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A Guide to Tiered Loyalty Programs (+12 Successful Examples to Create One)

What according to you makes customers loyal? Sales or discounts? Here's the secret! The key to customer loyalty lies in long-term engagement and customer delight.

Salesforce reports that 91% of customers are likely to make another purchase from a brand after receiving a great service experience. And, a Bond Brand Loyalty report reveals that 66% of consumers switch brands on not feeling valued.

That's where tiered rewards programs enter the picture. A strategic business solution to inculcate brand loyalty and engage customers for longer. In this blog, you will explore the ins and outs of these programs with real-life examples. Read on to know more!

Table of Contents:

  • What are Tiered Loyalty Programs?
  • Benefits of Creating a Tiered Rewards Program
  • 12 Successful Examples of Tiered Loyalty Programs
  • How Can You Create An Effective Tiered Loyalty Program?
  • Invest in Customer Loyalty With Thriwe

What are Tiered Loyalty Programs?

Under a tier program, businesses reward customers based on their level of spending and engagement. These programs have different structures with multiple tiers like bronze, silver, gold, or platinum. New rewards and benefits are unlocked as customers reach higher tiers through specific actions.

Early access, special offers, earn and save more with a tiered rewards program.

For instance: Ulta Beauty's Rewards Program is a prime example of a tiered loyalty program. Customers earn points for product reviews, purchases, and attending beauty events. Higher tiers like Ultamate Rewards Member, Platinum, Diamond, and Silver Member offer diverse benefits like exclusive discounts, early access to sales, free birthday gifts, and more. That's how Ulta Beauty motivates their customers to stay engaged.

In short, these programs push customers to climb the engagement ladder and stay connected to the brand.

What are the Benefits of Creating a Tiered Rewards Program?

Interchangeably called milestone loyalty programs, let's have a look at how they can transform your business:

Boost in Customer Engagement

Imagine the impact on your sales when your customers are more invested in your brand. McKinsey reports that tiered programs boost customer engagement by 20%.

And, Sephora's Beauty Insider program is the perfect example to prove this. The brand has higher tiers like Beauty Insider, VIB, and Rogue to offer escalating benefits like exclusive discounts, early access to beauty events, and free birthday gifts. That's how Sephora's customers stay engaged, ultimately driving more sales.

Long-Lasting Customer Relationships

Brands make their customers valued with exclusive benefits in higher tiers. Such a customized approach strengthens customer relationships and builds brand advocates who promote and support your business.

Level up with tiered loyalty programs

Better Customer Retention

Frederick Reichheld of Bain & Company reports that a 5% increase in customer retention leads to a profit increase of up to 95% for the business. And, tiered rewards programs incentivize repeat business, reduced customer churn, and a profitable customer base.

Fetches Valuable Customer Data

Data is power. With tiered programs, brands fetch valuable insights into customer's choices, habits, and preferences. This data can be further used for target marketing campaigns, personalized offers, product development, etc to resonate better with your audience.

Enhanced Customer Lifetime Value (CLTV)

Customer Lifetime Value is an approach in which businesses understand how much money a customer is worth over their entire relationship with the business. By motivating customers to spend more and engage more, businesses increase their customer lifetime value which is a key metric for long-term profitability.

The above benefits highlight that tiered rewards are beyond spending. Here's taking a look at some examples:

Super-Successful Examples of Tiered Loyalty Programs

Take a look at why tier programs are a powerful tool for long-term allegiance and enhanced retention for businesses:

1. NikePlus's Multi-Faceted Approach

Members can earn points for engaging with the brand in multiple ways like participating in Nike events, and challenges, and sharing experiences on social media, beyond purchases. Every touchpoint with NikePlus is rewarding and inspires members to stay actively involved in the community. Provision of early access to new product launches, pre-sale opportunities, and members' exclusive previews are a few examples.

2. BMW Tiered Program

Offered to current BMW owners, current BMW financial services owner/lessee, former BMW owners, and Former BMW financial services owner/lessee, the BMW loyalty program offers BMW credit to the customers. Credit can be used for discounts and items and accessories for your car.

3. Hilton Hotel's Chain Loyalty Program

With over 6,500 hotels in 119 countries and being the most popular hotel rewards program, Hilton Honors provides diverse benefits of choosing its 18 hotel brands, its generous elite program, and a quick path to elite status with the Hilton Honors American Express Aspire Card.

A successful tiered program is dynamic and evolves as per your business and customer needs.

