Rethinking the Three-Tiered Rewards Program
The tiered rewards program has emerged as a valuable tool to acknowledge loyalty among the casino’s most valuable players and allows the casino operator to bestow certain privileges on them. Tiered rewards programs are based on the Pareto Principle, also known as the law of the vital few, which states that 80% of the effects come from 20% of the causes. Applied to business, it means that 80% of business volume comes from20%of customers. In reality, an examination of most casino databases shows that upwards of 85% of business comes from 15% of customers and it is for this reason that tiered rewards programs are created: to provide higher levels of service and amenities for the casino’s most important customers and to publicly acknowledge their loyalty.
When embarking upon a tiered rewards program, most casino operators initially employ a three-tier model consisting of a base tier, a middle tier and a top tier. There is no qualification
required for the base tier while the latter two premium tiers require substantial amounts of gaming activity in order to achieve premium tier status. The base tier normally contains
the bottom 90% of the total database. The middle tier contains the 90%-98% segment and the top tier contains the top 2% of the database.