Beyond Rewards: Assessing the competitive edge of customer tier programs introduction in the beauty industry: Sephora’s customer tier program case

Abstract

This paper aims to examine the impact of loyalty programs on customer behavior, specifically focusing on how the perceived benefits of these programs influence brand equity, brand loyalty, and, ultimately, brand competitiveness within the context of Sephora’s loyalty program. A comprehensive literature review was conducted, followed by empirical analysis using a PLS-SEM, bootstrapping, and multigroup analysis in SmartPLS4. Data were collected through a questionnaire, and the target was members or former members of Sephora’s loyalty program. The findings revealed that Sephora's customer tier program is generally perceived positively, with special offers and discounts being the most valued benefits. The structural model showed that the program special treatment offered by Sephora’s customer tier program indirectly enhances brand competitiveness via increased brand equity and loyalty, particularly in higher satisfaction levels. The study suggests that tailored strategies are needed to maximize program effectiveness based on satisfaction levels and membership duration.