4. Hyatt Hotels Corporation's Loyalty Program

Members gather points for eating, stays, spa treatments, and other activities to incentivize free hotel stays and experiences. The World of Hyatt is free to sign up and allows customers to earn and redeem points during their hotel stays. For higher tier membership, you need to qualify for minimum nights spent, points gained or meetings hosted. Late check-outs, complimentary parking, premium internet, and last-minute assured availability are some of the benefits of this tiered loyalty program.

5. Marriott Bonvoy Multi-Tiered Rewards Program

There are six elite tiers i.e. Marriott Bonvoy Member, Silver Elite, Gold Elite, Titanium Elite, Ambassador Elite, and Lifetime Titanium Elite with benefits like club lounge access, room upgrades, and guaranteed elite status retention. This multi-tiered structure encourages loyalty to the Marriott brand.

6. Amazon Prime Rewards Program

The premium membership of Amazon goes beyond the traditional tiered programs as it offers benefits like exclusive deals, two-day free shipping, access to streaming services like Prime Video, early access to lightning deals, and more.

7. Myntra Insider

A popular fashion e-commerce platform that offers a 3-tier program – Insider, Trendsetter, and Icon to the customers based on their annual spending. With this, members unlock benefits like early access to sales, premium discounts, bonus points, and free altercations as they climb up the tiers.

8. Zomato Pro

India's leading e-commerce marketplace, Zomato has a simple tiered rewards program with 3 tiers – Lite, Super Saver, and Infinity offers increasing benefits like free deliveries, high-priority services and discounts.

9. McDonald's McCafe Rewards

Mcdonald's offers a two-tiered program based on points earned per purchase – Regular and McCafe Fan. With the Fan tier, you unlock birthday rewards, exclusive menu items access, and free beverages.

10. Domino's STARS

The famous pizza delivery giant features a three-tier program – Regular, Classic, and Domino's Black based on points earned on every order. The highest tier offers quick delivery, free pizzas, and exclusive deals.

11. MakeMyTrip Insiders

The well-known online travel portal, MakeMyTrip offers a tiered rewards program including tiers like Member, Silver, Gold, and Platinum with benefits like priority customer service, travel cash on bookings, and premium deals on flights and hotels.

12. Taj Inner Circle

Taj Group of Hotels flaunts its four tiers (Privilege, Club, InnerCircle Elite, InnerCircle Royale) which features benefits like room upgrades, priority airport assistance, and complimentary meals.

Thus, by implementing tiered loyalty programs, businesses are building strong customer bonding and driving customer retention and loyalty in the competitive landscape.

How Can You Create An Effective Tiered Loyalty Program?

Here's a roadmap to guide you in creating an effective tiered loyalty program for your business:

Define Tiers And Earning Criteria

Structure your program into tiers like Gold, Silver, Bronze, Platinum or Diamond. Establish a clear system of progressing through tiers based on purchase frequency, spending thresholds, or a blend of other facts.

For instance: Starbucks Rewards offers a two-tiered loyalty program (Green and Gold) based on earned stars per purchase. Green members earn 2 stars per dollar spent and Gold members earn 4 stars per dollar spent.

Provide Clarity in Guidelines and Communication

Structure the program in a way that customers can easily understand how to earn rewards and benefit from each tier. Make the information available on your app or website and ensure a smooth redemption process for the rewards through point redemption codes, in-store redemption options, or mobile-app integration.

Tiered loyalty programs are more than points because they value engagement.

Offer Tailored Rewards

Provide rewards that resonate with your target audience. Consider discounts, freebies, priority treatment like quick service, free shipping, early access to new launches, etc. Brands can think beyond products and offer premium quality experiences like workshops, meet-and-greet with their favorite stars, and more. Leverage customer data to create milestone-based loyalty programs.

For example: Spotify Premium personalized experiences by offering curated playlists based on customers' listening habits to differentiate the premium tier and add value.

Track and Analyze Program Performance

To monitor the key metrics, customer satisfaction, and redemption rates, use data insights to assess the program's effectiveness and identify areas of improvement. It is important to make sure that the tiered program remains relevant to your target audience.

Invest in Customer Loyalty With Thriwe

With different types of customer loyalty programs available, we understand that it becomes overwhelming for businesses. That's where Thriwe comes in. We simplify your approach to tiered loyalty programs so you can reach your business milestone. We help you with greater customer engagement, loyalty, and retention so that your customers feel valued.

Ready to invest in customer loyalty and retention with Thriwe? Connect with us!