Can customer loyalty be bought?

It's often an offer too good to refuse – one that entitles us to freebies or cash simply for shopping at our local supermarket, fashion outlet, coffee shop or airline. For doing nothing more than we always did – shop – a rising numbers of stores in the UAE seem willing to throw money at us. And it's all in the name of the loyalty card. Whether it's an espresso-coloured piece of cardboard that will earn you a free skinny latte from Costa Coffee or the sky blue piece of plastic that offers you free flights, spa days or mere toasters from Air Miles, points mean prizes. And prizes are just what everyone needs in these straitened times. The Park Hyatt offers customers a free meal if they notch up enough points; the Centrepoint Privilege Club card turns points into shopping vouchers; Emirates' Skywards scheme rewards customers with flights and gifts; and Air Miles promises to pay your weekly shopping bill at Spinneys. But it's not all about cashing in points to redeem prizes. There are also the innocent-looking retailers who give you an even more tempting offer: You show us some loyalty and we'll give you some nice bonuses in return. Mercato Mall's Privilege Plus card, for instance, brings in shoppers by the A360-load with offers of instant discounts and prizes. The La Senza Club card, which gives away one free bra for every nine you buy, and the Coffee Bean and Tea Leaf Pink Drink card, which puts the 13th coffee you buy on the house. However they work, loyalty cards certainly get customers excited. Tara Bonner, a 42-year-old mother from the UK, who admits to having six loyalty cards weighing down her purse, says, "I was addicted to loyalty cards in the UK, and as more and more appear here in Dubai's shops I feel compelled to sign up. I just can't refuse that offer of discounts and points – I guess it makes me feel a little less guilty about shopping when I should be saving!" More fool those retailers, you might think, as you pocket that 20 per cent discount or cash in points to redeem all manner of tempting handouts. But far from this being an act of kindness, retailers are obviously looking for something in return. In today's fierce – and more recently challenging – climate, retailers are searching for smart weapons to gain an edge on the competition. Enter the loyalty scheme, which not only encourages repeat custom, but gets shoppers to increase their spend in one store. Given the choice between two stores, we are more likely to shop at the one where we earn rewards. So choosing to be loyal is actually synonymous with opening your wallet to one coffee shop, airline or hotel over another. For the past 10 years, shoppers in the UK and the US have been bombarded with the question, "do you have a loyalty card?" every time they reach the checkout. In the UAE – a shopping paradise that attracts more than two million visitors during Dubai Shopping Festival and Dubai Summer Surprises alone – the loyalty card is still a new phenomenon. However, with more tourists each year than the number of residents, and with new outlets such as the Dubai Mall and Marina Mall, the need to stand out in the retail sector has become more pressing. In more established markets such as the UK, retailers have developed various concepts to gain that competitive edge. For example, since Tesco introduced its Clubcard loyalty programme in the UK, its customers are spending 28 per cent more at its supermarkets and 16 per cent less at its competitor Sainsbury's. Research for the Middle East is harder to come by. Fiona Leslie, Head of Marketing & Public Relations, Air Miles Middle East, says: "Loyalty is a recent development in the Middle East, but with increasing competition all the time, it is becoming more and more essential for retailers to use loyalty initiatives such as Air Miles as a way to retain and lift spend of existing customers as well as acquire new customers, which can be done most effectively using a coalition programme, instead of a stand alone programme." Air Miles was the first loyalty scheme to reward UAE shoppers and, since its launch in 2001, more than 1.4 million members have enrolled from over 700,000 households in the UAE, Qatar and Bahrain. Members can collect Air Miles from over 120 market-leading companies to claim rewards and experiences. While originally set up as a frequent flyer programme for British Airways, Air Miles has diversified to offer a variety of rewards; in fact the most requested reward is now for shopping vouchers. When we look at the loyalty schemes set up by Etihad and Emirates, miles are no longer simply currency for flying. Both companies operate a tiered system offering anything from an ipod nano to tickets for the Big Bus tour. While Etihad Guest offers immediate rewards and a miles-plus cash-option of claiming rewards, Emirates' Skywards offers benefits such as waitlist priority, priority check-in and exclusive lounge access for frequent travellers. Similarly, hotels, which once just offere