Step 1: Decide whether customers enter tiers based on dollars or points.

VIP programs are built around the idea that customers need to move through a number of different levels based on either how many points they’ve earned or how much money they’ve spent over a certain period of time.  

📝  Pro Tip:

Running a points program? Points is the way to go.  
Running a stand-alone VIP program?  Revenue’s the answer.

The other factor you need to consider is time.  How long do your customers have to earn points or make purchases in order to join each of your tiers? 

Smile.io allows you choose whether your customers’ position in your program is based on the past 365 days or the amount of time your program has been live (also known as all time). The benefit of a rolling 365 day period is that customers will be pushed to try to keep their status year after year instead of simply achieving it once.

📝  Pro Tip:

If your product is a consumable good or has high purchase frequency, use a rolling 365 day period.  Otherwise, use all time.

Step 2: Decide how many tiers your program has.

You can’t have a VIP program without tiers, and the number you use can make a big impact on your customer experience.

📝  Pro Tip:

When it comes to tiers, our magic number is 3.

This structure allows you to effectively bridge the gap between entry level shoppers and your best customers, making their movement through the program easy to see and understand.

In order to run an effective VIP program, you need to offer at least 2 tiers but never more than 5.  When you begin organizing customers into so many groups, your program becomes confusing and much too difficult to communicate to your customers.  This will severely impact your participation and engagement rates and could have a negative effect on your ROI.

Step 3: Set tier entry milestones.

Now that you’ve decided whether your program is structured around revenue or points earned, you need to decide what customers have to achieve in order to enter each tier.  

📝  Pro Tip:

Your top tier should have no more than 5% of your customers.

Since a VIP program is largely based on status, your top tier should always have the fewest customers.  This will keep the exclusivity of your top tier in tact while motivating customers in your bottom two tiers to engage with your brand more in order to join that elite group.  

The best way to motivate your customers is by making your tiers achievable but challenging.  Customers shouldn’t be able to enter your second tier immediately - it should instead be designed to encourage people to be better than average. 

As a starting point, set your tier entry milestones based on multiples of your store’s average order value. This makes each successive tier more aspirational and tougher to achieve the more your customers engage in the program, pushing them to work harder to achieve each goal.

Step 4: Choose rewards & perks.

Rewards and perks make your tiers valuable for each of your different customer groups.

To get the most out of your VIP program, it’s important to understand the difference between a perk and reward.

Rewards:

Rewards are issued through Smile and can include things like discount coupons, free shipping, and bonus points.

Perks:

Perks are not issued through Smile and can include things like early access to sales, free products, and special events. 

📝  Pro Tip:

Don't offer more than 5 rewards & perks per tier.

When it comes to perks & rewards, less is always more.  Offering more than 5 rewards & perks per tier makes your program extremely overwhelming.  Keep it simple to keep value visible.

Start by choosing how many points per dollar members of your lowest tier will earn, and build each successive tier from there.  

You can also offer your customers tier entry rewards.  These are one-time rewards customers earn only the first time they enter a given tier, regardless of whether your program resets every year or not.  

Since every customer starts in tier 1, this type of reward should not be given to members when they enter your first tier.  This would give your customers too much too fast, making your program less valuable.  Offer shoppers something like dollars off coupons, bonus points, and free shipping only for moving into your upper tiers.

📝  Pro Tip:

Only offer entry rewards in tier 2 and higher.

Step 5: Name your tiers.

Last but not least, you want to give your program some flair.  The best way to do this is by naming each of your tiers. 

Puns, alliteration, and product names are all great ways to connect your tiers to the rest of your brand. 

📝  Pro Tip:

Use names that relate back to your brand and the products you sell.

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