To mitigate loyalty erosion, which design approach is most effective?

• A. Tiered rewards that offer fresh rewards
• B. Flat rewards for all customers
• C. Reducing rewards over time
• D. Replacing rewards with price cuts only

Answer: (A)

The main idea here is using progression and novelty to keep customers engaged with a loyalty program. Tiered rewards create a sense of progression: as customers spend more or stay longer, they rise to higher levels with better benefits. that ongoing growth keeps people motivated to stay active rather than drift away. Adding fresh rewards regularly introduces novelty, so even high-tier members have new perks to pursue and don’t get bored with the same benefits. This combination strengthens attachment to the program and encourages continued, increasing engagement over time.

Flat rewards for everyone can feel static and fail to reward greater loyalty or higher spending, leading to plateau and waning interest. Reducing rewards over time signals diminishing value, which can push customers to churn. Replacing rewards with price cuts shifts the focus to cheapest option rather than building ongoing loyalty and emotional connection with the brand.