The Intricacies of Loyalty Program Design – Part 3

How do you set foreign money, tiers and rewards?

The concluding installment of this three-part collection on The Intricacies of Loyalty Program Design. To get the whole story on loyalty program design, you will discover Half 1 right here and Half 2 right here.

This concluding segmentdeals with three of probably the most attention-grabbing points of program design

  • Forex
  • Tiering
  • Rewards and Redemption

As specified within the earlier two installments, we aren’t moving into the detailed understanding of every of those idea areas. It is a give attention to the type of choices that may must be made with regards to every.


Program Forex refers back to the incentive issued by the model for repeat and common customized. The frequent terminologies embody – Factors, Stars, Miles, Cash.

Forex is an integral a part of most program propositions. It’s, undeniably, the tangible laborious profit that’s best to recall and vocalise.

You will need to outline a sustainable foreign money technique and construction this system earn such that it’s ATTRACTIVE to the member and AFFORDABLE to the model.

Questions a model wants to handle:

  1. Does your program NEED a foreign money? And can it give you the results you want? Keep in mind that program foreign money is sort of a ticker. It must maintain shifting. So, does your model’s buy cycle supply the chance for VELOCITY of earn? And may you afford to offer again to the member at a price that motivates them to accrue your foreign money?
  2. What ought to your EARN standards be? Ideally, you’ll reward your key enterprise metric – income or frequency or quantity. However maintain earn standards holistic and multi-dimensional.
  3. Which brings us to the following query. How must you STRUCTURE your EARN TABLE? How a lot is BASE EARN and the way a lot is BONUS EARN? And what buckets of behaviour will you award your bonuses for?
  4. How lengthy is the foreign money going to be VALID for? What are the EXPIRY guidelines? Set them such that you’ll be able to drive an inexpensive accrual and but not burden the model with undue legal responsibility ranges
  5. Lastly, a degree most frequently compromised on. What’s your CURRENCY BRAND? Keep in mind that foreign money can be a branding alternative so select a reputation that ties in with this system identify and but has a – sure, foreign money – of its personal!


Tiers are probably the most primary segmentation. They’re an exterior manifestation of program aspiration and do wonders for social esteem and the sensation of exclusivity and privilege that program membership brings.

Not each program nevertheless wants or warrants tiers. Tiering technique should slot in with the general program technique.

  1. Does your program NEED TIERS? The reply lies within the buyer knowledge evaluation. Are there sufficiently distinctly performing buyer segments that warrant being handled in a different way?
  2. What ought to your TIERING CRITERIA be? Very like Forex, hyperlink your tiering standards additionally to your key enterprise metric. If it’s a must to drive income, base your tiers on income. You may have a number of standards to outline a tier – like income AND/OR frequency – however the easier the higher. And set your threshold as spherical numbers – simpler to recollect and talk.
  3. HOW MANY TIERS ought to you may have? There’s no laborious and quick rule. The info tells you what number of ranges you possibly can break up your buyer base into. And your inside capabilities will inform you what number of tier propositions you possibly can handle to ship successfully. While you launch tiers, don’t go greater than three for positive.
  4. TIER UPGRADES AND DOWNGRADES – how usually are you going to improve and downgrade your members. Finest follow is to improve as and when attained and downgrade as soon as in a yr.
  5. TIER-WISE PROPOSITIONS – most crucial. Don’t have tiers in case you can’t ship distinctly completely different propositions as you progress upward. Except you create aspiration to climb greater, the tiers will serve no goal. And ensure the differentiated propositions aren’t simply on paper – they’re truly delivered on-ground.
  6. TIER BRANDING – Yet one more branding alternative. Try to transcend the Silver, Gold, Platinum to names that really mirror this system and the model.

Rewards and Redemption

Arguably the largest second of fact in any program.

Two ideas to be understood:

  • Redemption – when foreign money is “redeemed” for a present/reward together with towards the following procuring transaction.
  • Breakage – when foreign money expires with out being redeemed and the financial savings thereof go straight to this system backside line making it look “greener”.

All the time design for redemption. Not for breakage. You need members to redeem – that’s why you gave them foreign money. The financial savings ensuing from breakage converse of an ineffective program in the event that they’re too excessive.

  1. What are you providing as redemption choices? The only and most seamless is towards future procuring of your individual product. Are you additionally going to incorporate a redemption “catalogue”?
  2. What is going to function in that catalogue? What services and products? Are these what your members anticipate or need?
  3. Will you may have associate manufacturers within the catalogue? And can they ship to your members at this most necessary second of fact?
  4. How will you construction your redemption? Is there going to be a minimal level steadiness earlier than you permit redemption? What milestones are you setting?
  5. What are the alternatives you’ll supply at every milestone? Don’t have too many decisions resulting in paralysis of choice making. However enchantment to HOARDERS and REDEEMERS alike
  6. Have you ever balanced ATTAINABLE rewards with ASPIRATIONAL rewards?
  7. What are you doing to drive HIGH PERCEIVED VALUE? Exclusivity, curation, can’t-buy-for-money rewards – all these drive-up perceived worth.

In abstract

Loyalty Program design is fraught with nuanced choice making. Key areas to cowl embody:

  • Setting your targets with focus and readability
  • Articulating a holistic worth proposition
  • Defining clear Eligibility and Enrolment guidelines
  • Setting Membership and renewal pointers
  • A sustainable foreign money technique
  • A well-defined tiering technique
  • And, lastly, a beautiful rewards and redemption providing.

Concentrate on these vital areas first and you’ll have the nuts and bolts of an incredible design in place!

Concerning the Creator

Mala Raj is a Licensed Loyalty Advertising and marketing Skilled™ and college member of the Loyalty Academy™. A Administration post- grad from IIM Bangalore, she is an skilled loyalty advertising and marketing practitioner having labored for over twenty years within the subject throughout purchasers, audiences, and verticals. Mala has designed lots of the profitable loyalty applications working in India immediately. She has authored analysis on Loyalty in addition to been a jury member for Loyalty Advertising and marketing awards in India and internationally. She may be reached through and +919821041171.

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