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The Truth About Customer Loyalty

Marketing

The Truth About Customer Loyalty

The concept of customer loyalty is very fragile in today’s economy. Communicate has earlier covered reports citing that consumers aren’t necessarily loyal to brands anymore but are skewing more towards timely delivery service. A consequence of the improvements in digital connectivity and service today. Hence the reason why many brands introduced loyalty programs to attract customers and keep them happy. But sadly, even these programs are not enough today. KPMG has released a study that highlights the truths about customer loyalty today. The study is focused on the UAE consumer market.

How loyal do UAE customers behave?

What earns and retains loyalty?

  • The findings of the survey highlighted that product quality was the top factor for inspiring loyalty among UAE consumers. Value for money, customer service, and product consistency all place second.
  • Overall, only 45% of local respondents (37% globally) identify points and rewards as a particularly important factor in earning and keeping their loyalty.

In almost every country, points and rewards are less likely to earn loyalty than corporate transparency and honesty. Customer loyalty is simply too critical to be left to a rewards program.

The paradox of personalization

  • While the industry consensus is that most consumers want personalization, the survey seems to speak a different tone. Only one in five consumers in the UAE see personalization – be it in terms of service, communication, promotions and offers – as a leading benefit of loyalty programs.
  • The drive for personalization is likely to conflict with public concerns about data privacy. 14% of UAE-based consumers do not belong to loyalty programs because they do not want their data tracked.
  • As opposed to personalization driving loyalty, material rewards such as cashback and discounts are the most valued features for local customers.

  • The findings also suggest that while loyalty programs are important to customers, some UAE-based companies may not be getting it right. 94% of UAE consumers believe companies should reward loyal customers, the same percentage also believe companies should find a new way to compensate repeat shoppers.

What will promote loyalty?

  • When pooling up the consumers who do not belong to any loyalty program, 39% of them cite their reason due to a lack of awareness about these programs.
  • 57% cite discounts or special pricing as a key driver to sign up for these programs.

There are still opportunities in developing and growing loyalty programs, to positively impact customer experience and drive loyalty but brands and retailers need to refine their loyalty value proposition. The study suggests that four factors should be considered when revamping a loyalty program:

Make loyalty programs easier to use

Sixty-one percent of local shoppers would like to have more flexibility to earn or utilize benefits. UAE brands need to pay more attention to their onboarding process and, concurrently, the earning and redemption process.

Clarify their purpose

Sixty-five percent of UAE consumers believe they belong to too many loyalty programs. Successful engagement must always be relevant and well-timed. Harnessing the power of available data may inform improved interaction and help brands provide a program that stands out from the crowd.

Raise awareness

Almost four in ten (39 percent) of UAE consumers who do not belong to loyalty programs say it is because they are not aware of any. In addition to making programs more accessible and clarifying what benefit the customer derives, companies must also promote their programs.

Freshen them up

Twenty-nine percent of local users find current loyalty programs unattractive. Sixty-one percent mentioned that the most valuable benefit of a reward program is “cashback on future purchase.” A review of the current value proposition, with a focus on local consumers’ needs, may provide an effective new approach to providing rewards and
promoting loyalty.

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