4 awesome tiered loyalty programs and what you can learn from them

December 13, 2018

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With more and more eCommerce stores opening every year, you need to keep an edge over your competition. A tiered loyalty program that offers awesome benefits can help you break the tie against your competitors and win customers' repeat business.

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According to Tim Winship, an air miles expert, Pan American Airways got an edge above their competitors with WorldPass. The milage program, which included tiers with ascending benefits, helped Pan Am keep some altitude over the competition in the 1980s. (Check out this old school commercial for their frequent flyer program!)

Pan-Am-WorldPass-tiered-frequent-flyer-loyalty-program

Source.

With so companies already offering loyalty incentives, you even have to get competitive with your eCommerce loyalty program. A great way to make your program more alluring to customers is by offering exclusive benefits to people who spend more.

In this blog post, we'll analyze four big brands' programs and figure out what they do right, so you can start planning your own tiered loyalty program.

But first let's start with a few basic reasons why you should consider using a tiered loyalty program in the first place.

 

Why you should use a tiered loyalty program:

People will come back to your store to use their points

Let's start with the most obvious one: When you award points, you're encouraging people to shop on your store again. And when people return to your store, it's likely they'll spend more than the value of their points, if gift card spending habits can be any indication.

A 2018 study found 59 percent of people spend more than the amount on their gift card

It builds your brand

Offering VIP perks to customers can do more than just motivate them to spend more: It can differentiate your brand and help give your customers, and therefore your brand, higher status.

Frequent flyer programs do this all the time, offering customers priority boarding and lounge access to make them feel more important.

Tiered programs make your customers feel important

A tiered program shows your customers not only that they're appreciated, but they're also important. This can make them feel better about your brand, and keep them spending to maintain the VIP status your company grants them.

It spreads the word

Another benefit of a reward program that uses loyalty tiers is word of mouth. When a customer gets an awesome reward for being a loyal customer, they might tell their friends about it.

As I'm sure you already know, customer advocacy is important. In fact, "recommendations from friends remain the most credible form of advertising among consumers," according to Nielsen. So, give your customers an excuse to advertise for you!


 

4 great tiered programs:

Sephora, Starbucks, Marriott, and Uber all use loyalty programs not only to encourage customers to come back, but also to make their customers feel important, which helps strengthen their brand and spread the word. 

Tiered loyalty program breakdown 1: Sephora

sephora-beauty-insider-banner

 

Sephora's Beauty Insider Program pops up on top ten lists of the best loyalty programs pretty often. They know what perks motivate their customers and make it easy to join the program.

Members get perks like earning more points per dollar spent, using points for sample-sized or full-sized products, getting makeup done for free in-store, free shipping, and gifts for reaching the next tier.

Sephora-beauty-insider-rouge-gift

Sephora rewards a free gift for getting to the highest tier.

But the coolest part is that their first tier is free. It's call Insider, and it offers cool rewards like a birthday gift, bigger discounts during sales events, and two free samples per order.

These rewards are desirable to makeup maniacs who love trying new products. Free samples can boost sales, but they're especially effective in the beauty industry.

Another benefit to this reward program is that members can add a loyalty card to their iPhone wallet for easy use when purchasing products in store. Being mobile-friendly is important, as you'll learn from our next program.

 Tiered loyalty program breakdown 2: Starbucks

starbucks-rewards-banner

Starbucks' loyalty program is primarily used through their phone app, making it convenient for members. Again we have a brand who knows what its customer want, with cool perks like jumping the line, free refills, point-multiplier days, and birthday gifts. 

There's also special in-app offers that are sent as push notifications and emails so people know when they're eligible for a reward.

The app and program have a slick look and feel that's cohesive with Starbucks' branding, bringing customers a consistent and aesthetically pleasing brand experience.

I also love this super simple breakdown on their website of what both tiers offer so people will want to reach the next level. Making the first tier free (who doesn't want free refills?) is an easy way to hook people into the program.

starbucks-tiered-loyalty-program 

Check out all the other perks here.

