Loyalty programmes can take different forms, from one-off offers to points, recommend a friend schemes or exclusive VIP programmes. And they can involve a wide variety of reward types from freebies to money off, access to exclusive content and charitable donations being made on your behalf. With so many options to choose from, it can be hard to know where to start.

We’ve looked in a previous article at what loyalty means to our clients’ businesses and whether or not it’s an area worth investing in. In this article, we bring to life the loyalty ladder and how you can use it to shape a reward programme to meet the needs of both your business and your customers.

Introducing the loyalty ladder

To create loyalty programmes, we work with a ladder which is based on a hierarchy of needs. We use it to better understand the best approach to take, centred around what a brand needs to achieve.

This ladder has similarities to the well-known Maslow’s hierarchy and has three steps:

  1. The bottom step – at the foundation of loyalty, customers want their custom to be recognised
  2. Middle step – you can build greater loyalty by being relevant and personalising your approach to your customers
  3. Top step – aligning your company values with what customers really value

As a brand, you can decide how high up this ladder you go. The higher you go, the stronger the emotional relationship you can build with your customers. And in turn, the stronger the loyalty and advocacy you can get back.

However, not every company needs or wants to create an emotional connection. For them, just meeting the first step of the ladder can be extremely effective and the only step they need to make.

The bottom step

At the base of the ladder is the foundation of loyalty – people want their custom to be recognised. Put simply, they want to get something back for the loyalty they give your brand. This is often about getting better value for choosing you, choosing more from you or choosing you more often.

This doesn’t mean that every brand needs a complex reward or loyalty programme. A foundation layer can take a relatively simple form, such as guaranteeing existing customers get better deals or a discount that is applied if you buy more than one product.

A good example of this is Admiral’s MultiCover Insurance. This offer is available to all customers and as such is used to attract customers to the brand, as well for rewarding loyalty of existing customers. If you insure more than one car or pet (multiple products) then you get additional savings plus, with their joined up online account, it’s simpler to manage all of your policies in one place.


Another example is to offer additional discounts on other products in your portfolio, or on third-party products. For example, MoneySuperMarket SuperSaveClub gives customers unlimited access to free days out.

One thing to note here is that if your customers choose your brand and products because of the amazing value you offer them, without any additional discounts or rewards, then you may not need to offer anything more. This is because they already feel you’re delivering against their needs. A good example of this is Beauty Pie who offer world class skin care for low prices by removing retailer markups and selling directly to end customers.

The middle step

The middle step is where relevancy and personalisation come in. Where you build from your foundation and start to talk to customers on a one-to-one basis and demonstrate that you know and value them.

Generally, people have become comfortable with brands having access to their data, but they want their data to be used in a way that benefits them, giving them something back. Rewards such as personalised pricing, bespoke service levels, personalised offers and personalised messaging all sit here.

An example of this is personalised prices from Nectar (Your Nectar Prices), which gives customers lower prices on certain products based on their previous purchase patterns. The VIP Club from Pets At Home gives customers bespoke offers relevant to the type, age and birthday of a customer’s pet(s) and their tenure on the scheme.

Personalisation does not have to include offers. It can also be personalised messaging or product recommendations to help customers. An example here is Majestic who tailor their emails and wine recommendations to individual customers based on previous wines each customer has bought from them in the past.

This is often where many successful customer-led brands stop.

The top step

At the very top is where your company values and purpose play an important role. It’s where you align your company values with what your customers really value. Content, expertise and exclusive access can all come in here.

Example of loyalty ladder - Top step

Examples are Apple’s Genius Bar that aligns to their value of Education. Where customers get free courses showing them how to use Apple products to create music, edit pictures or even just get online if you’re not tech savvy. This is where the real belonging and advocacy of their products comes to life.

Going straight for this top step without giving customers the first two levels of recognition and personalisation can make this level of reward feel random or disingenuous. But if customers already feel valued and that your company knows and recognises them, then this additional layer can be highly effective. It can start to create real emotional connections between your customers and your brand.

Apple is an interesting example to continue to explore here. They don’t offer discounts however the more products you have with Apple, the more value customers feel they get as all their products work so well together. Plus, the more products they have the more personalised the experience becomes. The fact that my iPad, watch and phone all work together to understand me and fit around my life, to me, gives me better value and personalisation than a discount on multiple products.

Remember, this top layer may not be right for all businesses, but for brands that want to make customer centricity and reward a central part of their positioning, this can be a powerful way to achieve it.

A summary

The loyalty ladder provides a simple framework to think through where you want to start (or where you currently are) with your loyalty programme.

Just because there is a ladder it doesn’t mean you need to get to the top. For many companies, just having the first step in place can be highly effective.

To make the right choice on the approach that suits your business, you need good customer insight and analytics. And to be clear on your objectives and the customer behaviours you want to drive.

If you would like to find out how we can help you build your loyalty strategy, then please do reach out to us at Blue Feathers via susie@bluefeathers.co.uk


Author: Jess Poore

Jess has experience across a breadth of areas from brand and commercial marketing to customer experience. Her passion is putting customers front and centre to drive business growth and customer happiness. Jess brings together data and insight, creativity and commercial understanding to shape impactful brand and marketing strategies.