Dubai: The UAE is renowned as a global shopping hotspot and the festive season during the holy month of Ramadan represents the peak of shopping activities. Festive shopping has become a major economic driver, with retail sales experiencing a sharp spike during festive sales as brands leverage special offers and promotions across retail avenues to attract customers. In this intensely competitive environment, both retailers and financial institutions are turning to tech-driven loyalty benefits programs to engage customers and drive profitability.
The UAE loyalty program market has experienced rapid growth in recent years, amidst technological advancements, shifting consumer preferences, and regulatory changes. As per a report by Research and Markets, the UAE loyalty market is projected to grow by 16.1% in 2025, reaching USD 490.8 million. This can be attributed to the presence of an affluent, tech-savvy customer base, increasing digitization, and shifting consumer preferences for personalized services.
Financial institutions are experiencing intense competition, making customer retention crucial for sustainable growth. Loyalty programs are being rapidly adopted as a way to enhance customer engagement, foster long-term banking relationships, and create opportunities for cross-selling various financial products. Some notable examples include loyalty points and benefits offered across categories like sports, fashion, hospitality, entertainment, and consumer durables. In the retail industry, loyalty programs have proven particularly effective in converting occasional shoppers into repeat customers by offering redeemable points for discounts, exclusive items, or store credits. From individual brands to shopping malls, businesses across the retail ecosystem are utilizing loyalty-based rewards to foster long-term customer relationships. Especially during the festive season when consumers are inundated with discounts and offers from every shopping avenue, these programs are becoming an essential part of the promotional strategies to attract customers and maximize revenues.
From simple point-based systems to sophisticated engagement strategies that prioritize overall customer experience, loyalty programs have come a long way. Modern loyalty programs now emphasize personalization, tiered membership structures, and seamless digital integration to enhance customer retention and brand affinity.
Personalization has become a key differentiator, offering customers rewards and incentives tailored to their preferences, behaviors, and purchase history rather than generic offers. As per a study by Accenture, 91% of consumers are more likely to shop with brands that recognize and offer relevant recommendations. Brands are utilizing customer data, including past purchases, browsing behavior, and engagement history, to make data-driven decisions and curate offers and exclusive deals personalized to individual users, fostering a valuable perception of appreciation and reciprocity. Tiered loyalty programs incorporate gamification by providing customers with escalating benefits based on their spending or engagement levels. These programs reward loyal and high-spending customers with enhanced perks and access to exclusive offers, promoting long-term loyalty to the brand. By incentivizing customers to reach higher tiers and incorporating gamification elements like points, levels, and challenges, businesses are promoting active participation and long-term engagement.
Businesses are increasingly prioritizing a seamless digital experience that provides unified access across various platforms, including mobile apps, websites, and physical stores, to encourage active engagement in loyalty programs. A McKinsey report reveals companies using digital engagement in their loyalty programs see a 20-30% higher customer retention rate than those using traditional programs.
Emerging technologies like AI-driven personalization and augmented reality are transforming the way businesses engage with customers. Brands are leveraging AI-driven predictive analytics to accurately gauge customer demand to provide relevant, personalized deals. The future of loyalty programs will be influenced by AI, blockchain, augmented reality, and hyper-personalization, leading to more immersive and engaging experiences for customers. However, businesses must be mindful of the need to handle customer data responsibly and transparently to address data privacy concerns and regulatory compliance.
Loyalty programs in the UAE have evolved beyond mere discounts and points; they are now powerful tools for businesses to strengthen relationships, boost engagement, and maximize profitability. A well-implemented loyalty program offers substantial business advantages beyond just customer retention, helping brands build stronger connections with their audience and enhance overall profitability. In banking, retail, and other sectors, loyalty benefit programs have emerged as an essential tool in the strategic repertoire of businesses to forge lasting customer connections and stand out in an increasingly competitive market.
This writeup is contributed by Dhruv Verma, Founder and CEO of Thriwe
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