This might be an unpopular take, but I think the correlation isn't always as direct as we assume. Sure, the Golden Core elder outranks the Foundation Establishment outer disciple in the canteen line. But I've read some stories where a genius alchemist stuck at a lower level gets more respect and better accommodations than a brute-force combat cultivator two levels higher, because their skills are rarer and more critical to the sect's economy. The system is hierarchical, but it's also deeply pragmatic. Influence comes from a mix of raw power, utility, and connections. I remember a side character in 'I Shall Seal the Heavens' who was basically the sect's logistical mastermind. He wasn't the strongest, but everyone from the Sect Leader down had to be polite to him because he controlled the distribution of resources. Social rank feels less like a flat ladder and more like a web of dependencies, with cultivation level being just the most visible thread.
That said, the influence is absolutely there in daily life. Your level dictates your residence zone, your access to spirit veins, your stipend of spirit stones, even the cut of your robes. It's a constant, tangible reminder of where you stand. A Qi Condensation disciple wouldn't dare look a Core Formation elder in the eye, let alone question them. The deference is baked into the culture, often enforced by mystical oaths or soul-binding contracts. But the really interesting conflicts arise when that rigid hierarchy gets challenged—like when a protagonist with a heaven-defying technique at a 'lower' level humiliates a young master from a higher one, sparking a generational feud. That tension between established order and disruptive potential is half the fun.