Immediate Gratification and Long-term Rewards: The Appeal of Tiered Loyalty Programs

September 1, 2023

It has become common for restaurants to personalize their loyalty rewards to cater to individual customers, rather than following a generic approach that applies to all.

With the pandemic highlighting the importance of digital communication, the restaurant industry has witnessed a rise in the adoption of loyalty programs. Many brands that did not have loyalty programs in place have started incorporating them, while those that had already implemented them have made modifications. These changes usually involve altering promotions, enhancing rewards benefits, and introducing new tiers or ways to engage with patrons. Numerous benefits can be gained by restaurants offering loyalty programs, which can significantly impact their profitability.

The Tiered Rewards Landscape:

Earlier this year, Subway introduced a new rewards program that is tiered based on a the amount patrons spend throughout the year. The MVP Rewards program will now have three tiers as opposed to the former dollar-for-tokens system. Individuals who spend $200 annually will be placed in the Pro tier, earning 10 points for every dollar spent, 5% bonus points for orders placed online, bonus points days, discounts on their anniversary and birthday, and points challenges. Additionally, there are two tiers that give members access to limited-edition merchandise and even more rewards. Subway's chief operating and insights officer stated: “MVP Rewards gives our guests more of what they love from Subway, with a few hidden surprises baked in, so every guest feels like an MVP and comes back to Subway more often for their favorite subs,” Kappitt said.  In fact, newer loyalty programs often incorporate a tier-based system. As such, Sweetgreen and P.F. Chang's have also implemented subscription-tiered loyalty programs in their strategy, though P.F. Chang's is based on frequency rather than spending.

Why are Tiered Rewards so Attractive?:

1. Personalization: A crucial component of successful tiered loyalty programs is customizing rewards according to consumer behavior.“Moving to a more transparent, points-based system allows us to accomplish both while providing an experience that is personalized to every guest,” according to Kaitlyn White, the project lead for Chick-fil-A One. As customers move up the tiers, they get access to more customized incentives that cater to their preferences. The rewards are based on factors like frequency of purchases and total spending. Tiered programs usually start with a basic level where the rewards are small and easy to attain. As customers engage more with the business, they move up the tiers. 

2. Increased Spending: Restaurants that elect to incorporate a tiered rewards program as part of their engagement strategy, often experience increased average spending per visit: 69% of customers reported that loyalty programs play a vital role in whether they keep coming back. Moreover, they tend to achieve a 1.8x higher return on investment (ROI) than non-tiered programs. 

3. Exclusivity: To foster customer loyalty, it's important to make them feel valued and appreciated. One effective strategy is to create an exclusive members-only club, which can help turn customers into brand advocates and encourage them to spread the good word. At the top of the funnel, customers are eager to receive exclusive benefits such as more points per purchase, VIP merchandise, or special limited-time offers. By creating a community of elevated status, businesses can encourage customers to maintain their elite status, leading to a mutually beneficial outcome for both patrons and restaurant owners.

Getting Started With Tiers In Your Loyalty Program:

  1. Ensure full customization: With Appfront, you decide how to reward loyal customers, greet new ones, and ensure you engage them all - with plenty of reward options. Cash back programs let you define the return amount tiers that work best for you (e.g. $5 back for the first $100 spent and 10 after reaching $200). A points bank system takes it to the next level and allows customers to collect points for every purchase and then redeem whatever coupons they wish to use.
  2. Take an omnichannel approach: Communicate to loyalty members when they are close to the next tier, welcome them to new tiers, emphasize their underused tier benefits, or share any new rewards they’ve unlocked as a top-tier member. A campaign trigger determines when and where to publish a campaign (whether it's manual, scheduled, or automatic and delivered via email, SMS, or push notification)  by collecting events like buying a signature pizza for the 4th time or completing the first delivery order. Set up the reward, select a condition, and let Appfront do the rest. 
  3. Keep it simple: Setting up a tiered loyalty program can get messy and complicated. Appfront makes it simple by designating a main path first, such as a points bank or cash back that will run for long periods of time. Then, whenever you're ready, create dynamic loyalty modules like signup gifts or money-spent-based coupons, by combining a reward and a manual or auto-trigger.

Tiered rewards programs are essential for restaurants looking to thrive in today's competitive landscape. They foster customer loyalty, drive revenue, and provide a competitive edge. By understanding their importance and implementing them effectively, restaurants can elevate their success in the market. Don't miss out on the opportunity to elevate your dining experience, discover Appfront's tiered loyalty program today.  

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