Affluent UAE consumer overwhelmingly embrace loyalty programmes

Christopher Evans, director, Collinson Group.

Affluent UAE consumer has overwhelmingly embraced loyalty programmes over the past two years and brands are meeting customer expectations to a degree and building meaningful relationships with their customers, said Collinson Group on Wednesday.
There has been a stark rise in loyalty programme membership among the UAE affluent middle class since 2014, particularly in hotel and frequent flyer programmes. Collinson Group surveyed attitudes to programmes run by supermarket and grocery stores, airlines, credit card providers, retailers, hotels, telecom and media companies, coffee shops, and banking. 
"The UAE is a fascinating market, as brands have to engage its transient population with relevant rewards, right from the start," said Christopher Evans, director, Collinson Group. 
"One area we're particularly interested in is financial services, a sector which is gaining momentum and in only a few short years has engaged consumers with loyalty initiatives. Key for brands in the UAE will be to avoid the pitfalls of consumer fatigue, which we see in more mature markets, by enhancing these initiatives through increased personalisation. Globally loyalty membership is down 20 per cent, and if companies fail to innovate they may see their current success plateau, and even decline."
Collinson Group polled 6,125 of the top 10-15 per cent of earners from Australia, Brazil, China, France, Hong Kong, India, Singapore, UK, USA and the UAE. Alongside the rise in membership in the UAE, the research shows a significant uplift in those who agree that they are an engaged member of a loyalty programme - rising from 44 per cent in 2014, to 65 per cent in 2016. This significant jump demonstrates how brands in the UAE are effectively motivating positive behaviour among consumers. 
Indeed, the UAE affluent middle class is now more likely to choose a brand they feel loyal to even if it is more expensive (+13 per cent), more likely to purchase from them in future (+4 per cent), and is less likely to switch to a competitor (+6 per cent). 
The UAE affluent middle class is not the most demanding when compared to other countries. They track very closely to the global average with regard to the factors that influence whether they are loyal to a brand or not. 68 per cent demand great customer service (69 per cent globally), 69 per cent want access to a choice of rewards and benefits (68 per cent globally), and 70 per cent expect brands to be easy to do business with (69 per cent).
However, there are areas where brands can develop programmes and initiatives that will impress the affluent UAE middle class. 65 per cent of respondents expect brands to know who they are on a personal level and treat them uniquely, nine per cent higher than the global average. When asked what would encourage higher and more frequent spending, 43 per cent said a personal adviser to help them with their purchases, double the global average of 22 per cent. This suggests a bespoke approach - driven by relevance and high-level personalisation - will help UAE brands connect with their customers more effectively.
 
Financial services 
Of all the industries surveyed, the financial services sector is well placed to succeed when it comes to meeting evolving customer expectation. 69 per cent of affluent UAE middle class customers feel their bank should reward them for their loyalty, a 13 per cent rise since 2014. By drawing on the wealth of customer data held on record, retail banks and credit card providers can develop initiatives that tap into what motivates their customers.
"The UAE affluent middle class values spending time with, and providing for, their families, as well as saving for the future. These aspirations rank far higher than driving a good car or going on a luxury holiday. Brands should seek to tap into what motivates their customers instead of reaching for only discounts or material goods as rewards," continued Evans. "We are encouraged to see that the financial services sector is starting to see the value in delivering a more personal and digital, experience for their customers."   
66 per cent of UAE respondents agree that their bank knows and understands their needs - a 13 per cent increase since 2014. The figure also beats the global average of 49 per cent suggesting a forward looking sector.
Further, UAE banking loyalty programmes specifically were found to encourage 87 per cent of members to spend more (82 per cent globally), while credit card initiatives positively influenced 82 per cent of respondents (79 per cent globally). The research also uncovered increases in the levels of trust in financial services' ability to manage personal data, and faith in institutions to act in their customers' best interests.
The financial services sector must however be aware of challenges to their business in the form of new fintech start-ups offering services that impact revenues. The reduction in interchange fees which have traditionally been used to fund loyalty programmes is already impacting several countries globally, and will be felt in the UAE in the immediate future. 
To succeed, financial services and other industries must recognise the value of relevance; Address how loyalty programmes are funded; embrace digital Move beyond transactional rewards. - business@khaleejtimes.com