Is a basic loyalty program enough to keep your customers coming back? These days, many businesses find it isn’t. That’s why more brands are turning to tiered loyalty programs to better engage their audience.
I’ve seen how adding loyalty program tiers can make a huge difference. It gives customers clear goals to aim for, keeps them excited, and makes them feel special. So, if you’re thinking about using a tier-based loyalty program, you’re in the right place.
In this article, I’ll show you:
- How tiered loyalty programs work
- Real-life examples of successful programs
- Tools to help you build one
Ready to take your loyalty strategy to the next level? Let’s dive in!
What is a Tiered Loyalty Program?
A tiered loyalty program is a rewards system where customers progress through different levels (or tiers) based on how much they spend or engage with your brand. Each tier typically offers increasingly valuable perks, giving customers a reason to stick with you and aim for higher levels.
Example: Sephora’s Beauty Insider Program
Sephora’s tiered loyalty program is a great example of how this system works. It has three levels: Insider, VIB, and Rouge. The higher the tier, the better the perks—and it’s all based on how much members spend in a year.
Here’s what makes it so effective:
- 40 million members across the U.S. and Canada
- Members spend 25% more after joining.
Overall, Sephora’s program proves that a well-designed tiered system can boost both loyalty and sales. It’s not just about perks; it’s about creating a reason for customers to keep coming back.
How does a Tiered Loyalty Program work?
A tiered loyalty program works by offering rewards to customers based on their level of engagement, with benefits increasing as they climb the loyalty ladder. Starting with basic perks at the entry-level, customers can unlock more exclusive rewards like special products, events, or services as they advance to higher tiers.
This structure not only keeps customers satisfied but also taps into their desire for achievement, creating a positive feedback loop that encourages more interaction with the business.
Pros & Cons of Creating a Tiered Loyalty Program
Tiered loyalty programs can be a really effective way to boost customer engagement, but they also come with their own set of challenges. I think it’s important to weigh the advantages and disadvantages before deciding if this structure is right for your business. So, here are the key pros and cons of creating loyalty program tiers to help you make an informed decision.
6 Steps on How to Create a Tiered Loyalty Program
Tiered loyalty programs are a great way to motivate customers to spend more and build stronger relationships with your brand, but setting one up can feel a little complicated. Here is a step-by-step process on how to create a tiered loyalty program that actually works:
Bonus: Creating a Tiered Loyalty Program with Joy.so
If you are looking for a reputable tool or app to assist you in creating an ideal tiered loyalty program, then Joy Rewards & Loyalty Program is a must-viewed option. This Shopify app allows merchants to establish various forms of tier based loyalty programs for their online stores.
Here are the basic steps to use the Joy app for creating a tiered loyalty program:
- Navigate to the Membership section > choose the VIP Tier option by clicking the Set up button.
- Set up your tier levels (e.g., Bronze, Silver, Gold) and define the criteria for each tier. You can add a new tier, too, if you like.
- Configure the design of each tier, Including the Icon, Box name, Card background, etc. Click Save & next to continue.
Launch your tiered loyalty program and promote it to your customers.
Set up email notifications to inform customers about their tier status and available rewards.
First, you need to set up the general settings with the basic information like Tier calculating rule, Tier demotion, or Tier reset. Click Save & next to proceed.
In the Subscription section, you need to choose either the Professional or Advanced plan, as tiered programs are not available in the free Starter plan.
Install the Joy Rewards & Loyalty Program app from the Shopify App Store.
For more detailed guidance, you can refer to Joy’s official documentation: Ultimate guide to setting up your loyalty program with Joy.
10 Main Types of Tiered Loyalty Programs
Understanding the different types of loyalty program tiers can help you pick the one that works best for your business. Belo is the breakdown of the 10 most common types, their key features, and benefits so you can make the right choice.
- Point-based Tiered Loyalty Program: Customers earn points for purchases or actions, progressing through tiers based on their accumulated points.
- Spending-based Tiered Loyalty Program: Tiers are determined by the total amount a customer spends within a set period.
- VIP/Exclusive Access Tiered Loyalty Program: Higher tiers unlock exclusive perks such as early product launches, premium services, or private events.
- Membership Fee-based Tiered Loyalty Program: Customers pay a fee to access tiered benefits and exclusive rewards, often with premium-tier options.
- Progression-based Tiered Loyalty Program: Customers move up tiers based on consistent engagement, encouraging long-term loyalty.
- Milestone-based Tiered Loyalty Program: Tiers are reached by achieving specific goals or milestones, such as a set number of purchases or anniversaries.
- Subscription-based Tiered Loyalty Program: Tier rewards are tied to a recurring subscription, with increasing benefits over time.
- Hybrid Tiered Loyalty Program: Combines multiple criteria like points, spending, and engagement to determine tier progression.
- Status-based Tiered Loyalty Program: Tiers reflect the customer’s current standing with the brand, such as frequent traveler status in airlines.
- Activity-based Tiered Loyalty Program: Rewards tiers based on customer activities, such as referrals, reviews, or social media engagement.
💡 Discover the Most Popular Types of Loyalty Programs That Keep Customers Coming Back!
