What is a loyalty program?

The purpose of a loyalty program is to grow your brand's sales revenue by building and nurturing a committed core group of members who purchase your goods and services rather than from a competing brand. To achieve this goal, loyalty programs offer benefits to its members that promote increased spending.

At its simplest level, a loyalty program rewards its members for each dollar spent on the brand's goods and services. Most often, the amount of money spent is expressed in points. Members accumulate points through repeated purchases and then redeem the points for rewards. For example, a quick service restaurant might award its members 1 point for every dollar spent and offer a free hamburger in exchange for 25 points.

Adding tiers to a loyalty program allows you to offer increasingly attractive benefits at higher levels of spending and brand engagement. A tier is a mechanism for ranking members based on their value to your brand. Members are categorized into different groups (tiers) based on criteria such as total amount spent or points earned. Each successive tier offers more valuable rewards to the members who qualify for that tier. By extending preferential treatment to high-ranking members, tiers, provide a compelling incentive to increase spending.

SessionM’s loyalty program functionality enables you to set up powerful tier strategies, where each tier delivers unique rewards for specific member behaviors. You can reward members with different point multipliers or specific rewards at each tier level to deepen engagement and motivate long-term loyalty. For example, when a member in the bronze tier earns 200 points, they receive a 10% discount on their next purchase. Members at the silver tier level, however, receive 20% off their next purchase when they earn 300 points.

Tiers can be set up and deployed in numerous ways, and are ideal for spurring members to move into higher spending brackets. Your loyalty program can reward members in the highest tier exclusive benefits such as double points days and free express shipping. And you can target lower-spending members with messaging about the benefits of reaching the next tier along with the number of points they need to earn to reach this tier. For example: You're within 100 points of the Silver tier. Redeem this offer to qualify!

Example: Koalla Retail

The following image shows the Koalla Retail loyalty program, which is an example of a SessionM loyalty program. We'll refer to this example throughout this article as we explain how tiered loyalty programs work.