Comprehensive Guide to Customer Loyalty Programs for Premium Brands

Enter loyalty programs. Done right, great loyalty programs can build an emotional connection, brand advocacy, and lifetime value.

One brand that has perfected this is Mecca, Australia’s leading beauty retailer. With their Beauty Loop program, Mecca has cultivated an intensely loyal community - without ever offering sitewide discounts. Instead, they’ve built a value driven ecosystem that celebrates spend and nurtures customers through tiers of increasing exclusivity and delight.

In this guide, we’ll explore how premium brands can create a successful loyalty program themselves to increase customer LTV, without racing to the bottom on pricing. 

Why Loyalty Matters More Than Discounts

Discounting is a slippery slope and not always a great long term strategy for premium brands. Over-reliance on sales can train customers to wait for discounts, erode perceived value and alienate top-tier customers who expect more than lower prices. 

Instead, value-based loyalty programs ensure customers feel appreciated without devaluing the product. Bain & Company did a study which saw that increasing customer retention rates by just 5% can lead to a 25% to 95% increase in profits.

When it comes to the value of customers, your loyal existing customers have a 67% higher average order value than new customers. The chance of converting an existing customer is 60%-70% as opposed to the 5%-20% chance with new customers, making them a much more valuable segment to market to. 

With the cost of ads going up and the increased reliance on first-party data, developing a successful loyalty strategy has never been more important.

Using Customer LTV to Build Smarter Loyalty Tiers

Before building any loyalty program, you need to understand your customer base - specifically, how much they’re worth to your business over time. This is where Customer Lifetime Value (LTV) comes in.

LTV tells you how much revenue you can expect from a customer across their relationship with your brand. Once you’ve calculated LTV across your customer base, you can break your customers into tiers and build a loyalty program that targets and nurtures each segment differently.

How to Use LTV to Build Loyalty Tiers:

Calculate LTV Across Your Customer Base

Use your ecommerce or CRM data to understand average spend per customer, purchase frequency, and lifespan. Most tools like Klaviyo, Shopify, or GA4 can help with this.

Segment by Value

Break your customer list into at least three LTV-based tiers:

• Low LTV: One-time or infrequent buyers.
• Mid LTV: Occasional repeat customers.
• High LTV: Your top 10–20% who spend the most and buy often.

‍

Tailor Your Loyalty Program to Each Tier

• Low LTV: Focus on driving second purchases. Use welcome flows, clear tier incentives, and early rewards.
• Mid LTV: Encourage progression. Communicate how close they are to the next tier and what they’ll unlock.
• High LTV: Delight and retain. Offer exclusives, early access, and personalised rewards to reinforce their loyalty.

Why It Works

This data-led approach ensures you’re not wasting resources on customers who won’t return - and you’re doubling down on the ones who do. It’s more expensive to lose a top tier customer so you should spend money on gifting to these people to maintain loyalty. There are many ways businesses can take unique and creative approaches to reflect their own brand identity in their loyalty tier offering. 

Reach out to 303 for assistance in CRM and Customer Segmentation to help set up your loyalty program.

‍Loyalty Case Studies

Mecca’s Beauty Loop: A Masterclass in Tiered Loyalty

Mecca’s Beauty Loop is a three-tier loyalty program based on annual spend:

• Level 1: $300–$599/year
• Level 2: $600–$1199/year
• Level 3: $1200+/year

Each level offers increasing rewards like exclusive sample boxes, early access to launches, and tailored in-store experiences. The more you spend, the better the value you get from their loyalty program. 

Every release, customers can either pick up their Beauty Loop boxes in store or online with a purchase of $25 or more. This is not only a great way to coordinate online UGC content and buzz, but is also a great way to plan an increase in customer spending so people can access their boxes. 

At 303, we offer Organic Social Media Management to help strategise, plan and coordinate UGC activities in connection with CRM and  loyalty activities.

