I was recently invited onto Dubai Eye’s Business Breakfast Show and asked the question: What’s up with every Tom, Dick, and Harry wanting to launch a Loyalty Program? And another asked how he was expected to manage 38 apps on his phone and wouldn’t a single program such as Air Miles be better?
By: Manav Fernandez, CLMP
The Ever-Increasing Amount of Loyalty Program Offers
Having answered to the best of my ability, I found myself thinking: Isn’t it great that finally businesses are learning the importance of knowing who their customers are and building genuine relationships with them beyond just transactions?
However, the question remains, are there too many loyalty programs? Research shows that the average American consumer is a member of 14.8 programs while they engage with 6.7: begging the question, which 6.7? How do you ensure your program isn’t in the 55% of inactive memberships?
It’s quite simple — a member will engage with a program that is first and foremost, RELEVANT to them, their lifestyle, their aspirations and objectives. As an example, John in Dubai is a Business Development Director who travels across the region for business (pre-Covid, obviously). John will definitely be on an airline program and a hotel program. If he’s anything like me — a caffeine junky — he’ll be on a coffee retail program (probably a chain he frequents and is close to home, work, or on his route to work). He will have a supermarket program membership that he shares with his wife and last but not least, he will have a couple of restaurant memberships (pizza, sushi and/ or a steakhouse). These will all be underpinned by a credit card that earns him points for his everyday spends.
What about a coalition program — “One program to rule them all”. Personally, I’m not a fan — it seems to me these are usually set up with a supermarket, bank, or telecom company underpinning them and the only ones who benefit are the credit card holders from the participating bank. Having been a member of a ‘Glocal’ Coalition, I can tell you from personal experience, while I have earned points that are currently in six figures, they aren’t enough to warrant a redemption of any kind and I have stopped asking merchants if they offer them. I am not alone.
Growing pains of a maturing loyalty market in the middle east
So yes, there is an increasing proliferation of loyalty programs as our market grows and embraces competition. This is a sign of a maturing market, one where the power resides with the customer and not with giant monopolistic businesses who have been driving their businesses around the axiom, “Build it and they shall come!”, and come they have from the far corners of the world, making this one of the most diverse and popular regions for expats. However, as the market grows, so does the competition and this means that over time, “they” stop coming, because they have options.
The increase in loyalty programs is great for customers. The businesses who want their custom will need to really get to know them and offer incentives that are of value to them. There is pressure on businesses to be creative with their program design, make sure the program is genuinely generous, and has a series of symbiotic partnerships to widen the rewards eco-system to ensure there is engagement. In other words, become customer-centric to reduce or minimize brand-promiscuity and increase customer lifetime value.
A close friend of mine once told me how his chest would swell with pride, when he walked up to the check-in counter of a popular regional airline with his wife and daughters, and be greeted with “Welcome back, Mr Mehta and where will you be flying to today”. “My daughters looked at me like I’m a king,” he said. Of course, he appreciates the points he earns and the upgrades he is able to use them for, but what truly matters to him is the recognition — and that is why he will never stop flying with them.
So, are there too many loyalty programs on the market? Well, if brands want to build more customer recognition programs, make them interesting to engage with and relevant to my needs, and I will end up managing all 14.8 loyalty programs I’ve signed up to and their apps. I may even tell all my friends about them and who knows, write a blog about each of them and how they add so much value to my life!
Manav Fernandez, Co-Founder and Executive Director, QuickBrownFox Consulting FZ LLC, has lived and worked in the MENA (Middle East & North Africa) Region since 1995.