Have you ever wondered how top brands keep their customers coming back? The key secret is a compelling Tiered Loyalty Program.
Tier based loyalty programs boost customers to interact more with the brand, earning points and climbing the ladder to get cool rewards and benefits.
As store owners, finding ways to retain customers might seem challenging, but our guide is here to light the way. This blog will help you learn about the essence of tiered loyalty programs and show you 5 examples from businesses that use them successfully.
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What is a Tiered Loyalty Program?
A Tiered Loyalty Program is a rewards system that businesses use to encourage customers to continue purchasing from them, but it will be in levels, or “tiers.”
Do you know that organizations with tiered loyalty programs see a return on investment that’s 1.8 times higher than those without tiers.
When a customer buys something or uses a service, they can earn points or rewards, and the more they buy, the higher tier they reach, and the better the rewards they get.
How does a Tiered Loyalty Program Work?
When customers start, they are usually in the lowest tier. They progress to higher levels as they make more purchases and accumulate more points. Rewards include discounts, special offers, coupons, or even exclusive products.
For example,
Imagine a coffee shop with three levels of a tiered loyalty program: Bronze, Silver, and Gold.
- Bronze Level: For every 5 coffees bought, get 1 coffee free.
- Silver Level: (Reach after buying 30 coffees) For every 4 coffees bought, get 1 coffee free + a 10% discount on snacks.
- Gold Level: (Reach after buying 60 coffees) For every 3 coffees bought, get 1 coffee free + a 20% discount on snacks and access to special promotions.
Tiered Loyalty Program Benefits
Implementing a tiered loyalty program can offer lots of rewards to customers, making them feel valued and appreciated. Here are some key tiered loyalty program benefits:
- Enhanced Customer Engagement: Customers are motivated to interact more with the brand to reach higher tiers and earn better rewards. Different levels of rewards, based on customer engagement, pull in 67% of consumers to join loyalty programs.
- Increased Customer Loyalty and Retention: Offering exclusive benefits and rewards makes customers more likely to stick around and stay loyal to the brand.
- Boosts Customer Spending: The desire to reach the next tier encourages customers to spend more. 74% of customers prefer brands with loyalty program tiers based on how much they spend per year.
- Positive Brand Perception: Recognizing and rewarding loyal customers enhances the brand’s overall image, creating positive word-of-mouth.
How to Set Up a Tiered Loyalty Program
Learn how to create a tiered loyalty program in easy steps. From setting goals to promoting it, we’ve got you covered.
Identify the business objective
Before creating a tiered loyalty program, you must know what you want to achieve. It could be things like attracting more customers, keeping the existing ones happy, or making people buy more products. It’s like setting a goal for what you want to accomplish with the help of the program.
Create a Simple Points System
Now, think about how customers will earn points. Will they get points every time they buy something? Or when they refer a friend? Keep it simple. For example, 1 point for every dollar spent. Make sure the rules are easy to understand.
Set Up the Reward Structure
Next, think about what rewards your customers would really like. Discounts are great, but they may also enjoy a special gift or a unique experience. The rewards system can be points, discounts, gifts, or special access to new products. Mix it up and offer a variety of rewards to keep things exciting.
Determine the Tier Levels and Benefits
Here, you can decide how many levels or ‘tiers’ to have in the program and what benefits or rewards to give at each level. For example, you might have three levels: Silver, Gold, and Platinum, each offering better rewards than the last.
Create Terms and Conditions
Every program needs rules. Create rules, or terms and conditions, that explain how the program works, how people can earn and use rewards, and other important information. It helps in avoiding misunderstandings and problems later on.
Market the Program to Customers
Once the tier program is ready, you need to tell people about it. It is done through various marketing strategies. Use advertisements, email marketing, social media, or other ways to inform customers about the new program and encourage them to join.
Invite your Customers to a Premium Experience with Loyalty Program Tiers. Communicate the value and encourage a more rewarding shopping journey!
