Abu Dhabi: Retailers in the region are facing challenges in terms of standing out and attracting customers due to the increase in loyalty programmes entering the market, according to Priyanka Lakhani, regional planning director at ICLP, a loyalty marketing and customer relationship management company.

“Findings [from research by Forrester Consulting] suggest that programmes are not delivering enough in terms of choice and personalisation. Consumers expect more personalised and tailored experiences, along with more immediate rewards, and want to have the flexibility to use these rewards when they want,” Lakhani told Gulf News.

She added that this was especially true with the rise of social media, and many customers expecting digital engagement with retailers.

Discussing loyalty programmes, Lakhani said that they are likely to increase consumer spending, encourage customers to purchase the same brand again, and even pay additional fees. According to the same research by Forrester, more than 35 per cent of customers in the Middle East are willing to pay additional fees to receive a premium service for a product or a brand that they are loyal to.

The figure is higher than in UK where 22 per cent of customers said they would pay more for a premium service if it were a brand they are loyal to, and higher than the 24 per cent in the US who agreed on the same statement.

“Retail programmes that offer discount or cash back vouchers as reward actually see incremental revenue benefit in the redemption of those vouchers.

Typically, a discount or cash-back voucher of a specific value is issued when a customer reaches a predetermined threshold of spend. The voucher can only be used on their next visit, encouraging a return visit where the customer will spend much more than the value of the voucher,” Lakhani said.

While the retail sector still struggles in terms of personalisation of loyalty programmes, the travel industry has pioneered with most commercial airlines offering frequent flyer programmes and frequent guest programmes.

Qantas rumours

“In some instances, these programmes have become a source of new revenue generations, and in many cases, are more valuable profit centres than the airline itself — a case made painfully clear by the well-publicised situation at Qantas,” Lakhani said.

She was referring to the rumours that had surrounded Australian airline, Qantas, about possibly selling their frequent flyer programme, which is worth millions of dollars, to inject cash into the airline.

“Barring the travel sector, programmes in the Middle East are in their infancy. However, where customers have seen value in these offerings, engagement has been high, with a few programmes boasting a member base [of] over a million, and a significant portion of their turnover contributed by member spend,” the regional planning director said.

She added that retailers must maintain a customer-centric focus in order to generate higher revenues through their loyalty programmes.

“Brands across industries must seek alternative ways of improving sales and profits, centred around adopting more transformational relationships and loyalty marketing initiatives, with the aim of building customer loyalty and retention,” Lakhani said.

ICLP creates loyalty programmes for organisations such as Sephora, Jumeirah Group, Qatar Airways, Mothercare, and Louis Vuitton, among others.