Key success factors:

• Exclusivity: Boxes and benefits are not for sale. This is only for members who qualify by spending certain amounts of money in a year.
• Content flywheel: Beauty Loop Boxes drive huge volumes of UGC and influencer PR every release cycle. This also increases the exclusivity and desire to spend more to get into higher spend tiers. 
• No discounts, just delight: Mecca retains its premium positioning by never relying on markdowns.

Key Takeaways for Building a Loyalty Program Like Mecca

• Prioritise Value Over Discounts: Discounts can dilute your brand. Value offerings like exclusive content, experiences, or gifts, keep the perceived value of your brand intact.
• Make Your Value Genuinely Valuable: Don’t offload unsold stock. Offer products or experiences that feel like a treat, not a leftover.
• Top-Tier Customers Are Worth the Investment: Losing a top spender costs more than rewarding them. Give them more reasons to stay loyal - think exclusive gifts, early access, or tailored experiences.
• Use Customer Tiers to Guide Strategy: Segment your LTV data and focus efforts on the top 10–20%. For Mecca, this is the group driving the majority of revenue - and loyalty efforts are squarely aimed at nurturing this segment.

Two Big Moves You Can Steal From Mecca

1. Nurture the Top 10%: Send surprise gifts, early access, or even personalised services. They already love you so deepen the relationship.

2. Drive Ascension for the One-Time Buyers: Incentivise movement from one-time purchase to repeat buyer with a clear path to tier upgrades and meaningful rewards. Add in email or SMS automations to remind customers how close they are to accessing the next tier.

NET-A-PORTER: EIP Rewards and Exclusive Access

While Mecca leads the way in the beauty world, NET-A-PORTER offers a compelling example of luxury loyalty in the fashion space with its EIP Rewards (Extremely Important Person) program.

Why it’s best-in-class:

Net-a-Porter has moved from a secretive, invite-only elite tier to a transparent, tiered loyalty program called EIP Rewards, designed to reward loyalty based on annual spend. It’s still incredibly luxurious, just more accessible and aspirational. This will allow them to engage more active customers than just the top spenders, but make it aspirational for other customers to spend to get into the top tiers. 

The tiers:

• Insider – £0–£1,000
• Silver – £1,000–£5,000
• Gold – £5,000–£10,000
• EIP (Extremely Important Person) – £10,000-£50,000

Key features:

• All tiers enjoy perks like early sale access, exclusive previews, and birthday treats.
• Higher tiers unlock private styling sessions, priority access to in-demand items, exclusive events, and first look at new designers
• EIPs receive hyper-personalised treatment, including bespoke curation, dedicated personal shoppers, and invitations to Net-a-Porter’s most elite events - an aspirational tier with first class treatment. 

What makes it work:

• Rewards are experience-led, not discount-based which is important for a luxury fashion retailer. 
• Spend thresholds are clearly communicated, which encourages aspirational behaviour and increased spending. 
• The brand’s luxury integrity is maintained. There are no loyalty based markdowns, just increasing layers of VIP treatment. 

Net-a-Porter shows that you can incentivise high spend without ever using discounts. By tying increasing value to customer status and offering lifestyle-based perks, they’ve created a loyalty program that aligns perfectly with the expectations of a luxury audience.

Conclusion:

For premium and luxury brands, loyalty isn’t built on discounts, it’s earned through thoughtful, value-driven experiences that make customers feel seen, appreciated, and part of something special. Programs like Mecca’s Beauty Loop, Net-a-Porter’s EIP Rewards, and others across beauty, fashion, and lifestyle show that the most effective loyalty strategies don’t just reward spend, they build long-term connection and value.

The key takeaway? Know your customers, understand their lifetime value, and design loyalty programs that celebrate their importance. Whether it’s exclusive events, surprise gifts, early access, or personalised experiences, every touchpoint should reinforce your brand’s value and your customer’s worth.

Reach out to 303 to learn more about our CRM and Loyalty service offerings.

‍