Tiered Loyalty Programs: Here’s What You Need to Know

There are several types of loyalty programs that you can create. The most important of which are those programs with levels and tiers, and programs without. As part of Gameball’s rewards programs, we’re focusing on the tier-based options.

This article is part of our series on product strategies. Through the series, we aim to help you make the most out of your loyalty program with Gameball.

Gameball’s loyalty programs help business owners and marketing managers generate and increase customer engagement and retention.

In this article, we’ll help you identify the key strategies to create a successful tiered loyalty program for your e-commerce business.

The Importance of Tiers in Rewards Programs

Tiers are one of the way you can increase customer engagement and activity in your online store.

Loyalty is a perk that customers give to brands that they like and enjoy shopping at. Let’s take Ikea as an example.

Ikea named its loyalty program IKEA Family. The name itself gives a sense of belonging. And belonging is an instinct that everyone wants and yearns for.  

When you are an IKEA Family member, you enjoy perks such as special prices on selected items and a free hot drink with every visit. IKEA’s rewards program is one of the best loyalty programs in the world.

It’s widely recognized because it’s an attractive program for customers who are looking for unique but affordable products.

So what could be more awesome than loyal customers who keep coming back to your store to unlock more of what you have to offer?

What Are Levels and Tiers in Loyalty Programs?

Similar to having levels or the rungs on a ladder, tiering is an effective tool that generates customer engagement and participation. Tiers provoke customers’ desire to move up the levels to reach the highest-ranking and accordingly the best rewards.

Any loyalty program offers customers points that they can accumulate by taking various actions and for the purchases they make. As a store owner, you can predetermine what actions can grant customers points, in addition to buying your products.

As your customers gather more points, they begin to level up in their tiers on your loyalty program. You forecast how many points customers need to move to tier two, three, and so on.

By having a tiered loyalty program, you’ll not only be able to retain customers but also create satisfied and loyal followers and buyers.

Tiering allows you to segment your customers according to their loyalty levels. For example, when your customer signs up, you can allow them to automatically level up to the entry-level tier.

Let’s say, you’ll reward your customer 50 points for signing up. After that, each action they make will give them more points that they can use to get a reward when making their first purchase.

Why Your Business Needs a Tiered Reward System?

“You don’t earn loyalty in a day. You earn loyalty day-by-day.” – Jeffrey Gitomer, Professional speaker on customer loyalty

Attracting new customers to your business is vital. But so is retaining them. By using a tiered loyalty program, you’ll be able to boost both retention and engagement.

Tiering has been a success in the retail market. All successful companies heavily engaged in creating tiered programs to create segments within their brand.

Let’s take airlines’ frequent flyer programs as an example. The Frequent Flyer program correlates the frequency of the flyer with their status.

Depending on the number of flights made and the number of points accumulated, flyers are placed in different tiers. The more they fly, the more they accumulate points to rise in tiers and get better perks.

For example, if the flying member is in the Gold tier, they can enjoy free entry to the lounge, extra baggage, and can even upgrade to business class tickets at a discounted rate.

On the other hand, a member in a lower tier, like silver or bronze, will get fewer perks such as fewer seating choices, lounge access, and probably an extra 5 kgs for their luggage.

Airlines are among the best industries for loyalty programs, alongside hotels, restaurants, coffee shops, and more. And all of them can have the tiered option for their loyalty program.

These are examples of how you can include tiers in your customer loyalty program to make it more appealing to your customers.

When a customer is making or completing a purchase from your store or website, they’ll be looking forward to what the next tier is and what rewards will be unlocked.

Tips for a Well-Built Tiered Loyalty Program

1. Create a relationship with your customer
   The emotional aspect is the most effective tool for your customers.

2. Elevate your customer’s self-worth
   Status is always sought, so name your tiers well for desirable results. Try linking tier names to your business. For example, if you’re a bakery, your tiers can be named after products or product types.

3. Create personalized interactions and experiences
   Gameball allows you to send personalized and customized messages to your customers, whether as popups, email…, etc. Use them to increase engagement and to personalize the experience.

4. Provide a fuss-free user experience  
   Keep it simple. Use easy-to-understand tables or charts to simplify the algorithm of your point system.

How to Build Your Tiers?

Define the Criteria for Sorting Your Customers into Tiers

As a merchant, you’ll need to classify your customers into groups. Those groups are usually based on the number of points earned or money spent by customers.

But don’t limit yourself to those two options. There are plenty of brilliant ways to categorize your customers. Here are several examples with which you can divide your customers into tiers:

Specify the Number of Tiers in Your Loyalty Program

As perfect as a triangle, the number 3 is perfect for loyalty tiers.

Three basic levels: entry, middle, and high or like bronze, silver, and gold.

That said, you can choose the number of tiers to serve your needs as a merchant.

However, we do not recommend you go beyond five tiers, because the levels will be too complex with little differentiation.

If you have too many tiers it will be difficult for you to organize and hard for your customers to follow what you offer in each tier. Fewer tiers will seem more achievable for your customers.  

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Choose a Meaningful Name for Every Tier

To give the full-gamified experience, we recommend naming your tiers. Beautify your tier’s names to showcase what your customer is associated with in that tier.

For example, if you’re using tiers for a gym loyalty program, you’ll want to name your tiers using power words to excite gym members, like: Excel, Power, Performer. Make each name distinctive to its level and its benefits.

Customize Proper Benefits per Loyalty Tier

To be elite is to be exclusive. Every customer wants to feel special.

Keep this in mind when creating your tiers.

