The landscape of customer loyalty in the Middle East is transforming.
Technological change, emerging channels of interaction, shifting consumer expectations and the harsh economic climate are transforming the landscape of customer loyalty in the Middle East. Brands are increasingly aware of the importance of gaining customer loyalty but are finding it much more challenging to secure long term commitment from their customers.
ICLP commissioned research surveying 600 consumers across the United Arab Emirates (UAE) and Kingdom of Saudi Arabia (KSA) to gain new insights on what consumers expect from brands that they’re loyal to and how brands are delivering against these expectations.
The research highlighted a number of important insights that brands need to consider that impact customer loyalty:
1. Price limits customer loyalty
UAE consumers are the most cost-conscious with only 37% willing to pay a premium for a brand they considered themselves loyal to. Price remains an established and primary consumer motivator of loyalty.
2. Levels of customer satisfaction mirror advocacy and repurchase rates
There appears to be a direct correlation between the customer satisfaction levels with products and services and consumers’ willingness to repurchase/make recommendations to friends and family. UAE and KSA consumers want brands to offer trust, value, quality and service.
3. Loyalty to a brand is not always a guarantee of future commitment
With so much choice between brands, consumers are becoming increasingly fickle. Even where consumers regard themselves as loyal, on average 70% are willing to switch to a competitor. Along with this only 33% of consumers said they would go out of their way to do business with a brand if it was not convenient. Brands need to work harder to secure ongoing loyalty by finding ways to make it easy for customers to continue to interact and purchase and/or creating reasons why a customer would want to go out of their way.
4. Traditional channels still dominate brand engagement in UAE but the reverse is seen for KSA consumers
Loyal KSA consumers prefer to interact with brands using their website although UAE consumers prefer going into a store. However email usage is comparable being driven by Generation X (35-54 age group) in both markets with 62% of consumers wanting these to be personalised. On average just over a fifth of consumers across both regions had used social media to interact with a brand over the last 6 months. This illustrates the priority of channels in which brands need to ensure they are delivering an exceptional experience today but also planning for tomorrow.
5. Clear chasms exist between customer expectations and how brands currently meet those expectations
Whilst discounting and price-driven strategies are commonplace, 62% of consumers perceive that brands are not meeting their needs for greater personalisation and customisation in communications and rewards. Both UAE and KSA consumers want to be able to redeem their rewards via their mobile phone, ranking the importance of this at 74%. Many brands are failing to achieve this as there is a current chasm of 19% between consumer expectation and brand delivery.
Also, there is overwhelming demand from consumers that want coupons and rewards that they can use when they want. On average, 72% of consumers expect more instant gratification with discounts and rewards – currently a chasm of 15% - and want to be rewarded based on what they have purchased.
The smallest chasms are in areas such as social media, which are the least important to consumers. Brands need to re-evaluate their priorities to ensure they are meeting customer expectations in the areas which matter most.
6. Loyalty programmes positively impact loyal behaviour
Consumers appear to have very favourable perceptions of loyalty programmes; 60% of KSA and 55% of UAE consumers would buy more from brands whose loyalty programme they have joined. Consumers agree that a loyalty programme influences their purchases so there is an opportunity for brands to use such a strategy to positively impact buying decisions.
Dion Maritz, Regional Director for Middle East, Africa and India summarises the research saying: “This insight proves the effectiveness of a loyalty programme, but sheds new light on what consumers expect for their loyalty. More than anything else, consumers expect loyalty programmes that are localised to the Middle East, and offer tailored communications and rewards. We have seen an ongoing trend in better customer segmentation, and that is where brands will get the biggest results driving loyalty.”