THE PULSE: Survey shows confusion and social class frustration in actually getting value out of loyalty programs.

WHY IT RATES: Is that the Pharrell Williams song playing in the background? It must be, because this little nugget will make airlines happy. Why? Because if a third of consumers can’t identify which tier they belong to, it’s safe to assume a good portion of them also don’t track their frequent flier miles and points. Now the airlines can take that nice empty seat that one of their customers has enough points for but isn’t aware, and sell it. Caveat emptor, indeed. – Rich Thomaselli, TravelPulse airlines editor

Nearly one-third (32 percent) of U.S. and Canadian consumers can’t identify which tier they belong to in their favorite loyalty rewards programs, according to a study released today by COLLOQUY.

The stunning lack of awareness of basic tier status is a key finding in Fears for Tiers: 2014 COLLOQUY Study on Membership Status In Loyalty Programs. Study findings are based on a February 2014 survey of 3,077 U.S. and Canadian consumers. COLLOQUY is a leading provider of loyalty marketing publishing, research and education.

COLLOQUY’s research reveals that the familiar gold, silver and bronze tiering system no longer works. The study shows the three-tiered structure is outdated as a way for brands to keep their customers engaged – sometimes creating confusion rather than inspiring loyalty.

“Savvy shoppers and travelers are all too aware of the recent onslaught of changes to rewards programs,” said study author and COLLOQUY research director Jeff Berry.  “Brands want to revive consumer engagement simply by updating rewards, but that exacerbates confusion about tier levels and can impose so many limitations that upward movement is perceived as unattainable.”

Fears for Tiers, in fact, shows the chasm between those able to reach the highest tiers and those trapped in the bottom tier – due to economic status – is widening. Consumers with incomes below $50,000 a year are more than 50 percent less likely than those with incomes more than $100,000 to make it to the high tier of a program. Moreover, 42 percent never make it out of the low tier.

Americans and Canadians deeply believe all men and women are created equal, but the same cannot be said for customers. No less than 75 percent of consumers said it’s acceptable for businesses to give special treatment to members of their loyalty programs.

Some travel weary road warriors are resentful when they learn the person stretched out in a first-class airline seat next to them simply purchased the points or miles needed to achieve that luxury experience. But the resentful road warrior is a distinct minority. Fully 69 percent of survey respondents said it’s fair for customers to purchase a higher tier membership if they want to receive the same benefits as those who earned their status through program participation. 

The COLLOQUY tiering research sheds light on a key gender difference. Hard benefits, such as monetary or cash rewards, are more likely to motivate women (84 percent) than men (81 percent). The positive feeling of reaching a higher tier status is stronger for men (39 percent) than women (33 percent).  

In other key findings:

• 50 percent of survey respondents said they have increased their spending or changed other purchasing behavior in order to achieve a higher tier status in a rewards program
• 33 percent of low tier members do not think they are properly acknowledged for their participation in a program, even though they participate whenever possible
• Non-travel program members are almost twice as likely as those in travel programs to be unsure of their tier level (34 percent to 16 percent).

COLLOQUY’s tiers study is available for a free download at www.colloquy.com/tiering. The survey margin of error, which measures sampling variability, is +/-1.8 percent on the full base, 19 times out of 20.

Source: COLLOQUY press release