How Loyalty Tiers Work, and Who They Are Built For

Tiered rewards are designed to change how much you spend. Read as a customer, the question is whether the top tier is worth what it costs to reach.

The basic design

A loyalty programme rewards repeat custom, as outlined in Wikipedia's article on loyalty programs. A tiered one adds levels: spend more within a period and you unlock better treatment. Airlines, hotels, department stores and online gaming sites all use the same structure.

What tiers usually offer

• Rebates or points at a higher rate as you climb.
• Service: a dedicated contact, faster handling, higher limits.
• Occasional gifts on birthdays or anniversaries.

The two numbers that matter

1. Qualifying spend. How much, and over what period, to reach and to keep a tier.
2. Effective return. The cash value of the benefits divided by that spend.

If reaching the next tier means spending more than you otherwise would, the extra spending is the price of the benefit. It is rarely a good trade.

Status matching

Some businesses will match the tier you hold with a competitor to win your custom. It can be a fair shortcut, provided you ask what must be done to keep the status afterwards.

Two examples from one industry

Online gaming sites publish tier tables in much the same form as airlines. For a sense of the layout, see this Traditional Chinese page describing one operator's VIP programme (夜色娛樂城 VIP 計畫). On the matching side, this Traditional Chinese guide lists seven questions to ask before transferring VIP status to another platform (娛樂城 VIP 轉移). The questions apply almost unchanged to a hotel or airline match.

A sensible rule

Collect what your normal spending earns. Do not spend to collect.