Best Practices

Tier Structure Design

Progressive Incentives

• provide clear value jumps motivate customers to reach the next tier

Achievable Entry Tier - Set Bronze/Base tier at $0 minimum spend

• Every customer starts with some reward, building immediate loyalty

• Typical cashback: 1-3% for base tier

Realistic Progression

Space tiers based on your Average Order Value (AOV) and purchase frequency:

If AOV = $75 and customers order 3x/year:

• Bronze: $0 (everyone qualifies)

• Silver: $300 (4 orders)

• Gold: $750 (10 orders)

• Platinum: $2,000 (27 orders / multi-year)

Sustainable Cashback Rates Calculate based on your profit margins:

Example with 40% profit margin:

• Bronze: 2% (5% of profit)

• Silver: 5% (12.5% of profit)

• Gold: 8% (20% of profit)

• Platinum: 12% (30% of profit)

Evaluation Period Selection

Choose Annual When:

You have seasonal products with predictable buying cycles

• You want to encourage regular annual spending

• Your customer lifetime is typically 3+ years

• You want to prevent "one-time big spenders" from staying top-tier forever

Example: Fashion retailer with seasonal collections

Choose Lifetime When:

• You sell big-ticket items with infrequent purchases

• Customer lifetime value is more important than annual value

• You want to reward long-term loyalty permanently

• Purchase cycles are irregular or unpredictable