5 Best Real-life Tiered Loyalty Program Examples
Let’s delve into real-world success stories of Tiered Loyalty Programs that have left customers delighted and businesses thriving. Discover the top five examples here.
Starbucks Rewards
Starbucks Rewards is a Tiered loyalty program designed to reward customers for making purchases at Starbucks. Every time you buy something, you earn stars, which can later be exchanged for free items.
Tier Structure and Benefits
The program has three levels: Welcome, Green, and Gold, each with its own set of perks. The more you spend, the more stars you earn, and the higher you climb in tier levels, unlocking more rewards and benefits.
- In the Welcome tier, customers will get one free tall beverage during your birthday month + One free size upgrade on a handcrafted beverage.
- In the Green tier (Should earn 5 stars within 12 months), customers will get all Welcome tier benefits + One additional free tall beverage with a purchase of 250g Whole Bean coffee + One additional free size upgrade on a featured beverage.
- In the Gold Tier (Should earn 25 stars within 12 months after Green level), customers will get all Green Tier benefits + two free customizations on any handcrafted beverage + One free tall-size drink after every 10 additional stars earned.
Success of the Program
This program is widely popular because it makes customers feel valued, encouraging
repeat purchases and brand loyalty.
Sephora Beauty Insider
Sephora Beauty Insider is a tier loyalty program that rewards customers for shopping at Sephora. Members earn points for every purchase and can later exchange the points for products, discounts, or other exclusive rewards.
Tier Structure and Benefits
The Beauty Insider program has three levels: Insider, VIB, and Rouge, each offering distinct perks. The more customers spend, the more points they accumulate, allowing them to move up the tiers and unlock greater rewards and benefits.
- Insider Tier: For entry-level customers, earn one point for every dollar spent. Offers include free shipping, birthday gifts, 10% off on seasonal savings, 2X points multiplier, Beauty insider cash, end-of-year discounts, access to (app exclusives, auto-replenish, reward bazaar), and exclusive events.
- VIB Tier: Customers reach this level after spending $350 in a year. Benefits include all other Insider rewards, 15% off on seasonal savings, 3X points multiplier + exclusive gifts.
- Rouge Tier: This is the highest level, accessible after spending $1,000 in a year. Customers receive all VIB benefits, 20% off on seasonal savings, 4X points multiplier + Rouge rewards, and first access to products.
Success of the Program
The program has been a great success. The special rewards in each tier encourage customers to interact more with Sephora. This program is a vital part of Sephora’s plan to keep customers coming back.
Marriott Bonvoy
Marriott Bonvoy is a tiered loyalty program formulated to reward guests for choosing Marriott’s range of hotels for their stays. For every stay, guests earn points and can later redeem them for free nights, upgrades, or other exclusive benefits.
Tier Structure and Benefits
The program comprises several levels: Member, Silver Elite, Gold Elite, Platinum Elite, Titanium Elite, and Ambassador Elite, each offering its unique array of privileges. As guests stay more frequently, they accrue more points and progress through the tiers, unlocking enhanced rewards and advantages.
- Member Tier Guests start earning points right from the first stay. They get access to complimentary Wi-Fi and member rates.
- Silver Elite (10 nights/year) Along with Member Tier benefits, guests get a 10% bonus on points earned during stays, and priority late checkout.
- Gold Elite (25 nights/year) Guests enjoy all Silver Elite benefits plus a 25% bonus on points, enhanced room upgrades, and a welcome gift of points upon arrival.
- Platinum Elite (50 nights/year) In addition to Gold Elite perks, guests receive a 50% bonus on points, lounge access, guaranteed room type, and a welcome gift of points + breakfast or amenities.
- Titanium Elite (75 nights/year) Alongside Platinum Elite benefits, guests get a 75% bonus on points, additional hotel amenities, and 48-Hour guarantee prior booking access.