Make sure you indicate the differences between each tier. As the customer climbs up the tiers or levels, they’ll want to feel that they are gaining more benefits and perks.

Provide value at each level of your program, but maintain the differences to provoke the desire to move up those levels.
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A key to a successful tiered loyalty program is to create a reachable goal for your customers.
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It is key to create levels of rewards within your program.  So you can offer points for everyone on their birthday because everyone deserves to earn points for their birthday!

But moving up the tiers, not all customers will be rewarded a 5% flat discount rate on every purchase. Your customers need to earn that 5% discount rate.

So you can see how to create the feel of your customer deserves a reward and earns another.

Types of Benefits

In your loyalty program, you can provide customers with both rewards and perks. Let’s explain what each of those means.

Rewards are what your customers get when they complete an action on your platform (while being enrolled in your loyalty program). For example, if a customer refers 3 friends, they get a 5% cashback on their next purchase.

On the other hand, perks are benefits that can be awarded outside of the loyalty program, such as services. Your loyalty reward system can consist of some or all of the following list of benefits. Besides, your perks can vary from services like beauty consultation to sending out free product samples.

A. Loyalty System Rewards

Tiers are divided into stages, in which, as you level up, you will be able to add more rewards for the higher tiers. Here are examples of rewards you can offer:

• Entry reward
• Different cashback % per tier
• Anniversary points
• Birthday points
• Vacation rewards
• Badges to be collected
• Seasonal rewards/badges
• A campaign such as “Weekend Cashback”

B. Brand Perks

You can offer to add extra value for your high-value tiers customers in addition to the other rewards like the below example. You don’t have to include all the special treatment and benefits in your loyalty program. Instead, you can offer a wide variety of perks such as:

• Free samples
• Access to special products
• Consultation sessions, such as beauty products consult.
• Special Treatment, special edition product, skip ahead of the line, and more.
• An e-commerce website can offer beauty products, expert help, a beauty consultation service,…etc.
• You can tier the high-value customers, for free valet parking at your stores for instance.

Cosmetics retailer Sephora has a unique tiered loyalty program that offers customers the chance to get makeup sessions, styling, and special discounts.

Examples of Tiered-based Loyalty Programs

Here we will look at several examples of tiered loyalty programs created by store owners using Gameball’s tiering scheme and how each tier works.

VII MART has three tiers, the Member, Platinum, Diamond.

VII Mart’s Rewards Program

MEMBER

Member is the entry level tier, which is free for any customer who signs up to the loyalty program.  Members can redeem points to pay with, earn an entry reward, and access to promotions.

SILVER

Silver is a tier you achieve when you spend $300 throughout a calendar year. By rising to the Silver tier, customers receive an additional entry reward, exclusive promotions, birthday rewards and access to mega sales.

GOLD

Once you spend $1,200 in a calendar year at VII Mart, you rise to the Gold tier, where you get even more benefits than the other 2 tiers.

The table clearly explains everything you need to know about this loyalty program. You earn points and rise in tiers based on your spending.

As you can see, the free Member tier has only two benefits. The higher a customers rises in the loyalty tiers, the better the rewards and perks become, making the rise more exciting and enticing.

What stands out for VII mart is that they have really distinguished their tiers with so many unique rewards and offers. Their gifting system is appealing to skincare consumers since the skincare world is always in a state of activity and growth.

As your spending increases, your rewards become more exclusive.

The exclusivity offers Gold member customers the chance to get double the points for the same value spent by Member and Silver tiers as well as a 5% fixed discount on all their purchases in addition to attending exclusive launches and getting a first look at products.

Uber Rewards Loyalty Program

Uber is another example of a great tiered loyalty program. Uber has four tiers. Their algorithm is for every 500 points you get $5 to spend on Uber.

BLUE

Is the entry-level.

GOLD

To achieve it, you must earn 500 points or more. At this level, you earn both perks and points. As a Gold member, you get less waiting time on customer service calls and free cancellation within the time frame of your bookings.

PLATINUM

To achieve it you must earn 2,500 points or more. Platinum tier grants customers access to perks such as locking prices for rides between two places, avoiding price fluctuation added to priority airport pickups.

DIAMOND

To reach this tier, you must earn 7,500 points or more. At this level, Uber customers gain access to dedicated phone support for fast responses and occasional free upgrades to Black Uber, three free UberEats deliveries, fast response rate, and access to top-rated drivers.

Uber wants to get its customers to use the platform regularly to earn points, get rewards, and not turn to an alternative. Accordingly Uber created a tiered loyalty program to keep their customers motivated to rack up points and rise up in their tiers.

It’s important to pinpoint that this Uber Loyalty Program has touched upon its most essential services and offered them as perks. They offer their customers what they would desire, special treatment, best drivers, price fixation, upgrades to better cars, and less wait time.

Build a Good Explanatory Page

To finish the tiered loyalty program we built together, create an explanatory page that illustrates what your program offers. The page will act as the user’s guide to understanding how your loyalty program works and what they get from it.

Keep it simple and straightforward. Meaning you want to keep the wording easy so your readers don’t turn away to find an alternative.

A Gameball tip is to set up in-app notifications to educate your customers on how to level up and redeem their rewards. These in-app messages can also explain how to achieve and to notify customers if they reached a new tier and what rewards they have unlocked.

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heck the below article to read more about how you can use in-app notifications and messages through Gameball:
How to Use Customized Messages for a Better Customer Experience

Now you have a detailed overview of how to design and build a tiered loyalty program along with examples to help you grow and retain your customers. You can start today with Gameball or if you're on Shopify, sign up anytime through here.