Fears For Tiers

Close to one-third (32%) of U.S. and Canadian consumers can’t identify which tier they belong to in their favourite loyalty rewards programs, according to a newly released study by COLLOQUY.

The stunning lack of awareness of basic tier status is a key finding in “Fears for Tiers: 2014 COLLOQUY Study on Membership Status In Loyalty Programs.” Study findings are based on a February 2014 survey of 3,077 U.S. and Canadian consumers.

COLLOQUY’s research reveals that the familiar gold, silver and bronze tier system no longer works; showing that the three-tiered structure is outdated as a way for brands to keep their customers engaged, sometimes creating confusion rather than inspiring loyalty.

COLLOQUY study author and research director, Jeff Berry observed: “Savvy shoppers and travellers are all too aware of the recent onslaught of changes to rewards programs. Brands want to revive consumer engagement simply by updating rewards, but that exacerbates confusion about tier levels and can impose so many limitations that upward movement is perceived as unattainable.”

In fact, the Fears for Tiers study shows the chasm between those able to reach the highest tiers and those trapped in the bottom tier — due to economic status — is widening. Consumers with incomes below $50,000 a year are more than 50% less likely than those with incomes more than $100,000 to make it to the high tier of a program. Moreover, 42% never make it out of the low tier.

Americans and Canadians deeply believe all men and women are created equal, but the same cannot be said for customers. No less than 75% of consumers said it’s acceptable for businesses to give special treatment to members of their loyalty programs.

Some travel weary road warriors are resentful when they learn the person stretched out in a first-class airline seat next to them simply purchased the points or miles needed to achieve that luxury experience. But the resentful road warrior is a distinct minority. Fully 69% of survey respondents said it’s fair for customers to purchase a higher tier membership if they want to receive the same benefits as those who earned their status through program participation.

COLLOQUY’s research also sheds light on a key gender difference. Hard benefits, such as monetary or cash rewards, are more likely to motivate women (84%) than men (81%). The positive feeling of reaching a higher tier status is stronger for men (39%) than women (33%).

Other key findings include:

• 50% of survey respondents said they have increased their spending or changed other purchasing behaviour in order to achieve a higher tier status in a rewards program.
• 33% of low tier members do not think they are properly acknowledged for their participation in a program, even though they participate whenever possible.
• Non-travel program members are almost twice as likely as those in travel programs to be unsure of their tier level (34% to 16%).

COLLOQUY is a provider of loyalty marketing publishing, research and education. It’s study is available at http://www.colloquy.com/tiering.