear rules and terms for your multi-level loyalty program to function seamlessly. Define everything from how customers can earn points, to how they can redeem them, to expiration policies to every other major rule for the program. Also, ensure that you convey all the rules of the program as clearly as possible so that there will be no confusion for customers regarding any aspect of the program.
Implement technology solutions
Choose appropriate technology solutions that can support and enhance your multi-level customer loyalty program. Firstly, choose a competent loyalty program management software. Depending on the loyalty program’s requirement you should also choose the right customer relationship management systems (CRMs) and point-of-sale integrations too. Developing a mobile app is also a highly rewarding strategy to make your program more accessible.
Monitor and measure program performance
You can’t simply set up a loyalty program and expect wonders. Constantly assess how your multi-level loyalty program is performing against relevant metrics and KPIs like enrollment, retention rate, average order value, ROI, engagement rate etc. This is needed for gaining a better understanding of the effectiveness of the program as well as for modifying the program in the best possible way for optimum performance.
Optimize and improve
For the best results, it is important that you regularly review your multi-level loyalty program and optimize it. Your optimization should be informed by the latest market trends, performance data that you have collected and customer feedback. Constantly look out for areas that can be improved and bring in changes to the program to make the value being provided even more compelling while attempting to drive improved results in the long run.
Conclusion
The only way to keep your loyalty game on point and boost engagement in your loyalty program is by constantly keeping things fresh and interesting. And the dynamic and engaging structure of multi-level loyalty programs has the capability to do precisely this.
Wish to know more about building highly performing and engaging loyalty programs?
