Why Tiered Loyalty Programs Are So Attractive to Customers

How to create successful tiered loyalty programs: see our best practices and 7 real-life examples of brands who have done an amazing job.

The cover image of Antavo's Tiered Loyalty Programs article.
The cover image of Antavo's Tiered Loyalty Programs article.

What makes customers truly loyal? The key lies not in sales and discounts, but in customer satisfaction and long-term engagement. According to Salesforce, 91% of customers say they’re more likely to make another purchase after a great service experience. In the world of loyalty management, there’s a feature that embodies this concept: tiers. But what’s the secret behind tiered loyalty programs? What makes them so irresistible? Let’s find out!

What Is a Tiered Loyalty Program?

A tiered loyalty program is a type of membership program where customers enjoy different loyalty program benefits depending on their rank. Unlike traditional earn & burn loyalty programs, tiered loyalty programs rank members into certain groups based on certain metrics. Each rank — or tier — is defined by a set variety of rewards, services or benefits, which increases in value as customers progress.

To better understand these loyalty program types, think about “love” as a strong emotional bond that’s required for a successful marriage, or even a deal or purchase. This bond sustains loyalty, which is the core component to repeated and frequent purchases. And that’s precisely why tiered loyalty programs are so powerful—they give customers a benefits structure they can really sink their teeth into and engage with for years to come.

Tiered loyalty programs offer different rewards based on milestones that members reach. These milestones can be a great way to increase member engagement because they add levels of exclusivity to the program.
Tiered loyalty programs offer different rewards based on milestones that members reach. These milestones can be a great way to increase member engagement because they add levels of exclusivity to the program.

As customers advance upward through a program’s tiers, they should have access to better and better rewards. And because the higher levels provide better benefits, these programs, by nature, make your customers feel appreciated and valued. They know they’re getting exclusive rewards that are not available to the majority of other customers, which makes them stick to your brand even more.

Antavo’s tier management module empowers you to create your very own tier management rules and logic based on your needs.

The 6 Benefits of Tiered Loyalty Programs

Tiered loyalty programs are a phenomenal way to get your customers more invested. According to the Global Customer Loyalty Report 2022, tiered program owners reported a 1.8x higher return on investment compared to programs that do not offer tiers. So, let’s see what makes tiered reward systems so uniquely effective for engaging customers and boosting revenue:

Those whose loyalty program includes tiers reported a higher ROI than those whose loyalty program does not include tiers.
Picking the right loyalty program structure can add further value and enable your program to generate additional revenue.

1. Shower Customers With Great Benefits and Privileges

Tiers are associated with benefits that incrementally increase in value. The higher the tier, the better the benefits and the more exclusive the brand experience. Tiers give program members positive motivation to continue purchasing from your brand and engaging with your loyalty program.

Reaching a higher tier level feels like an achievement, which motivates customers to keep ranking up.
Reaching a higher tier level feels like an achievement, which motivates customers to keep ranking up.

2. New Ways to Engage Customers

Tiers create natural opportunities to connect with your customers beyond transactions. You can create another layer of names, branding, color schemes, and imagery around tiers, which can create more excitement and more emotional engagement from customers. Use your unique branding in your rewards program and make it creative and specialized by designing program tiers to fit both your brand and audience.

Tiers create natural opportunities to connect with your customers beyond transactions.
Raise your customers’ competitive spirit by attaching higher-value rewards and benefits to the top tiers and applying different reward mechanisms per tier, including fixed benefits, behavioral triggers, and surprise & delight benefits.

3. Build Long-Lasting Customer Loyalty

Tiered programs establish a foundation for building long-term relationships between customer and brand — on an emotional level. Achieving a special status or rank makes members feel recognized by the brand while achieving incremental benefits creates anticipation and gratification. Customers see the advantages of committing to your brand and will return again and again.

Antavo’s back-office supports a wide range of tier structures, point-based, spend-based tiers and invitation-only tiers.
Antavo’s back-office supports a wide range of tier structures, including point-based tiers, spend-based tiers and invitation-only tiers for VIP programs. You can also mix and match various tier elements and loyalty features to build a ranking system that is unique to your brand, drives your KPIs, and mobilizes your customers.

4. Run a Loyalty Program Without Points or Expiration Dates

Using tiers is also great for running a loyalty program without points. This can be especially valid in luxury fashion when using points might be perceived as “cheap”. Expiring points can also be frustrating for customers and are a major undertaking for companies to properly communicate. Also, if you have tiers, long-time customers can keep their benefits without having to start all over again once they’ve redeemed their points.

If your customers are fed up with point expiration or want a more flexible way to spend points, tiered loyalty could be a great alternative. In this video, Zsuzsa Kecsmar, Co-founder, CMO & Head of Partnerships at Antavo, asks Jörn Roegler, CCO at Antavo, what tiered loyalty programs are and how they work.

