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. Membership was markedly up across all industries, except grocery stores:
35 percent are now members of hotel programmes, up from 8 percent
43 percent hold frequent flyer memberships, up from 20 percent
40 percent participate in credit card programmes, up from 36 percent
39 percent are involved in banking programmes, up from 25 percent
“The affluent UAE consumer has overwhelmingly embraced loyalty programmes over the past two years. We’ve seen huge gains across almost all sectors, indicating that brands are meeting customer expectations to a degree and building meaningful relationships with their customers. The UAE is a fascinating market, as brands have to engage its transient population with relevant rewards, right from the start,” said Christopher Evans. “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 percent, 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 percent of earners from Australia, Brazil, China, France, Hong Kong, India, Singapore, the United Kingdom, the United States of America and the United Arab Emirates. 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 percent in 2014, to 65 percent 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 percent), more likely to purchase from them in future (+4 percent), and is less likely to switch to a competitor (+6 percent).
The key to success
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 percent demand great customer service (69 percent globally), 69 percent want access to a choice of rewards and benefits (68 percent globally), and 70 percent expect brands to be easy to do business with (69 percent).
However, there are areas where brands can develop programmes and initiatives that will impress the affluent UAE middle class. 65 percent of respondents expect brands to know who they are on a personal level and treat them uniquely, nine percent higher than the global average. When asked what would encourage higher and more frequent spending, 43 percent said a personal adviser to help them with their purchases, double the global average of 22 percent. This suggests a bespoke approach—driven by relevance and high-level personalisation—will help UAE brands connect with their customers more effectively.
The financial services opportunity
Of all the industries surveyed, the financial services sector is well placed to succeed when it comes to meeting evolving customer expectation. 69 percent of affluent UAE middle class customers feel their bank should reward them for their loyalty, a 13 percent 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 Christopher 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 percent of UAE respondents agree that their bank knows and understands their needs—a 13 percent increase since 2014. The figure also beats the global average of 49 percent suggesting a forward looking sector.
Further, UAE banking loyalty programmes specifically were found to encourage 87 percent of members to spend more (82 percent globally), while credit card initiatives positively influenced 82 percent of respondents (79 percent 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 – Brands need to balance programme objectives for motivating short-term behaviour and driving deeper engagement for long-term loyalty. Personalisation and breadth of rewards and benefits is key for brands to remain relevant.
Address how loyalty programmes are funded – For financial services, the loss in interchange fees can be mitigated by increasing fees in other areas of the business, developing their own loyalty programmes, increasing collaboration with merchant funded programmes, and building bank-wide loyalty through account add-ons like insurance.
Embrace digital – The smartphone is becoming the consumer device of choice for many brand interactions. Incorporating loyalty programmes and initiatives into payment card and mobile ecosystems will drive engagement and increase consumer brand affinity.
Move beyond transactional rewards – Although discounts and cash-back provide instant gratification, they do little to drive long- term loyalty. Brands should instead get to the heart of what matters to their customers. For the affluent middle class, this is often their friends and families, so rewards should be more experiential, lifestyle and life-goal oriented.