Each business would like its customers to pay more. A higher average value for orders means greater revenue but without the expense of marketing. However, how can you motivate your customers to purchase an additional item to their shopping cart? It could be that the answer is within your loyalty program.
The loyalty tiers don't only focus on providing your top customers with a gift. They're a great tool to influence the behavior of customers. If designed with care the benefits of tiers can lead to more purchases. People who are looking to get to the next tier will alter their purchasing habits in order in order to achieve that level.
This article outlines five tried and tested methods that can increase AOV loyalty tiers. These are straightforward ideas businesses can apply to their business, no matter if you're beginning your loyalty program or are looking to upgrade your existing program. It's the goal to assist to design levels that inspire customers to buy more.
If customers know what benefits they can gain by paying some extra and do the same thing. An effective tier structure transforms each purchase towards a reward. The journey itself will naturally result in higher average purchases.
Beyond the First Tier: 5 Strategies to Use Loyalty Levels for Higher AOV
Strategy 1: Create Clear Spending Thresholds for Each Tier
To increase AOV with loyalty tiers, the basis of every tier strategy is transparency. Customers must know the amount they will need for the next step. If the thresholds are clearly defined, customers are able to plan their purchases accordingly.
Consider how airline miles function. If you're aware, spending $3,000 earns you Silver status. It is possible to book an additional flight or select a costlier option to get this threshold before the year's end. This same principle applies to your clients.
Determine the spending requirements for each level. For example, bronze could require between $0-200 per year. The price of silver could range from $201 to $500. It could begin at around $501. This amount should be attainable however, they will require exertion. If Gold seems too simple and easy, it's not distinctive. If the process is too difficult people won't even try.
Be aware of your average value for orders in determining limits. If the majority of customers pay $50 for each purchase A silver threshold of $500 is equivalent to 10 purchases. This is achievable in an entire year. A gold threshold of $2,000 could be unattainable for the majority of.
Strategy 2: Offer Tier-Based Shipping Benefits
The cost of shipping is among the main obstacles for larger purchases. Many customers add products to their cart, and then delete from their cart when they are able to see the total cost of shipping. Free shipping is a good way to promote more expenditure. Your loyalty points can go even more.
You could consider offering different benefits for shipping for each level. Members of the Bronze tier could get free shipping for orders of more than $50. Members of the Silver category could receive free shipping on all purchases without a requirement for. Gold members might receive expedited shipping at no extra cost.
If customers are aware that reaching the next level can save cash on each order they make and they're enticed to buy more today. The benefits of shipping become something worth striving towards.
It is also possible to give free returns to customers of the higher levels. This reduces risk associated with bigger purchases. For instance, a Gold member looking to purchase an outfit worth $200 is aware that if the item doesn't match and is returned, it's free. The confidence increases purchases.
An apparel retailer tried this method, and found out that Gold members' average order value was 45% more than those who were Silver members. Free shipping and returns allowed them to experiment with the more costly items, and to make sure to order multiple sizes if they are not sure about the size.
The benefit of shipping is that they will cost some money, but they also encourage behaviors that are more than costs. Just a couple of dollars for shipping isn't a huge price to be paid by a client who is always spending more.
Strategy 3: Create Bundles and Collections Exclusive to Higher Tiers
Special products can be powerful motivators. If customers are aware that they will purchase certain products only after having reached a certain stage, they'll strive to reach that tier. When they do finally gain access to the game, they typically purchase more than the coveted item.
To increase AOV loyalty tiers, you could think about creating bundles of special items that are only available to customers of Silver or over. They could be carefully curated collections of your top-selling merchandise at a slightly reduced price. They are exclusive and feel distinct, and the bundle structure naturally boosts the value of your order.
One effective way to increase AOV with loyalty tiers is by offering Gold Members limited edition items or early access to new collections. If Gold members know they'll get something before others, they're inclined to keep their status. When they shop during early access sales, they'll typically buy many items.
The brand has created the "Gold Member Starter Kit" for customers who have reached the top of their level. It included full-size versions of five of their most well-known products with a 20 percent discount. Members who are Gold took advantage of it as well, and the mean value for these purchases was more than triple the amount normally purchased.
Strategy 4: Design Tier-Based Discounts That Encourage Larger Orders
When designing strategies to increase AOV via loyalty tiers, remember that special products can be powerful motivators. If customers know they can purchase certain products only after reaching a specific tier, they'll strive to get there. When they do finally gain access, they typically purchase more than just the coveted item.
Think about offering discounts based on tiers which increase in value depending on the size of your order. Silver members might get 10% off orders over $50. Gold members can get 15% off any order that exceeds $75. Platinum members could get 20% off purchases of more than $100.
The system encourages consumers to purchase more items in order until they reach the discount threshold. Customers aren't just receiving discounts on what they're already purchasing. The incentive is to spend more.
Also, you can provide tier-based gifts with purchase. Gold members receive a free sample when they purchase. Gold members get a premium Travel size when ordering more than $75. Platinum members receive a large reward with orders of $125 or more.
Strategy 5: Use Tier Progress Bars to Create Urgency
Many people don't like leaving work incomplete. This is why progress bars are very useful. If customers notice they're at only 80% towards the next tier they'll search for solutions to make the difference. Show progress bars in prominent places on the customer's accounts, within emails, or on your website if customers have logged on.
Let them know exactly how close to the next prize. If your customers are below the threshold for tiers, email the customer a gentle reminder. "You're only $45 away from reaching Gold status for the rest of the year. Here are some items our Gold members love." The gentle push often ends in a quick purchase.
You should think about creating opportunities with a time limit to fill the gaps. "Double points weekend" or "spend $50 and earn triple points" provide customers with an incentive to take action now instead of later.
The store in the home department A home goods store "close the gap" emails for customers with orders within fifty dollars of the next-tier. The emails have a conversion rate, and resulted in orders of an average around $120. The visual progress bar with the reminders created significant motivators.
The urgency is a dual-sided issue. The customers also want to stay on their current status. If a Gold membership is required annually, and someone is spending $450 and has just two months to go typically, they'll take out a transaction to safeguard their status. The purchase will usually be more expensive than their usual order.
Conclusion
The most efficient loyalty programs employ multiple strategies together. Specific thresholds will show the customer what they want to achieve. Benefits based on tiers make the goal appealing. They are motivated by progress bars. Special products as well as smart discount offers give them a reason to take action now.
Begin by determining your customer's spending habits. Which are the top clients you typically spend each year? Which areas do the majority of customers belong to? Utilize this data to establish realistic, but relevant levels.
The ultimate goal is to increase AOV with loyalty tiers, creating a positive cycle. Clients spend more to reach higher tiers. The higher tiers provide more rewards. Better benefits make customers more loyal. In turn, loyal customers naturally spend more in the long run.
This is the true value of loyalty levels. They aren't just a way to reward existing behavior. These programs shape future behavior in ways which benefit you as well as your clients. If everyone wins, this program works for everyone.
