The StartUp Blog at PartnerUp

The Chicago Journal of Consumer Research conducted a study recently that found businesses can make their customers feel special by creating multi-level loyalty programs. These types of programs create a sense of status for customers, which in turn can also make many of them more eager to climb the ranks in terms of loyalty or engagement, which typically means more money for the business.

Loyalty programs usually work in conjunction with some type of membership. This could be a card membership, a club membership or some other type of membership. The way that loyalty programs are structured within memberships depends primarily on the business itself. Here are some examples of how different types of businesses use tiered loyalty programs.

1. Many businesses in the retail sector have credit cards associated with their stores. These stores often tier their cards (usually in a silver, gold, platinum format) in such a way that the more you spend the higher up in the ranks you’ll go, often resulting in rewards like special discounts and thus creating status and incentive to purchase more.
2. Businesses sometimes create “clubs” for their most loyal customers. For example, a theater or video store could have the “frequent movie-watchers club,” while a restaurant could have the “frequent diners club.” Within these clubs members can reach certain levels and receive different perks or rewards, and also leave with the feeling that they are a valued or preferred customer.
3. Sometimes you’ll find businesses that revolve completely around memberships. Gyms and social networks are the first to come to mind. Within these businesses memberships are structured so that the more you pay, the more you get. People who pay for the most prestigious (most expensive) membership pretty much have free reign over available services.

In the eyes of the business owner, multi-level loyalty programs are meant to build loyalty of course, but they’re also meant to coax customers into spending more. For many consumers, however, it’s all about status. They aspire to reach a higher level, but to reach that level they have to spend more, either directly or indirectly, which inevitably builds loyalty. Basically, everyone wins.