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Segmenting Your Loyalty Program

Jacob Brain


Depending on the design of your loyalty program, segmenting your loyalty program might be a vital part of your overall loyalty strategy. Your product and customers may be so diverse that you will have a hard time creating a program with incentives that truly speak to each customer in their respective level. But, segmentation can give your program “tiers” that allow you to be more effective. So, how do you determine tiers? We’ve got suggestions below to help you get started.

Segment by Dollars

If you don’t have an all-in strategy for loyalty, it’s likely because your customers purchase at different amounts or levels. It’s hard to think about giving one reward to all customers, when some are in the thousands or dollars, while others are in the hundreds. When you create tiers based on price, make sure to keep the number of tiers low, and the division high. Establish different classes of customers, and you might even create two different programs if the products are very different as well. You may be familiar with “gold”, or “VIP” level programs. This is essentially what you would need to do as well. Just make sure being a VIP really means something.

Segment by Offerings

If you sell various products or services, you might segment based on your offerings. A good example of this might be for a service that does a lot of small offerings, but also has clients who use all their offerings. An example might be a storage facility that does truck rentals.  You might find that loyalty will work better for one group or the other, and might be a strategic advantage for your offering as well.  Product lifecycle and frequency might help you make that determination.

Segment by Customer Attributes

You might have a case where the customers themselves have an attribute that would allow you to segment them for different loyalty aspects. Geography is a good example. You might have a loyalty program for customers who live next to your store or restaurant, vs. those who don’t.  You could even base your program on pure affinity of your product or service. There may be something specific to your customers that makes a simple designation to allow you to build more value faster with segmentation.

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