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UAE loyalty programme market likely to hit $1.57 billion this year

Sector’s CAGR is projected at 8.9% from 2024 to 2028, expert says

The UAE’s loyalty programme market experienced a compound annual growth rate (CAGR) of 11.8 per cent from 2019 to 2023, reaching $1.57 billion in 2024 with an annual increase of 10.4 per cent.

This upward trend is anticipated to continue, with a projected CAGR of 8.9 per cent from 2024 to 2028, potentially reaching $2.2 billion by 2028, an industry expert said.

“This market is rapidly evolving, driven by technological advancements, stricter government regulations, and shifting consumer preferences. Companies are increasingly focusing on personalised, technology-driven solutions, with a growing emphasis on cashback options to enhance consumer engagement,” Dhruv Verma, Founder, and CEO of Thriwe, told Khaleej Times in an interview.

Loyalty programmes in the UAE help increase consumer engagement by offering personalised rewards, exclusive perks, and a seamless digital experience. These elements encourage deeper interactions with brands and help consumers feel valued through tiered membership systems. Many programmes feature mobile apps, enabling customers to easily track points, redeem rewards, and access tailored offers based on their spending habits, ultimately boosting brand loyalty.

Loyalty programmes in the UAE use several key methods to enhance customer engagement. Personalised rewards, created by leveraging customer data, allow brands to tailor offers and make customers feel understood and appreciated. Tiered membership systems, with increasing benefits at higher levels, motivate consumers to spend more to reach elevated tiers. Mobile app integration further enhances the experience by simplifying the process of tracking points, redeeming rewards, and accessing deals, encouraging regular interactions with the brand. “Gamification elements, such as points, levels, and challenges, increase engagement by promoting active participation. Social media integration, where customers can share their loyalty status or rewards, generates organic word-of-mouth marketing. Additionally, aligning loyalty programmes with local customs and preferences ensures cultural relevance, further boosting consumer engagement. Together, these strategies significantly strengthen customer relationships and brand loyalty in the UAE,” Verma said.

While digital loyalty programmes present valuable opportunities, they also come with challenges. “One such challenge is information overload, where the abundance of available loyalty programmes can overwhelm consumers, causing them to overlook certain offerings. To combat this, engaging storytelling and personalised messaging are essential for capturing attention,” Verma said.

Additionally, programmes that are too complex may deter user engagement, emphasising the need for simplicity and user-friendly designs. Effective technology adoption, including mobile apps and data analytics, poses another challenge, as any technical issues can frustrate users and lead to disengagement. “Ensuring a seamless omnichannel experience across online, in-store, and mobile platforms is vital but can be complex, particularly in the UAE’s diverse market. Data privacy concerns also arise with personalisation, making it essential for businesses to implement strong data protection measures and ensure transparency regarding data usage. Finally, in the highly competitive UAE market, businesses must continuously adapt their loyalty programmes to meet evolving consumer demands. By addressing these challenges, businesses can create more effective loyalty programmes that foster deeper customer relationships in the region’s competitive landscape,” Verma said.

The outlook for the loyalty programme market in the UAE over the next five years is highly positive, with significant growth anticipated. The market is projected to expand at a CAGR of approximately 9.2 per cent, increasing to around $2.23 billion by 2028.

Several key factors are driving the growth of loyalty programmes, Verma said. “Intensifying competition is prompting businesses to form strategic alliances and continuously innovate their offerings to retain customers in a crowded market. The rising adoption of loyalty programmes is fuelled by decreasing customer loyalty to products, compelling brands to invest in initiatives that help them stand out. Technological advancements in AI, machine learning, blockchain, and big data are enhancing programme efficiency, preventing fraud, and enabling real-time rewards distribution, allowing businesses to better understand consumer behavior and boost loyalty,” he added.

Increased digital penetration and transformation are pushing companies to leverage advanced technologies like AI and data analytics for improved tracking, more frequent transactions, and personalised offerings that enhance customer engagement. “The integration of omnichannel strategies is also becoming critical, as companies strive to create seamless experiences across online, in-store, and mobile platforms to cater to the UAE’s diverse consumer base. Social media plays a pivotal role, as customer experiences shared online can significantly impact brand reputation — positive interactions can enhance loyalty, while negative ones can go viral and cause damage. Finally, as consumers grow more environmentally conscious, loyalty programmes incorporating sustainability and ethical practices are likely to gain popularity,” Verma said.

Overall, the UAE loyalty programme market is expected to undergo significant transformation, driven by technological advancements, changing consumer behaviours, and increased competition. “Brands that adapt to these trends are likely to enhance customer loyalty and engagement,” Verma said.