If you’re facing challenges with customer retention, you’ve got to explore some awesome tiered loyalty program examples to spark some inspiration and win back those hearts! But before we dive in, let’s understand what tiered loyalty programs are all about.
Tiered loyalty programs are similar to regular loyalty programs, but they offer varying levels of rewards and perks based on customers’ loyalty and spending habits. These programs help build lasting relationships with your customers because they reward them more as they spend more.
I know it’s a bit cheeky, but starting one without enough inspiration can be challenging. Luckily, this article dives into five examples you can check out. It also explores the nature of tiered loyalty programs and why they effectively improve customer retention. So, let’s get into it!
Why You Need Tiered Loyalty Programs
Annex Cloud reports that customers in tiered loyalty programs have a 39% higher lifetime value than those not in loyalty programs. This increase is attributed to the lasting connection formed through the rewards and recognition provided in tiered programs.
Likewise, in a survey conducted by Merkle, it was found that 87% of consumers are open to maintaining an ongoing relationship with brands that offer a loyalty program. This is because tiered loyalty programs motivate customers to actively engage in different activities, such as:
- social media sharing,
- writing reviews to earn more points,
- and other loyalty points ideas.
If it isn’t already clear, tiered loyalty programs not only strengthen your connection with customers but also generate a steady flow of income through their active participation. As your customers continuously engage with your program, your revenue streams keep growing.
Moreover, a study conducted by Bain & Company reveals that a mere 5% increase in customer retention rates can lead to a remarkable 25% to 95% boost in profits.
Now, because tiered loyalty programs motivate customers to make repeat purchases and encourage loyalty, you can enjoy a substantial 25%-95% increase in profits! Isn’t that appealing?!
The Psychology Behind Tiered Loyalty Programs
You now know why you need them, but have you ever wondered why these are so effective?
Well, it’s all about how these loyalty programs tap into various aspects of human behavior, both cognitive and emotional. Just like any other loyalty program, they work by triggering a sense of accomplishment and satisfaction among your consumers.
But what sets tiered loyalty programs apart is their ability to set clear objectives. As customers progress through the tiers, they experience a sense of achievement, much like reaching milestones in games.
And speaking of games, the gamified nature of these programs triggers the pleasure centers in the brain. The excitement of earning points, climbing tiers, and receiving rewards activates dopamine release. This, in turn, reinforces the desire to participate and engage further.
Tiered loyalty programs also play on the principle of loss aversion. With higher rewards offered at higher tiers, customers may fear missing out and feel the strong need to achieve those levels.
Finally, as customers accumulate points or rewards in these programs, they quickly become more attached to the benefits. This endowment effect makes it difficult for customers to let go of those rewards, increasing their loyalty and likelihood of making repeat purchases.
As you can see, tiered loyalty programs strategically use psychological principles to engage customers on both rational and emotional levels.
By doing so, they create a positive feedback loop that greatly helps in customer retention.
5 Tiered Loyalty Program Examples For Customer Retention
1. Beauty Insider by Sephora
Many customers have been drawn to Sephora’s loyalty program for several reasons. First and foremost, the program operates on a tier-based system (Insider, VIB, and Rouge), allowing members to earn points with each purchase. These points can then be used to redeem rewards, freebies, and deluxe samples.
Beyond the basic rewards system, Sephora takes it a step further by leveraging customer data.
They analyze purchase histories and preferences to customize offers and recommendations for each individual. This tailored touch makes it even more appealing and encourages their customers to make more frequent purchases.
Additionally, Sephora offers exclusive access to its Beauty Insider members. This means they get first dibs on new products, special promotions, and exciting events that aren’t available to the general public. This sense of exclusivity makes customers feel valued and fosters brand loyalty.
2. Starbucks Rewards
Starbucks has a loyalty program with two levels: Green and Gold. Gold members get special perks like free refills, personalized offers, and early access to new products.
But that doesn’t stop there. Starbucks took it a step further by introducing a tier system that expands the points program. This allows customers to use their stars for more than just coffee; they can redeem them for extras like an additional espresso shot or even free merchandise.
What really sets Starbucks apart is its clever use of technology. They’ve made it incredibly convenient for customers by leveraging their mobile app. With this app, customers can easily track their stars and rewards, place orders in advance, and even pay for their purchases seamlessly.
3. Uber Rewards
Uber Rewards offers 4 simple tiers: Blue, Gold, Platinum, and Diamond.
Each tier has a specific starting point requirement. As you move up the tiers, the rewards get better, just like any other loyalty program with levels.
For example, if you’re in a higher tier, you’ll enjoy exclusive benefits like priority pickups, faster customer support, and special offers. These perks make regular customers feel like VIPs and give them a sense of being part of an exclusive club as loyal customers.
Beyond that, Uber has partnered with various companies to expand the rewards program beyond just rides. This means you can earn and use your points on eligible food delivery orders and other services from their partners, making the program even more appealing and versatile.
4. Love Your Body Club by The Body Shop
Just like any other loyalty program, The Body Shop rewards customers for their repeat purchases. On top of that, they treat their members to early access to new products, exclusive offers, and a special birthday discount when it’s their birthday month.
However, what makes them unique is their sustainability focus.
The Body Shop is renowned for its ethical practices and dedication to sustainability. This means that by joining the Love Your Body Club, customers can align themselves with these values, which can be a powerful incentive for many people who care about the planet.
To make things even more exciting, they have multiple membership tiers, each with its own set of benefits. This tiered system encourages customers to increase their spending to unlock higher rewards and enjoy even better perks. It’s like a fun challenge to level up and get more from the program!
5. Chick-fil-A One by Chick-fil-A
Chick-fil-A has an awesome rewards program with different tiers based on points earned from purchases. As you collect more points, you unlock higher tiers with even better rewards, like free food items, exclusive offers, and special birthday treats.
But what really stands out is how they’ve embraced mobile ordering, just like Starbucks.
They’ve designed a loyalty program that’s super convenient for their users, making it incredibly easy to keep coming back for more.
For example, their mobile app allows customers to place orders in advance and select their preferred pickup method, reducing wait times. Additionally, with Chick-fil-A One, customers can make contactless payments using the app, adding an extra layer of convenience and safety.
Most importantly, the mobile app makes redeeming rewards a breeze, making it nearly impossible for customers to resist using them.
Tiered loyalty programs work wonders in keeping your loyal customers engaged and satisfied. By providing a variety of exclusive benefits and rewards tailored to their loyalty and spending habits, you can not only retain their loyalty but also encourage them to shop more frequently at your store.
In this article, we guided you through the advantages of tiered loyalty programs and the psychological reasons behind their effectiveness. We also covered 5 amazing examples of tiered loyalty programs:
- Beauty Insider by Sephora
- Starbucks Rewards
- Uber Rewards
- Love Your Body Club by The Body Shop
- Chick-fil-A One by Chick-fil-A
Do you have any questions about this article? Let us know in the comments down below!