5. Understand Your Customers Better

With the help of a tiered loyalty program, you can segment your customer base more effectively, by monitoring and analyzing member activities and interests. You can improve the customer experience they provide and create highly-targeted communication. Also, customers will feel that the brand looks after them.

Silver Tier Members enjoy free shipping for a limited time.
Personalized emails are a great place to highlight the privileges of your tiered loyalty programs. Let customers know what benefits they receive upon reaching the next level.

6. Shield Yourself From the Competition

When you have a tier and benefits that a customer can get without using points, you’ll be in a better position to defend customers against the competition. This is because all members will have benefits that are linked to future transactions. By attaching services like free delivery or extended returns to certain tier levels, people will be inclined to choose you over the competition, as they will receive additional benefits along with each purchase.

Use a tiered program and advanced loyalty mechanics to engage customers for the long term.
Use a sophisticated loyalty cloud and advanced loyalty mechanics to effortlessly manage your tiered loyalty program without any help from the IT team.

How to Create a Successful Tiered Loyalty Program

If you would like to retain your customers and grow their customer lifetime value, create a tiered loyalty program. Tiers help you set up the ladder – and the rules – that customers can follow to receive rewards and benefits. But instead of just collecting loyalty points indefinitely, members will receive a loyalty status that makes them feel more acknowledged and invested in the brand.

But that’s just the tip of the iceberg. Here’s a list of strategies to make your tiered loyalty program truly attractive to your customers:

1. Name Membership Levels to Increase the Feeling of Belonging

Let your creativity flow when choosing the name of each tier. To increase brand engagement, think about the best customer loyalty program names and titles that reflect your business’s personality and really speak the language of your target audience. For example, in the case of a nutrition supplement store, the level names could be: Rookie, Hardcore Builder, Shredded Superstar, etc. Be as fun and engaging as possible. This allows members to associate their levels of membership with their level of commitment to the community.

In Marvel’s loyalty program, participants can reach four levels: Insider, Agent, Elite and True Believer.
For more inspirational reward program names, just look at Marvel. In Marvel’s loyalty program, participants can reach four levels: Insider, Agent, Elite and True Believer. These statuses reflect how comic book fans might define themselves in the comic book community.

2. Pick a Structure that Reflects Your Strategy

There are two ways to set up a tiered loyalty program: based on tiers, or points. If your tiers are based on spend, customers reach new levels by spending more, and every tier corresponds to a specific spend milestone. However, using tiers based on spend limits the number of engagement touchpoints with the brand, and progression will generally be slower and less eventful. If, however, your tiers are based on points, customers will be able to advance through the ranks by making purchases and completing additional engagement actions, like completing a gamified profile, writing a product review, or performing athletic activities. This allows you to incentivize members to participate in a range of non-transactional activities and allows customers to earn points faster.

A tiered loyalty program example: tiers based on points.
Point thresholds must be well planned. If they’re very low, customers can easily achieve new levels by repeating certain actions. These have to be limited to a specific amount per month, so members cannot achieve higher tiers without spending.

3. Best Benefits for Your Best Customers

Bring in a touch of exclusivity by underlining and visualizing the difference in benefits. Each level should differentiate customers and reward them for their loyalty and engagement. The top tier must have at least 2-3 more privileges than lower membership tiers, and your best rewards should be reserved for your best customers. This adds an air of exclusivity to the loyalty program and gives a feeling of satisfaction and superiority to those who reach the top ranks. Furthermore, members in the top tiers will be motivated to continue achieving more rewards to get an even higher status that, perhaps, money can’t buy.

Our Bralette Club’s Peach Party Loyalty succeeded in finding a creative name for its loyalty program.
Our Bralette Club’s Peach Party Loyalty not only succeeded in finding a creative name for its loyalty program but also provided several exclusive membership perks to its top-tier customers.

4. Personalize Emails Based on Customer Tiers

By including tiers in your rewards program, you automatically have a way to offer more personalized benefits and send more personalized emails as well. Email and loyalty programs are a match made in heaven. If you are aware of customers’ tiers, you can set up automated email campaigns to nurture specific groups. When someone reaches the Silver tier, for example, you already know they are a returning customer. But if you tell them about the benefits of the Gold tier, they’ll be motivated to make more purchases. The goal here is to incentivize customers to engage more by showing off the benefits of higher tiers. By doing so, you’re encouraging members to move from their current customer life cycle stage toward the ultimate goal — real loyalty.

The message in Madewell’s email is short and sweet.
The message in Madewell’s email is short and sweet. The customer has earned enough points to qualify for free expedited shipping and can look forward to receiving two gifts a year.

