A Complete Guide To Tiered Loyalty Programs For Higher Engagement And Retention (2024)

More than 60% of all companies have some type of loyalty program. 

But most of these programs are similar — offering the same benefits and designed with the same structure.

Clearly, there’s a need for improvement.

There is one type of loyalty program that stands out — tiered loyalty programs.

When done well, tiered loyalty programs can be exciting, reflective of brands’ uniqueness, and can bring extraordinary results via engagement and retention.

In this guide, you will learn how to turn your Shopify customer loyalty program into a result-generating asset.

What is a tiered loyalty program?

A tiered loyalty program involves different levels. It is a system to categorize customers into various segments, tiers, or levels. Customers are rewarded based on the level they belong to. 

For example, you might have come across loyalty levels such as silver, gold, and platinum — some of the most commonly used tiers.  

Typically, tiers are structured based on customers’ engagement or spending behaviors. Tiers are often assigned based on how much customers spend. As customers spend and engage more, they move up levels and receive more attractive benefits. 

The main purpose of tiered loyalty programs is to increase engagement and customer loyalty, leading to more sales.

Here’s an example of a tiered loyalty program with three tiers:

Benefits of tiered loyalty programs

Tier-based loyalty programs are more effective than normal programs. That’s because tiered programs bring in elements of gamification, competition, and instant gratification through the event of collecting more points. Additionally, tiered programs offer more benefits. Here are some:  

1. Tiered loyalty programs are more attractive

According to a KPMG study, 75% of customers prefer brands that have loyalty programs. Add elements such as tiers or gamification to the program, and you will be able to attract more customers.

What makes us so sure about this? Here are the reasons:

• Tiered loyalty programs create more engagement and loyalty
• For customers, tiers or levels are like belonging to communities that build emotional connections with the brand
• Customers can look forward to more and better benefits as they progress tiers

2. More benefits

With tiered loyalty programs, customers always have more benefits to look forward to. As customers progress tiers, the benefits keep increasing.

Moreover, eCommerce brands keep introducing new benefits and perks to keep customers engaged. Apart from points and monetary rewards, customers also enjoy experiential benefits of various types.

3. Long-term engagement

Loyalty programs are meant to boost customer loyalty and long-term value, for both customers and brands. Tiered based loyalty programs incorporate the element of communities. When customers become part of communities, they feel more emotionally connected, engage more, and tend to have longer associations with brands.

How to create a tiered loyalty program on Shopify

60% of eCommerce brands have some sort of loyalty program. But customers connect with less than 10% of programs. That’s because brands fail to offer uniqueness. In this section, we tell you how to avoid that and design a Shopify tiered loyalty program that’s set up for success.

1. Plan a unique tiered loyalty structure

Tiered loyalty structures are based on mainly two elements – points or spending. Let’s understand how these two work.

• Points: Customers earn points based on various actions, such as, for following on social media, for referring friends, on purchases, etc. In this type of a loyalty structure, customers can be given many opportunities to collect reward points.
• Spending: Customers earn points based on their purchase amounts only. For example, different tiers are based on specific spend thresholds. In a spends-based structure, the opportunities to earn reward points are limited.

In both types of structures, customers are driven by goals to collect more loyalty points. However, how you plan your tiered loyalty program should depend on many factors, such as:

• What is relevant in your industry and for your products
• Customers’ preference. You can run customer surveys, interviews and track their comments to understand the tiered structure that your customers would like
• The goals you want to achieve from your loyalty program – for example, do you want to improve loyalty, increase repeat purchase, increase average order value (AOV) or increase customer lifetime value (CLV)

2. Explain how your tiered loyalty program works

It is important that your customers understand how your Shopify customer loyalty program works. One of the aspects customers are attracted to is simple terms and ease. 44% of customers prefer loyalty programs that are not too complicated – to collect and redeem points.  

Source

Here are some factors that will help you maintain simplicity:

• Mention the eligibility criteria for different tiers
• Limit the number of tiers to a manageable figure. For instance, most brands prefer three tiers
• Show customers the benefit of different tiers in a chart format for clarity
• Create a dedicated page for your tiered loyalty program
• Offer loyalty program customer support

3. Create a unique visual identity for each tier

Design a customized visual identity for tiered loyalty programs on Shopify. One of the ways you can differentiate different tiers, apart from the benefits, is to make the different tiers have different visual elements. You can do so by using customization features of your Shopify loyalty program app. Next, maintain branding consistency for each tier — it can increase revenue by 33%.

