Tiers and status structures have long been a staple in loyalty programs, tapping into the human need for achievement and recognition. Kobie’s 2024 Consumer Research Report explores the current state of status in loyalty programs, highlighting how these structures can drive deeper engagement and emotional loyalty.
The Duality of Tiers
Tiers serve a dual purpose in loyalty programs. Members expect tiers to deliver more frequent rewards (71%) and accelerated earning of loyalty currency (67%). Additionally, they look for access to exclusive benefits, events, and services as they move up the tier ladder. This duality underscores the importance of aligning tier benefits with member motivations, offering both core program perks and unique rewards at higher levels.
Emotional Impact of Tier Advancement
Advancing to a higher tier has a profound emotional impact on members. The report reveals that 75% of respondents feel a sense of accomplishment when they qualify for a higher tier, and 71% feel special. These feelings drive increased engagement, with 76% of members more likely to engage in-between transactions after advancing a tier. However, only 37% are willing to pay a fee for tier membership, emphasizing the importance of earning status through engagement rather than purchasing it.
Endowing Progress vs. Endowing Status
While granting status as part of promotional offers can motivate members, it can also backfire if they fail to requalify. Members who do not requalify for a granted status often feel disappointed and used. Instead, the report suggests endowing progress, giving members a head start but not the full status, which encourages them to work towards achieving it. This approach leverages the Head Start Effect, where members are more motivated to complete a goal when they have already made some progress.
Smart Tier Structures
Effective tier structures go beyond just offering rewards. They tap into the deeper emotional connections members have with the brand. By understanding and leveraging these connections, brands can design tier structures that drive both engagement and loyalty. Members with higher emotional loyalty, driven by status and reciprocity, are more likely to perceive tier benefits positively and remain engaged with the program.
Looking to explore even more loyalty insights? Access Kobie’s full 2024 Consumer Research for four additional sections packed with valuable findings and actionable strategies, including:
- Understanding Program Health and Member Disengagement
- Boosting Loyalty Through Personalized Experiences
- Engaging Members Beyond Transactions
- Navigating Loyalty Program Innovations
Read the full report to supercharge your loyalty strategy with insights that keep your brand ahead of the game!
Written By: Dr. JR Slubowski
Dr. JR Slubowski, Kobie’s Associate VP of Strategic Consulting focuses on creating engaging data-driven experiences for brands that customers love. His commitment to craft critical thought-out strategies allows him to perform complex customer analytics and to drive results with relevant data. He specializes in customer analytics, marketing communications and strategic planning.