5. Increase Customer Engagement Through Gamification

Gamification is an exciting feature of reward programs that can level up your brand community. By using addictive elements like progress bars and milestones, tiered reward programs are a perfect way to keep customers hooked. Gamification brings in fun, exciting elements while ensuring that customers earn something with every action or every win.

The brand leveraged the concept of gamification to enhance the Starbucks experience and, in turn, drive sales as well.
Leveraging the concept of gamification,Starbucks enhanced their loyalty experience and, in turn, drove sales as well. Each time a customer interacted with My Rewards with the app or made a purchase they would gain “stars”. Rewards vary depending on what tier the customer is currently in.

6. Establish an Exclusive VIP Tier to Cater to Status-Driven Customers

Exclusivity makes every customer feel valued. By giving better rewards to customers in your upper tiers, you are showing them that you value their business more. This not only improves their experience with your brand but also improves the likelihood of them becoming brand advocates. Advocates are passionate members of your community who can’t wait to tell everyone else about their experience, making them your most valuable marketing asset.

Members can only enter LuisaViaRoma’s Sneaker Club by enrolling in the company’s loyalty program, Privilege.
Members can only enter LuisaViaRoma’s Sneaker Club by enrolling in the company’s loyalty program, Privilege, earning 1,000 loyalty points, and redeeming their points for access to the Sneakers Club. Customers who can afford this entrance fee enjoy a position of privilege with benefits that are not available to other members, including early access to the latest styles and limited-edition sneakers.

7. Spice Up the Loyalty Experience With Experiential Rewards

Experiential rewards create an emotional connection with customers. Offer benefits that reward customers outside of the buying cycle. Invite them to a product launch, arrange celebrity meet-and-greets, and create a memorable experience. Exceeding customers’ expectations and adding experiences to your tiered loyalty program will help you stand out.

Love, Bonito offers its LBCommunity+ gold members a complimentary private session with one of its Style Ambassadors.
In Love, Bonito’s loyalty program, the LBCommunity+, members receive special partner-brand perks and the opportunity to book a stylist.

8. Don’t Forget About Mystery and Hidden Tiers

Create a separate secret tier specifically for influencers and brand ambassadors. This will make it easier for you to manage the loyalty program and provide ambassadors with special rewards and benefits. By implementing a hidden tier in your loyalty program, you can also differentiate between your customers and easily segment your most valuable audience. This will help you offer them the best rewards of all.

Diamanti Per Tutti aims to generate buzz and word-of-mouth around its brand by giving advocates special treatment.
Diamanti Per Tutti generates buzz and word-of-mouth around its brand by giving advocates, influencers and top spenders special treatment. A select few are invited to a hidden VIP tier, which is aptly named ‘Ambassador’. The company actively seeks out influencers and advocates and invites them to the program.

7 Awesome Tiered Loyalty Program Examples

There are a wide variety of different types of tiered loyalty programs, so let’s see some great real-life examples that you can use for inspiration.

1. Sephora – Beauty Insider

Sephora’s Beauty Insider loyalty program is one of the most talked-about loyalty programs—and for good reason. Members love it not only because of the tiered approach, but because it provides experiential rewards, unlike pure points programs.

  • Members receive perks like earning more points per dollar spent and using points for samples or full-sized products
  • Point multiplier events, free shipping, and gifts for reaching the next tier are also among the benefits
  • Members of the Rogue tier get to enjoy being first in line for new product launches, restocks, and more
Another benefit to Sephora’s loyalty program is that members get invited to exclusive events, meet and greet, trips and more.
Another benefit to Sephora’s loyalty program is that members get invited to exclusive events, meet and greet, trips and more.

2. Marriott – Marriott Bonvoy

Marriott International is a great example of a company using a tiered reward program as a tiebreaker in a competitive market. Marriott Bonvoy offers its members rewards and experiences that truly make a change in their hotel stays.

  • Customers not only earn points with hotel stays, but with credit card usage, car rentals, flights and more
  • They can also redeem their points for travel, renting a car or even for gift cards
  • Members can use their points for exceptional experiences, like tickets to music festivals, sporting events, or exclusive culinary events
Marriott International is a great example of a company using a reward program as a tiebreaker in a competitive market.
Marriott Bonvoy offers six tiers and an additional three-tiered lifetime membership, called Lifetime Elite, for its most dedicated guests.

3. Uber – Uber Rewards

With Uber Rewards members earn points with every eligible dollar spent on rides with Uber and orders with Uber Eats. Whether they’re just starting out or they ride with Uber every day, passengers can rack up points and access exclusive membership benefits at each level.

