Despite the financial crisis, it appears that customer's purses are getting fatter. The bulk of the plastic in their wallets comes not from the well-known and well-used credit card but from the many loyalty cards available in the market.
"Loyalty programmes have been around for quite some time and there are now almost two billion plus loyalty programmes in the [worldwide] market," says Samer Soliman, Senior Vice-President and Head of Processing for Network International, one of the leading payment solutions providers in the region.
Building true loyalty
"In terms of trends, loyalty is cutting across all business industries — hospitality, dining, air travel, retail, supermarkets and, more recently, insurance," he says. "Customers are getting increasingly more demanding, and wish to be more in control of what they do and where they spend. And businesses recognise this changing trend."
There is a discernible shift, according to Soliman, among businesses moving from the traditional discount mechanism into a customer relationship management model, whereby they know their customer, understand their preferences and therefore structure customised solutions for every segment.
Loyalty programmes are fast being integrated into the smart plan of marketing strategies, with last year seeing a surge in this segment. In fact, 2011 was said to have been the year of customer loyalty, according to Mark Johnson, CEO of the US-based Loyalty 360, a loyalty marketer's association that helps its members understand loyalty and develop effective programmes.
"Marketers will increasingly understand that loyalty is not a programme — it is a journey and a strategic business goal," he says.
While points programmes have been around for a while, from a marketing perspective true loyalty is now being built based on total customer experience, and this is the new area of interest for most brands.
"Loyalty initiatives are focusing on engagement and building long-term relationships," asserts Johnson.
Take for instance, Air Miles, which last year launched its Math campaign, inviting the coalition loyalty programme's 1.3 million members across the UAE, Qatar and Bahrain to shop at any three Air Miles partners. Air Miles club members would usually get points for shopping at more than 120 outlets, including HSBC, Emax, Spinneys, Lamcy Plaza, VOX Cinemas and Damas.
However, during the campaign, shopping at any three outlets enabled them to enter the draw for a prize of 20 million Air Miles.
"We were determined to achieve a fun holiday promotion that increased figures for the month by helping members old and new engage with the brand, while positioning Air Miles as a rewarding coalition loyalty programme," says Mark Mortimer-Davies, CEO Air Miles Middle East.
The average consumer basket size went up by 17 per cent and the number of Air Miles issued increased by 1.2 million — a prime example of successful customer engagement.
Brand recall
Toward this endeavour to further engage the consumer, brands are launching special offers and short-term incentives to maintain a prominent presence. The latest such marriage between brand and value is the Club Apparel-dunia credit card, which offers shoppers value-added benefits in the form of Club Apparel loyalty points that can then be redeemed at any of the Apparel stores including Tommy Hilfiger, Nine West, Aldo, Kenneth Cole, Dune and Tim Hortons, to name a few.
The card allows shoppers to earn up to 12 per cent back on all purchase at any of the Apparel stores and 2 per cent as Club Apparel loyalty points for use elsewhere.
While relationship building is at the forefront of trends in the region, the world is focusing on new technology to drive loyalty programmes to another level and to manage customer data. An early example in our market is the Bravo Card customer reward programme.
"It is a high-tech rewritable card, wherein points are updated for each customer transaction," says Hasan Zein, Bravo's Operations Manager, and as such eliminates the need for account statements or updates. The card's surface has an external layer that is rewritable, and with a specialised printer machine installed at the cash counters of participating outlets, information on the surface can be erased and updated information can be printed several times.
Another scheme that stands alone in its category is Apparel Group's own programme, Club Apparel. Launched in May 2010, it is one of the fastest-growing and the only card-less loyalty programme in the UAE.
As Nilesh Ved, Chairman, Apparel Group, elaborates, this is an exciting development for customers and for the brands. "The scheme is all about customers being rewarded for shopping with us without the hassle of carrying a card.
"The unique technology behind the programme makes for a totally paper-free point system and the most environmentally friendly option we could find," he says.
There is no doubting that brands must respond to the evolving global consumer landscape and rise to the challenges presented by ever-increasing customer expectations.
Old is gold
Having said that, it is important to understand that the defining characteristics of the UAE in particular, and the region as a whole, is its very basic payment infrastructure, limited electronic channels, stratified population demographics and a large proportion of payments still flowing through cash. A case in point being the fairly new Shukran Card launched by the Landmark Group — which is a no-frills card that today encompasses more than 45 retail and hospitality brands under its umbrella.
"The card allows customers to earn and redeem points, while shopping across the group's fashion, lifestyle, food, hospitality and leisure brands. The loyalty programme is currently spread across seven countries and covers more than 1,000 outlets," says Vipen Sethi, CEO, Landmark Group. Shukran members can earn up to 5 per cent of the value of their shopping as points and can redeem them for any one of the millions of products across these stores.
The lack of drama and dazzles doesn't seem to have affected the loyalty programme with a member base of more than 2.7 million in the Middle East and more than one million members in the UAE. "This is testament to the acceptance of the programme by our customers and the value they find in our proposition," says Sethi.
The newest entrant to jump on the bandwagon, though sticking to the tried-and-tested swipe-and-redeem formula, is the popular hypermarket chain Carrefour, with the launch of MyClub. Claimed to be the first of its kind for the hypermarket sector in the region, shoppers can earn one point for every Dh10 spent in the store and once they reach 500 points, they will automatically receive a Dh50 voucher to redeem against their next purchase. This effectively means that a customer would need to spend Dh5,000 to get Dh50.
The price of loyalty is obviously cheaper than may have been thought, but as Theodore Roosevelt once said, "It is better to be faithful than famous." Perhaps, in the world of loyalty programmes, it is imperative to have both. n
Trends: Closer to the customer
We highlight certain obvious trends in the market today:
• Customer engagement and employee engagement
• Loyalty focuses more on emotions than on rational, incentive-based initiatives
• Getting closer to the customer is a top business strategy and area of focus. It's all about insight and intelligence
• Loyalty programmes relevant to the consumer
• Increasing focus on in-the-moment marketing, looking at how best to use all the customer touchpoints, including mobile apps
• The hospitality industry is investing more in loyalty initiatives
• Growth in partnership programmes, whether with service provider or banks
• Integration of social media
— S.P.