Tiered loyalty program breakdown 3: Marriott Hotels

Marriott-rewards-banner

Marriott International is a great example of a company using a reward program as a tiebreaker in a competitive market. According to the Houston Chronicle, Marriott gives you good bang for your buck with rewards valued at $10.85 per $100 spent.

Combine this with the fact that they recently integrated with two other programs to give members access to over 6,700 properties in 129 countries, and this program gives frequent travellers thousands of reasons to go with Marriott.

Like Sephora and Starbucks, Marriott has their reward tiers laid out very simply on their website, and offers desirable rewards in higher tiers to motivate people to stay loyal. Some rewards include late checkout, accelerated point earning, and room upgrades.

Marriott-loyalty-tiers-chart

Check out all the full chart of benefits here

Tiered loyalty program breakdown 4: Uber

With companies like Lyft and Grab infringing on Uber's supremacy in the ride-sharing market, the pioneering tech company is rolling out what Wired called a "terrestrial spin on a frequent flier program" to roll over competition — much like Pan Am did 30 years ago when their supremacy was threatened by new competitors.

Uber-Rewards-tiers

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While the program is only available in limited cities as of December 2018, it's already attracted a lot of attention. The perks of the higher tiers are genuinely tempting, which can motivate people to keep using Uber instead of competitors so they can rack up points. 

You're eligible for the lowest tier without any points; the second tier, Gold, has enviable benefits like flexible cancellation, while the highest tier, Diamond, has all kinds of desirable reards including three free Uber Eats deliveries per year and priority pickup at airports.

Customers also earn three times as many points when they use Uber Black, which incentivizes customers to use those premium services.

 

Here's what you should copy from these programs for your own loyalty tiers

You're probably noticing some recurring features in each of these successful loyalty programs. Here's a few features you should use in your own program to make sure it's successful

 

1. Offer the lowest tier for free

Offering the lowest tier of your program for free shows your customer you appreciate them and helps make all customers aware of your loyalty program. Sephora, Starbucks, Uber, and Marriott all offer qualification for the lowest tier at zero points. Once customers join the lowest tier, they could be more likely to try to get into a higher tier.

Do you have any perks that you already offer to all customers, like holiday discounts? Frame it as loyalty perk to show people you care about keeping them as customers! 

 

2. Break down the benefits of each tier on your website

All of these brands also have a chart or diagram on their website that breaks down their loyalty tiers in an easy-to-understand way. 

Make sure you explain all of your program's tiers on your eCommerce store so people can easily see what benefits they earn when they spend more.

 

3. Clearly show how many points each member has

Each of the loyalty programs we just looked at clearly tell their members how many loyalty points they have on their store or in the app. This is an obvious detail, but important not to overlook. If you don't make it clear that customers have points, they won't know to come back to use them on their store.

Pro tip: Bold Loyalty Points shows customers how many points they have with a beautifully styled widget that's displayed on every page of your store.

 

4. Offer rewards your customers actually care about

If you don't have desirable rewards, shoppers won't be motivated to spend more to get them. All these programs have rewards that customers can get excited about. Sephora has free samples, Marriott has extended checkout times, Starbucks has free refills, and Uber has free Uber Eats deliveries.

Figure out a reward you can afford that will really make a customer's day once she finally earns it!

 

5. Make rewards easy to redeem

Airlines learned that customers get ornery when rewards aren't easy to redeem. David Spade even lampooned the resistance that members can experience when trying to trade in their miles for actual tickets in Capital One's commercials.

So, don't give your customers something to complain about. Make sure you can actually carry through with the promises you make to loyalty program members on every tier.

 

6. Be easy to use in real life and online 

If you have physical stores as well as an online store, make sure your points are easy to redeem in real life too. Starbucks and Sephora nail this since people can use their phones to redeem rewards when they pay in real life.


What kind of loyalty tiers do you want to use on your store? Are you a member of a loyalty program you really love? Let us know in the comments!

John Bruce

Written by John Bruce

John is a full-time copywriter, part-time boxing coach, and former cable-access host.

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