- Ambassador Elite (100 nights and $20k/year) On top of Titanium Elite benefits, guests have access to a personal ambassador, Your24™ (flexibility to choose check-in and checkout times), and an invitation to an exclusive event.
Success of the Program
Marriott Bonvoy has been very successful and well-received because it makes guests want to keep coming back. By offering lots of different and appealing rewards, it keeps current customers happy and brings in new ones, helping Marriott stand out in the hotel business.
H&M Loyalty Program
H&M Loyalty Program is a tiered loyalty scheme aimed at rewarding shoppers for their purchases at H&M stores and online. Each time customers shop, they accumulate points which can later be redeemed for discounts or special offers.
Tier Structure and Benefits
H&M’s loyalty program operates on two tiers: Member tier and Plus tier, with each level offering its distinct set of rewards. The more customers shop, the more points they acquire, allowing them to progress to higher levels and unlock additional perks.
- Member Tier: Customers enter as members and can earn 1 point for every $1 spent. Customers with 0 – 499 points belong to the Member tier. They receive a 200 point = $5 bonus voucher, Exclusive offers & discounts, Flexible payment options, Birthday treats, Invites to shopping events, Digital Receipts, Free online returns, Free shipping over $40, Monthly giftcard giveaway, Double points days, and Garment collecting.
- Plus tier: Customers should reach 500 points to become a Plus tier member. In this level, customers will receive all Member tier benefits along with access to Free shipping, Unique experiences, Surprise offers and Special access to limited collections.
Success of the Program
H&M’s Loyalty Program has worked really well in getting customers excited and making them feel special. It encourages people to shop more at H&M by offering rewards and making them feel valued, which helps in building a stronger and positive relationship between the customers and the brand.
Ulta Beauty’s Ultamate Rewards
Ultamate Rewards is Ulta Beauty’s tiered loyalty program designed to reward customers for making purchases at Ulta Beauty stores. Every time you buy a product, you earn points, which can be later redeemed for discounts or free items, making the shopping experience even more enjoyable.
Tier Structure and Benefits
The program has three levels: Member, Platinum, and Diamond, each offering its unique perks and benefits. The more you spend, the more points you earn, and the higher you ascend in tier levels, unlocking more rewards and exclusive benefits.
- In the Member tier, customers earn 1 point for every $1 spent, and they receive a birthday gift, bonus points, redeem for discounts, and can earn double points during their birthday month.
- In the Platinum tier (Customers must spend $500), customers earn 1.25 points for every $1 spent. They receive all Member tier benefits plus a $10 birthday coupon and exclusive deals, gifts & early access.
- In the Diamond tier (Customers must spend $1200), customers earn 1.5 points for every $1 spent. They receive all Platinum tier benefits plus a diamond gift, $25 beauty service reward card and free shipping on orders over $25.
Success of the Program
Ulta Beauty’s Ultamate Rewards has proven very popular, as it creates a personalized and rewarding shopping experience for beauty enthusiasts.
Looking to engage your customers? Unveil the thrilling discounts and rewards in your brand-new tiered loyalty program now!
Final Words
Tiered loyalty programs are a powerful way for businesses to encourage repeat purchases and nurture customer loyalty. It’s important to make your program simple, fun, and valuable to your customers. Always be ready to make changes to your program to keep up with what your customers like.
A tiered loyalty program rewards customers based on their spending or engagement levels. Higher tiers yield greater rewards, encouraging customers to spend more to achieve elevated status and benefits.
Ideally, a loyalty program should have three to five tiers. This range keeps customers motivated while maintaining program simplicity and manageability.
Tiered loyalty programs offer enhanced customer retention, increased spend per transaction, improved customer engagement, and acquisition of new customers through positive word-of-mouth.
Yes, tiered loyalty systems often bring in more business by encouraging customers to increase spending and engagement to unlock more valuable rewards and privileges.
Different tier rewards can include discounts, exclusive access, complimentary items, priority service, and accrual of points at enhanced rates, catered to different levels of spending and engagement.
