Tiers vs Points - How to choose the best loyalty model for your business?

Choosing the right loyalty program is key to your business's success. Here's a simple guide to help you decide between a tier-based or a point-based model.

A tier-based loyalty program sorts customers into different levels. As customers make more purchases, they move up to higher levels. Each level, or 'tier', comes with its own set of rewards. The rewards get better as customers move to higher tiers.

This program works best for businesses with a lot of customers who make considerable or regular purchases.

The tier-based model gives customers a feeling of achievement and exclusivity, which makes them want to buy more in order to gain both financial advantages, such as discounts, and emotional ones, i.e. the satisfaction of advancing in a hierarchy and having their status confirmed.

A point-based loyalty program gives customers points for each purchase. These points can then be traded for rewards or discounts.

This program is perfect for businesses with a smaller customer base or for online shops with clients that make small, but frequent purchases (which would normally not hit the minimum order value eligible for points in a tier-based system).

The point-system is easier to understand and use than the tier-based one. Plus, the instant rewards from the point-based model encourage customers to keep collecting points in order to unlock benefits they can anticipate and evaluate on the spot.

To make the right choice, you need to think about your customers, your products, and your business goals.

If your business sells high-value products or if your customers value both financial and emotional rewards, a tier-based program is a great choice. But if your AOV is rather small, a point-based program can keep your customers coming back for the commercial benefits they would get.

Your goal is to build strong relationships with your customers. Choose the model that fits your customers' needs and aligns with your brand. No matter which one you pick, theMarketer is here to help you create a successful loyalty program. Let's get started!