8 Elements of a Successful Tiered Loyalty Program
Let’s explore the 8 essential elements that contribute to the effectiveness of a tiered loyalty program.
- Clear tier structure: A successful program should have well-defined tiers with easily understandable requirements. Some programs fail when customers can’t figure out how to move up the ranks.
- Attainable benefits: Each tier should offer meaningful rewards that are within reach. On several occasions, customers can quickly lose interest if the perks feel impossible to achieve.
- Transparent communication: Members should always know where they stand and what they need to do to advance. I’ve found that regular updates and progress trackers keep customers engaged and motivated.
- Exclusive experiences: Higher tiers should offer unique perks that go beyond discounts. VIP events or early access to new products really drive customer loyalty.
- Personalization: The program should use customer data to offer tailored rewards and experiences. From what I’ve observed, personalized offers significantly increase engagement and satisfaction.
- Regular program updates: Successful programs evolve to keep up with changing customer preferences. Brands that regularly refresh their rewards tend to maintain higher engagement levels.
- Easy point redemption: The process of using rewards should be simple and straightforward. Complicated redemption processes are a major turnoff for customers.
- Mobile integration: A user-friendly mobile app can greatly enhance the program’s accessibility and usage. Many loyalty programs thrive when customers can easily check their status and redeem rewards on their phones.
3 Examples of Popular Tiered Loyalty Programs
It’s helpful to look at real-world tiered loyalty program examples to see how these programs work in practice. Let’s talk about 3 examples of the best-tiered loyalty programs and why they’ve managed to capture so much attention.
1. Vinamilk
Vinamilk is a global dairy leader, ranked among the top 36 dairy companies worldwide, exporting over 250 products to more than 50 countries. Their tiered loyalty program, Vinamilk Rewards, was launched in Q4 – 2023 to enhance customer engagement and retention across their extensive retail network.
How do they implement the Tiered Loyalty Program?
Vinamilk’s tiered loyalty program, implemented through Joy Loyalty Program, rewards customers for purchases and brand engagement with a multi-tiered system. Customers progress through levels based on spending, unlocking increasingly valuable benefits such as milestone rewards, automatic discounts, free shipping, and access to new products.
This structure encourages repeat purchases and deeper brand engagement, effectively driving customer loyalty.
Key results
- Over 300,000 customer adoptions in the first 30 days
- More than 30 million customer engagements taken by customers
- 2 billion points rewarded and redeemed since the launch
- Covered 1,165 stores across 63 provinces and cities, distributing over 373,000 gifts
2. Uber
Uber is a leading ride-sharing platform with a global presence, and its app has been downloaded over 95 million times. Uber Rewards, their tiered loyalty program, has over 100 million members worldwide and offers four tiers: Blue, Gold, Platinum, and Diamond.
How do they implement the Tiered Loyalty Program?
Uber’s loyalty program, Uber Rewards, features four tiers (Blue, Gold, Platinum, and Diamond) where passengers earn points on eligible rides and Uber Eats orders. As users progress through tiers, they unlock personalized ride experiences and increasing perks, with points redeemable for ride discounts, upgrades, or charity donations.
This multi-faceted approach, combined with expanded services like Uber Transit and enhanced safety features, creates a comprehensive loyalty ecosystem that encourages frequent use across Uber’s platforms.
Key results
- For every 500 points earned, members receive $5 to spend on Uber
- Gold tier (500+ points) offers less waiting time on customer service calls and free cancellations
- Platinum tier (2,500+ points) provides locked prices for rides between two places and priority airport pickups
- Diamond tier (7,500+ points) grants access to dedicated phone support and occasional free upgrades to Uber Black
3. H&M
H&M is a Swedish multinational clothing company with a strong global presence in fast fashion retail. Their tiered loyalty program, H&M Membership, operates on a points-based system with two tiers: Member and Plus.
How do they implement the Tiered Loyalty Program?
H&M’s tiered loyalty program offers a simple points system with three tiers: Member, Plus, and VIP, each providing increasing benefits from basic points earning to free shipping and exclusive event access.
The program is integrated into H&M’s digital ecosystem through a mobile app and offers sustainability-focused perks, such as points for recycling clothes. This approach not only encourages repeat purchases but also aligns with environmentally conscious consumers, creating a loyalty program that resonates with H&M’s target audience.
Key results
- Over 120 million members across 26 markets, a 71% increase year-over-year
- Members spend 12-18% more than non-members annually
- 1 point earned for every $1 spent, with 100 points equaling a $5 reward
- Plus members (300+ points annually) receive free shipping on orders over $40 and exclusive offers
6 Tips for creating an effective Tiered Loyalty Program
After reviewing several tiered loyalty program examples, now is the time that I am going to provide you some tips to make your tiered program effective and keep your customers excited to stay loyal.
Conclusion
Through the post, we’ve explored the different types of loyalty program tiers, the key elements they need, real-world examples of tiered loyalty programs, and actionable tips to make them successful. To deliver your customers the best loyalty experience, you should make your tiered loyalty program simple, rewarding, and aligned with what your customers truly value.
