Many banks have multiple tiers because the value a customer is worth increases as they move from one tier to the next. As a customer moves up, their benefits increase causing them to utilise their card more, which in turn increases your share of wallet, retention rate and revenue.
This is invaluable to card issuers as gaining a new customer can be up to 25% more expensive than retaining one.
Having multiple tiers means you can always offer your customers more, and as long as they're happy, there's a likely chance that they will stay with you and progress through the tiers.
To move customers from a free to a paid tier, consider using card-linking to offer rewards. This creates a hassle-free user experience which will further strengthen your retention rate and the bond your customers have with their card.
To discover more about higher-tiers and the impact of card-linking, continue reading below.
The value of higher-tier customers
Higher-tier customers should not be overlooked as they have a stronger emotional connection to you and their card.
These customers are your most loyal, they spend more, and are reliant on their card because they're incentivised by the benefits the higher tier has to offer.
They're willing to show interactional behaviour and complete reviews or provide feedback as it's found that 75% of customers are happy to share personal data for personalised offers and rewards.
And as higher-tier customers strive to obtain rewards or benefits, they're easier to upsell, as you can encourage them to buy something extra to be able to achieve a specific reward.
Additionally, if you have a strong tier structure, you're likely to see an increase in referrals as your customers will want to willingly share their positive experience with those around them.
You know what they say - the best form of marketing is word of mouth.
So, overall, what is the value of higher-tiered customers?
Increased spend and frequency
Increased share of wallet
Increased retention rate
Increased customer data
Stronger position to upsell
Increased reviews and feedback
Overall, increased revenue
Migrate your customers to a higher tier plan
To migrate your customers to a higher-tier plan, the most important first step you can take is to dig deep into your customer data. Analyse the customer feedback you've obtained, customer lifetime value scoring etc. and answer these questions:
What are your current patterns of customer migration?
What are the reasons for this movement?
What customer categories are in place right now?
Do some categories have the ability to migrate upward?
Consider carrying out further customer feedback to gain relevant information.
After this, decide your customer migration goals. What exactly do you want to achieve and how long do you think this would take?
Next, you'll want to determine the incentives you wish to offer and keep your customers updated on what they could benefit from. When you do this, consider trigger-based messaging so that every customer receives the right information. For example, if a customer hardly ever uses your card to dine out with, consider nudging them with the relevant benefit that could change their transactional behaviour.
What makes a strong value proposition?
To determine the right benefits for your higher tier, you have to consider what would strengthen your value proposition.
This is where card-linked rewards come into it.
Using card-linking for rewards enables you to strengthen the relationship a customer has with their card by removing the need for a bunch of plastic loyalty cards, making their payment card an intrinsic part of their daily behaviours.
As the customer only has to rely on one card, a seamless user experience is created which allows customers to easily achieve benefits and rewards.
These rewards of course could be with companies such as Amazon or Uber, but are these benefits luxurious enough for customers to want to move to a paid tier?
You have to analyse your customer behaviours to figure out what would be unique for you to offer.
An example could be LUX.
By doing this, your customers gain free access to our membership app (RRP £200) and will be able to earn up to 10% of their restaurant spend back in reward points. These points can then be spent on over 100 luxury rewards. All they have to do is pay with their card after they've dined at a LUX venue.
And with over 300 hand-picked, high-quality restaurants, bars, cafes and pubs across the UK, only the finest experience is promised.
Our premium rewards scheme will strengthen the relationship between your customers and their payment card as they must continue dining to be able to earn our rewards. And as we only partner with high-end restaurants, we're sure to bring the luxury to your value proposition and help you move customers from a free to a paid tier.
If you're interested in knowing more about LUX or card-linking, please email firstname.lastname@example.org