Promotion Tier Definition
A promotion tier (level) is a separate level within a cart promotion that usually offers a higher discount for meeting a higher campaign condition, most typically a larger order amount. Promotion tiers are used to gamify a promo campaign, increase user engagement and increase AOV by offering better discounts at higher levels and order sizes.
For example, you can set up a tiered promotion (otherwise known as a staggered promotion) featuring such tiers (levels):
- For orders below $30, give 5% off
- For orders below $50 but above $30, give 10% off.
- For orders above $50, give 20% off.
Avon followed a similar pattern and offered their customers a tiered cart discount on different order values with the promo code TIER25:
What is the difference between tiered pricing and volume pricing?
With tiered pricing, once the customer reaches the endpoint of a particular tier, for instance, buys 5 products, they move on to the next tier and the price of the product changes with each tier. For example, as the first 5 products cost $10 each, the 6th will be priced at $8.50 and this price will continue up to reaching a new tier which is, let’s say, 10 products. Then, the price of the individual product will change to $7.
- Accordingly, for purchasing 15 products, the customer will pay the price of $127.5 (5 x $10 + 5 x $8.50 + 5 x $7 = $127.5).
With volume pricing, the calculations will be a little different considering the fact that in this system, as soon as a customer reaches a particular number of products, the price of all of the items changes – it is lowered. For example, if the customer decides to buy only 5 products, they will pay the price of $10 per product. However, if they buy 10 products, each of those 10 will cost $9 dollars. If they buy 15 products, they will pay $8 dollars for each.
- Accordingly, the price for 15 products will amount to $120 (15 x $8 = $120).
To learn how to build tiered promotions, go here.