How do tiers work in a loyalty program?

Tiers rank members based on their value to your brand. Each tier represents a higher level of achievement in the loyalty program. The Koalla Retail loyalty program, for example, has 3 tiers: Bronze, Silver, Gold.

Each tier in a loyalty program has the following types of rules:

entrance requirements, which determine what members must do to join that tier.
purchase benefits, which are rewards for making purchases while in that tier.
event benefits, which are awarded to members who complete designated, non-purchase events.
maintenance requirements, which determine what members must do to remain in their current tier.

Each type is described further below.

How do members enter a tier?

You determine how member enter tiers by defining the tier entrance rules and policy.

Tier entrance rules

Tier entrance rules determine when members qualify to advance to a higher tier in a loyalty program. Members must satisfy the conditions in the rules to enter the tier and receive the specified outcomes.

Examples of tier entrance rules include:

Members must complete a set number of transactions over a set period: 10 transactions in 90 days.
Members must earn a set number of points over a set period: 500 points over 6 months.
Members must spend a certain amount of money over a set period: $1000 over 1 year.

Koalla Retail tier entrance rules

The following table shows the tier entrance rules defined for the Koalla Retail loyalty program.

Koalla tier	Entrance rule	Outcomes
Bronze	The Bronze tier has no requirements; new members are assigned to this tier by default. An alternative approach is to not assign new members to a tier. Instead, they have to perform actions within the program to gain entry to the first tier.	Award 100 points to Koalla tier qualifying points account.
Silver	At least 1500 points in Koalla tier qualifying points account.	30% off offer on any purchase of at least $100.
Gold	At least 3000 points in Koalla tier qualifying points account.	30% off on any purchase of at least $100. Buy one, get one free offer.

Tier entrance settings

Members often are awarded with benefits (outcomes) when they have earned entrance to a higher tier level. For example, your tier entrance rules could specify that members receive 1000 bonus points whey they advance from the Silver tier to the Gold tier.

You can specify tier entrance settings that determine how many times members can earn the outcomes associated with entering a tier. You can allow them to earn the outcomes every time they enter the tier (unlimited) or you can limit the number of times they can earn outcomes, from once all time to some number in between.

You can set it up so that members receive the benefits the tier entry outcomes an unlimited amount of times or a limited amount. If you select limited, you will be prompted to configure the frequency within a timeframe that they can earn the tier entry outcome.

Use case for restricting tier entry outcomes

So why would you want to limit how often the outcomes can be earned? Take the case of a tier demotion. A member has been inactive for a year. During tier maintenance, the member is demoted from the Gold to the Silver tier. Subsequently, the member becomes more active in your program and (for a second time) gains entry to the Gold tier. Members who enter the Gold tier receive 1000 bonus points. You may or may not want to reward this member a second time. You can control whether to grant the reward using the tier entrance settings.

Fraud or “gaming the system" is a major concern for loyalty programs. An unscrupulous member could intentionally fall out of and then reenter a tier over and over again to get the bonus points. You can eliminate this type of fraud by restricting the tier entry outcomes to one time only.

What benefits do members of a tier receive?

Members of a tier earn benefits:

as they complete purchases (tier purchase rules)
when specific non-purchase events occur (tier event rules).

Tier purchase rules

Tier purchase rules are triggered when members make purchases that satisfy the conditions of the rule. In return for making qualified purchases, members receive the outcomes specified in the rule.

Example tier purchase rules include:

Earn 1 point per dollar spent on a purchase, excluding certain items
Auto purchase an offer for customers after they earn a set number of points
Earn 100 points for a purchase at a designated store.
Receive a 10% discount on selected items.

Koalla tier purchase rules

The following table shows the tier purchase rules defined for the Koalla Retail loyalty program.

Koalla tier	Purchase rule	Outcomes
Bronze	Complete purchase.	Award 1 point for every dollar spent to Koalla tier qualifying points account.
Silver	Complete purchase.	Award 2 points for every dollar spent to Koalla spendable points account. Award 2 point for every dollar spent to Koalla tier qualifying points account.
Gold	Complete purchase.	Award 5 points for every dollar spent to Koalla spendable points account. Award 5 point for every dollar spent to Koalla tier qualifying points account.

Tier event rules

Tier event rules are triggered when designated, non-purchase events occur. Example tier event rules include:

The “cancel credit card” event expires all points in a Credit Card Point Account
The “profile complete” event awards the customer an offer.

See About custom events for more information.

Koalla tier event rules

The following table shows the tier event rules defined for the Koalla Retail loyalty program.

Koalla tier	Event rule	Outcomes
Bronze	Happy birthday.	Award 500 points to Koalla tier qualifying points account. $10 off offer.
Silver	Happy birthday.	Award 750 points to Koalla tier qualifying points account. $25 off offer.
Gold	Happy birthday.	Award 1000 points to Koalla spendable points account. $25 off offer.

How do members remain in a tier?

You determine how members qualify to remain in their current tier by defining the tier maintenance rules and policy.

Tier maintenance rules

Tier maintenance rules determine what members must do to remain in their current tier and not be downgraded to a lower tier. Example tier maintenance rules include:

Member must spend a certain amount within 24 weeks since joining.
Member must complete a set number of transactions within 6 months since joining.
Member must earn a set number of points within 1 year since joining.

Koalla tier maintenance rules

The following table shows the tier maintenance rules defined for the Koalla loyalty program.

Koalla tier	Maintenance rule	Outcomes
Bronze	None.	None.
Silver	At least 1500 points in Koalla tier qualifying points account.	Expire all points in Koalla tier qualifying points account.
Gold	At least 3000 points in Koalla tier qualifying points account.	Expire all points in Koalla tier qualifying points account.

Tier maintenance settings

Tier maintenance settings determine how often a member is evaluated for tier maintenance. Members who satisfy the conditions remain in the tier. Members who do not satisfy the conditions are demoted to a lower tier. Preventing the loss of something of value is sometimes just as important if not more than achieving something new. Therefore, members are just as focused on retaining their current tier as they are on pushing towards a higher one.

When you enable tier maintenance, you determine:

how often the tier maintenance job runs: each day, week, month or year, of all the time. For weekly, you can choose which day. For monthly you can choose what number day up to 28. For yearly, you can choose which month and day to run each year.
whether members should be evaluated each time that the maintenance job runs, or relative to their join date.
whether there should be a grace period where members who joined recently are not evaluated.