Loyalty tiers leave customers confused

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By: Wise Marketer Staff |

Posted on May 8, 2014

Nearly one-third (32%) of US and Canadian consumers cannot identify which tier they belong to in their favourite loyalty rewards programmes, according to a study by loyalty marketing publisher and educator, Colloquy.

This surprising lack of awareness of basic tier status was a key finding in the 'Fears for Tiers' study, which found that the familiar gold, silver and bronze tiering system no longer works effectively, being something of an outdated way for brands to keep their customers engaged, often creating confusion rather than inspiring loyalty.

"Savvy shoppers and travellers are all too aware of the recent onslaught of changes to rewards programmes," explained study author and Colloquy research director, Jeff Berry. "Brands want to revive consumer engagement simply by updating rewards, but that exacerbates confusion about tier levels and can impose so many limitations that upward movement is perceived as unattainable."

The study revealed that the gap between those able to reach the highest tiers and those trapped in the bottom tier (due to economic status) is widening. Consumers with incomes below US$50,000 a year are more than 50% less likely than those with incomes more than US$100,000 to make it to the top tier of a programme. Moreover, 42% never make it out of the low tier.

Americans and Canadians deeply believe all men and women are created equal, but the same cannot be said for customers. No less than 75% of consumers said it's acceptable for businesses to give special treatment to members of their loyalty programmes.

Some travel weary road warriors are resentful when they learn the person stretched out in a first-class airline seat next to them simply purchased the points or miles needed to achieve that luxury experience. But the resentful road warrior is a distinct minority: some 69% of survey respondents said it's perfectly fair for customers to purchase a higher tier membership if they want to receive the same benefits as those who earned their status through programme participation.

The study also shed light on a key gender difference: Hard benefits, such as monetary or cash rewards, are more likely to motivate women (84%) than men (81%). The positive feeling of reaching a higher tier status is stronger for men (39%) than women (33%).

At the same time, 50% of respondents said they have increased their spending or changed other purchasing behaviour in order to achieve a higher tier status in a rewards programme, and 33% of low tier members do not think they are properly acknowledged for their participation in a programme (even though they participate whenever possible). Non-travel programme members are almost twice as likely as those in travel programmes to be unsure of their loyalty programme tier level (34% compared with 16%).

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