Here are some ways to bring visual uniqueness to each tier:

• Brand each tier with a different color, icons, etc. so customers associate with the visual identify of their tier
• Customize the name of each tier with a different name 
• Take the experience a notch higher by customizing the Shopify customer account page to match the colors and icons aligned to each tier

4. Combine tiered programs with other Shopify elements

Once you create a unique tiered loyalty program for your Shopify store, you must think of creative ways to make it a part of other aspects of your Shopify store. In other words, make it a part of different touchpoints of the customer experience. Don’t run the loyalty program in a silo.

Here’s what you can do:

• Personalize the customer account page based on customers’ loyalty tiers. For example, The Man Company, a men’s grooming brand, has created customer account page designs based on customers’ tiers. E.g., customers on the silver tier have a customer page design that reflects that tier – silver
• Incorporate tiered programs with other marketing features such as referrals. Offer points when customers make referrals. Display information about this in the referrals section as well

5. Create customer communities for tiered loyalty programs

Communities offer a better and more engaging experience to customers. Customers engage with other like-minded customers, discuss specific topics, and participate in activities they like along with other community members. 

In particular, the structure of tiered loyalty programs makes it easy to build communities. Customers are already segregated into different tiers. All that brands need to do is create interesting campaigns and activities for engagement.

Here’s how you can build communities for tiered loyalty programs on Shopify:

• Make your loyalty program communities prominent
• Give customized names to communities based on tiers
• Create exclusive campaigns and activities for different communities
• Generate and share exclusive content for each community
• Offer personalized and different benefits to each community

Here’s an example from sports brand Nike. The brands’ different communities of customers are based on fitness goals.

Source

6. Create a communication strategy and automate

From launching the loyalty program to welcome messages to campaign announcements, you will have a lot of communication going out to members of each tier. To make communications manageable, you must automate the process by using an efficient Shopify app. 

Explore Flits store credits app to automate loyalty program tasks.

Here’s what your tiered loyalty program communication strategy must entail:

• Create and automate emails, SMSes, WhatsApp messages etc.
• Create different and personalized messages for each tier
• Automate messages to be sent in a timely manner
• Plan campaigns for each tier and incorporate communication within the plan
• Some message ideas: points reminder, referral share prompts, exclusive benefits messages, etc.

7. Think beyond loyalty programs – tiered Shopify store credits program

Many eCommerce brands prefer store credits to loyalty or reward programs. That’s because store credits have many benefits — bring customers back to your store to make more purchases, retailers don’t lose sales, and improve customer loyalty. 

But how do you bring the benefits of tiered programs into your store credits strategy?

Here’s how to create a tiered Shopify store credits program:

• Create a tiered structure for store credits
• Instead of loyalty points, give store credits
• Create more opportunities for customers to collect credits, for example, when they return a product
• Create tiers based on store credits they earn – customers progress to higher levels as they collect more store credits

Read: Cash back vs store credits and loyalty: what is better?

Examples of tiered loyalty programs

Explore how some of the best brands have designed their tiered loyalty programs successfully. Gather inspiration and apply it to your Shopify customer loyalty programs.

1. Lancome

The cosmetics brand Lancome’s tiered reward program has three tiers — Rose, Gold, and Platinum — that offer different benefits based on the tiers. Some of the benefits include purchase points, birthday gift, early access, event access, etc. For easy points-redeeming, the brand shares a catalog of products that is accessible via the customer account at the time of checkout.

2. Aloha

A travel apparel and accessories brand, Aloha has three tiers in its loyalty program – Premier, Business Class, and First Class. The brand calls its points ALOHA Miles. The program encourages customers to spend more to collect more miles. Keeping it simple and minimal, Aloha’s loyalty program is easy to understand and use.

How to start a tiered loyalty program on Shopify?

Modern brands that stay abreast with technology and digital capabilities are able to stay competitive in the loyalty program market. Loyalty programs require a lot of effort. And so, your best bet is to incorporate the best Shopify loyalty app into your system. 

Meet Flits Customer Account Page App. 

Flits offers add-on features such as Store Credits, that can help you set up and efficiently run your tiered loyalty program. Bring in gamification, automate tasks, and boost customer engagement with the app’s intuitive features.

Install Flits Customer Account App on your Shopify store today.