Today’s online shoppers switch between multiple brands to get the best services and expect rewards for their repeated purchases. Simultaneously, e-commerce businesses capitalize on changing customer behavior to achieve long-term engagement. Personalized services, timely delivery, and easy reward points collectively contribute to a great online shopping experience.
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What is a Tiered Loyalty Program?
Tiered loyalty programs are designed to provide incentives to customers with every purchase in order to motivate higher spending. These programs deliver tier-wise value to customers based on their engagement and spending. Upon spending a certain amount, customers can unlock new rewards such as gift cards, coupons, free products, credit points, and discounts.
With higher spending, customers can unlock a higher tier of rewards. Tiered incentives develop an emotional bond with customers and improve long-term engagement.
As customers reach higher tiers of the rewards program, they unlock more and more exciting discounts and benefits. The feeling of getting exclusive benefits makes customers stick with a brand for longer periods of time.
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The Secret to a Successful Tiered Loyalty Program
The success of a tiered loyalty program is measured by customer engagement. The more a brand interacts with its customers, the more loyal they become. Instead of focusing on giving out benefits, businesses implementing a tiered loyalty program must pay attention to customer engagement strategies.
Lancôme, Ulta, and Total Tools offer the most successful tiered loyalty programs that are designed to improve customer lifetime value and engagement. When customers know that they are at a certain level of a tiered loyalty program, they feel more valued and acknowledged. Here are some of the ways to build a successful tiered program:
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Ensure that signing up is easy for customers
Going through long and tiring registration processes frustrates customers and also makes them switch to another brand. Therefore, the sign-up process for becoming a member of a tiered loyalty program must not take more than a few minutes.
It should be designed to require only the most important information in the easiest steps possible. Considering a tiered program, the process to earn loyalty points must also be quick and convenient.
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Communicate clearly about program rewards
Not only should customers be able to earn loyalty points easily, but they should also be able to know and comprehend the rewards they will receive with each new tier. Once a customer has fulfilled the requirement to receive a particular reward, they must be able to redeem it easily. When a tiered loyalty program is easy for customers to understand, the perceived value of a brand increases. As a result, there are higher chances of repeat purchases.
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Make rewards easy to earn by tailoring loyalty offers based on purchases
Personalization is king when it comes to offering loyalty rewards. Customers get attracted to brands that recognize their choices to offer relevant rewards. The ideal scenario for a successful tiered loyalty program is when a member receives personalized rewards shortly after making a purchase. To achieve this, e-commerce businesses need to incorporate AI-driven omnichannel loyalty solutions that present all the required information in real time.
Quick delivery of rewards and benefits results in a positive impact on customer loyalty. On the other hand, if rewards are delayed, customers begin to mistrust the brand and ultimately abandon it altogether.
Leveraging the data collected by modern omnichannel retail solutions, brands can understand and work around customer behaviors to create a pleasant experience. With such tools, achieving the right target through a tiered loyalty program doesn’t remain a challenge.
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Tiered Loyalty Program Examples
Every brand and retail business has its own take on tiered loyalty programs, but the end goal is to reward members along every step of their journey. Some of the most successful tiered loyalty programs implemented by major brands are listed below. Let’s take a deeper look at the way they grab every loyal customer’s attention.
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1. Lancôme Elite Rewards
Based on tiers that are categorized into Rose, Gold, and Platinum - loyal customers of Lancôme get exciting rewards in the form of special memberships, early access to upcoming products, and exclusive invitations to events organized by the brand.
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2. The Nordy Club Experiential Rewards
One of the key features that make this program successful is a free tier that is unlocked customers even before they spend on a product or service.
Apart from other exciting rewards, members of The Nordy Club get a range of rewards based on experience. For instance, they can avail free curbside pickup, free basic alterations on clothing items, and free access to the company’s events.
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3. Ultamate Rewards Program
- The brand’s free loyalty membership rate saw an increase of 64.8% between 2015 and 2018.
- The Ultamate Rewards Program now has approximately 32 million members who contribute to over 95% of their sales.
- 45% of these members lie in tier 2 (diamond) and tier 3 (platinum) of the Ultamate Rewards program, both of which represent high-spending members.
- Ulta is listed among the top brands in the beauty cosmetics category to offer an omnichannel experience, making it easy for customers to earn and redeem loyalty points.
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4. Total Tools Insider Rewards
The three-tier program is divided into Bronze, Silver, and Gold categories to provide members with exclusive benefits based on their spending. The rewards include bonus offers, a particular dollar amount depending on the tier, access to events, free shipping, birthday rewards, and much more.
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5. The Zumiez Stash
Zumiez customers get free access to the company’s tiered loyalty program called ‘The Zumiez Stash’. The program rewards members with the chance to win sweepstakes apart from other exciting loyalty benefits.
With ‘The Zumiez Stash’, loyal members can earn points for both their spending and their engagement with the brand. An app is available to keep track of spending and reward points, which is the perfect replacement for physical rewards cards.
Tier 1 members of the Zumiez Stash get 1 point for every dollar they spend. Moving on to the next tier, members can earn 2 loyalty points for every $1 spent. In terms of value, tier 2 members get double the amount when they redeem these loyalty points.
Similarly, members who make it to Tier 3 earn 1 extra point, which makes the redemption rate of loyalty points equal to 10.80%. In simpler words, the Tier 3 member would earn three times more than Tier 1 members in terms of rewards.
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6. E.L.F Beauty Squad
Loyalty points are earned for every dollar spent on e.l.f. cosmetics. The only requirement is to sign up and create an account at elfcosmetics.com through an easy process. If a customer makes an in-store purchase instead of shopping online, they can still earn points by simply attaching a photo of the receipt.
Moreover, members of the e.l.f. Beauty Squad can redeem loyalty points to receive discounts on future purchases, e-gift cards, free items, and cash-back offers. The program is categorized into three tiers - Fan, Pro, and Icon. Moving on to a higher tier allows members to access even better rewards.
One of the great things about E.L.F’s tiered loyalty program is that customers get points for simple steps taken to engage with the brand. For instance, there are points for connecting with the brand on social media, submitting a review, and also for filling out the required information in a ‘beauty profile’.
Similarly, email and SMS subscriptions also award loyalty points. Loyal members can redeem these easy points for rewards any time through their online shopping cart or through the brand’s ‘beauty squad’ dashboard.
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7. Patricia Nash
Loyalty program members can then redeem these points through rewards coupons, where the subtotal amount of purchased items must be higher than the coupon before tax is applied. That being said, rewards cannot be redeemed to get cash or credit. The simple program is based on tiers that categorize customers based on their spending levels.
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Create an Effective Tier-based Loyalty Program with XStak
Considering the examples of successful rewards programs discussed in this blog, it’s clear that tiers provide a greater way to generate customers’ interest and motivate them to return for more purchases. It is essential for all e-commerce businesses to retain loyal customers so that they do not have to spend on acquiring new ones.
Tiers provide customers with goals to maintain their spending levels in order to achieve better rewards. With XStak’s Omniretain module, online retail businesses can develop a better understanding of customers’ buying behaviors and preferences. Analyzing real-time customer data under one dashboard with XStak Omniretain allows businesses to develop effective tier-based loyalty programs and set realistic milestones to encourage repeat purchases.
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Tiered loyalty programs provide businesses with a competitive advantage by keeping customers satisfied with continuous engagement. Small and medium businesses need to consider implementing such programs in order to leverage the different levels of rewards they can offer to customers. Get in touch with our team to create your own tiered loyalty program today!
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