  • The free loyalty program is easily accessible through the Uber app
  • Diamond tier members receive premium support, highly rated drivers, and double points on Eats
  • Members earn 10 reward points per eligible dollar on the route of their choice and get cancellation fees refunded when they rebook within 15 minutes
With Uber Rewards, members earn points with every eligible dollar spent on rides with Uber and orders with Uber Eats.
Platinum and Diamond tier members also receive priority access to the closest drivers when riding from most airports.

4. American Airlines – AAdvantage program

Members of the AAdvantage program earn miles when they fly on American, oneworld, and other participating airlines. Members can use their miles for rewards like flights to nearly 1,100 destinations worldwide, upgrades and vacations.

  • Members earn miles for every dollar spent at restaurants, plus they can shop at over 950 online stores to increase their mileage balance
  • Travelers can reach travel rewards faster by purchasing AAdvantage bonus miles with Mileage Multiplier
  • Members can also earn miles when making a donation, receiving 10 American Airlines AAdvantage miles for every dollar with every donation of $25 or more
Members of the AAdvantage program earn miles when they fly on American, oneworld, and other participating airlines.
AAdvantage programs luxury experiences help make members’ travels as seamless as possible. They can choose from several levels of service and add what they need to personalize and enhance their airport journey.

5. philosophy – philosophers rewards

Philosophy’s rewards program is divided into three tiers: optimistic, confident, and empowered. Each tier gives points to customers for every purchase. By joining a higher tier, customers can enjoy special sales days plus free shipping.

  • Customers instantly earn 100 points upon joining
  • Members of the loyalty program receive recommendations based on their shopping habits, which can help them rank up to the next tier
  • Rewards members can gain extra points for reviews, referrals or by connecting on social media
Philosophy’s rewards program is divided into three different tiers, optimistic, confident, and empowered.
In a monthly email to its members, philosophy includes a gamified “Gratitude Meter” that lets them know how close they are to the next tier.

6. e.l.f. – Beauty Squad

e.l.f. Beauty Squad is a loyalty program with major rewards and surprises for every e.l.f. fan. Beauty Squad members earn points for any e.l.f. Cosmetics purchase and a variety of other activities. There are three tier levels – FAN, PRO, and ICON – and as you advance to a higher level, you unlock access to more perks.

  • Members earn points for any e.l.f. cosmetics purchase made at a retailer by uploading a photo of your receipt or online order confirmation
  • Customers also receive points for completing their beauty profile, connecting on social media, writing a review, signing up for email or texts, browsing e.l.f.cosmetics.com, and more
  • Icon tier members benefit from free shipping and trying new products before launch, for free
Members of e.l.f. Beauty Squad’s top-tier receive free entry to exclusive sweepstakes, as well as surprise offers and opportunities.
Members of e.l.f. Beauty Squad’s top-tier receive free entry to exclusive sweepstakes, as well as surprise offers and opportunities.

7. Lancôme – Elite Rewards

Lancôme Elite Rewards is an exclusive rewards program designed to delight and treat Lancôme lovers. The brand continuously plans new surprises and experiences for its most dedicated members.

  • The brand’s loyalty program is based on spend; points can be redeemed as vouchers and spent online
  • Members earn 50 bonus points upon signing up and extra points for following the brand on social media
  • Customers receive samples with every purchase, exclusive offers, access to private events and birthday rewards
Lancôme Elite Rewards is an exclusive rewards program designed to delight and treat Lancôme lovers.
Lancôme Elite Rewards offers their Gold tier members 5-day early access to new launches and promotions, as well as double point events and access to participate in three exclusive promotions.

Aim for the Top Tier

Tiers provide a goal for members to shoot for, and therefore an incentive to keep up their interest in your tiered loyalty program for far longer. This, in part, is because preventing the loss of something valuable is more important than acquiring new things, which is why members are just as focused on maintaining their current tier as they are on reaching a higher one. That’s precisely why they will stick with your company instead of choosing another brand.

Setting milestones based on loyalty points earned encourages your customers to interact with every aspect of your program, while moving customers through tiers based on dollars spent increases their lifetime value.

Whenever you require help introducing or revamping your own program, our team of experts is here for you, just book a demo or send an RFP.

And don’t forget to download Antavo’s Global Customer Loyalty Report 2022, an in-depth report that showcases dozens of statistics as well as future industry trends to help you navigate the world of next-gen loyalty programs.

A banner recommending to download Antavo’s Global Customer Loyalty Report 2022.

Headshot of Zsuzsa Kecsmar, Co-founder, CMO and Head of Partnerships at Antavo

Zsuzsa Kecsmar

Zsuzsa is the Co-founder, CMO and Head of Partnerships of Antavo. She has experienced Antavo grow from a startup into a scaleup. Listed by Forbes as one of Europe’s top 100 female founders in tech, Zsuzsa is a former journalist recognized by the European Commission.

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