State of loyalty schemes in the halal food sector

Perhaps the first observation about loyalty schemes in the halal food sector is: “Why are there not more of them?” The fact that the halal sector is based on customer loyalty to a religious instruction to eat halal and tayyib should, in principle, make it a suitable sector for specific loyalty schemes, mirroring the ones that are commonplace in the mainstream.

Loyalty schemes in the halal food sector and wider Islamic Economy space are still in their infancy; there are not more of them as traditional markets have not seen the need and the few initiatives in minority-Muslim markets are too small and too young to see the results.  

But loyalty programs certainly offer an opportunity to build a loyal customer base for brands that are fully engaged with the Muslim lifestyle market.

In the food retailing sector and also in the travel industry, as well as in the financial sector (with credit card benefits, for example) loyalty schemes have been around for decades in the mainstream marketplace. So will they work for the halal sectors?

POTENTIAL

The halal loyalty market is very much in its infancy but with significant potential.

The total North America loyalty market was $54 billion in 2014 (across all sectors), accounting for approximately 5.2 percent of the North American Food & Beverage market.

Applying the same ratio to total Muslim Food & Beverage expenditure globally yields a potential market of approximately $59 billion for 2014, based on DinarStandard data.

CURRENT STATE OF HALAL LOYALTY SCHEMES

Loyalty schemes in the halal sectors are few and far between. Given the comparative newness of halal as a defining market parameter and its fragmentation, perhaps it is not surprising there are so few schemes. But can they work?

Airlines, banks, food retailers and hotels have all used basic or tiered loyalty schemes for many years with varying degrees of success.

Certainly the business literature is full of arguments both for and against. But their continued use seems to confirm that, in the right circumstances, they have significant benefit whereby the brand and the end user can benefit.

Coupons in the halal food sector: A limited number of U.S.-based companies offer printable discount coupons via their Facebook pages, either with an expiry date or with limited re-print capabilities. Saffron Road does this, as well as numerous companies via the Halal Food Festival facebook page.

Loyalty cards: There are a small number of embryonic loyalty card schemes, such as the UK’s weeathalal.co.uk or the loyalty card offered at the Halal Food Festival Toronto in 2015 but they have yet to reach a critical mass to make them effective.

POTENTIAL SIZE OF HALAL LOYALTY MARKET (2014, USD billions)

Source: State of the Global Islamic Economy Report 2015-16, Thomson Reuters in collaboration with DinarStandard (Muslim and North American Food & Beverage markets); Raymond James Loyalty Study (North American Loyalty market)

FACTORS WORKING AGAINST HALAL LOYALTY SCHEMES

Two factors work against effective halal loyalty schemes – the fact that halal markets are so geographically scattered and that there is no dedicated global halal super brands.

However, the convergence of several Islamic Economy sectors, such as food, travel, hotels and fashion, may offer a real opportunity to implement a loyalty scheme for Muslim customers.

Mainstream loyalty schemes have also found success by bundling several offers, giving deals on partner hotels, airlines, car rental and dining.

In a successful scheme, all partners will benefit, as does the end user, i.e. the customer. The halal lifestyle market is fertile ground for a multifaceted loyalty offering, given that customers have a natural loyalty across all sectors, as long as they are geared toward Muslim preferences.

MASTERCARD’S HALAL BENEFITS PROGRAMME – A SOLID FIRST STEP

MasterCard’s Halal Benefits Programme is the first to try out a genuine loyalty scheme that matches its mainstream counterparts. Offered in Southeast Asia, via participating Islamic banks, the Shariah-compliant cards offer the user a range of free offers and discounts at a range of hotels, restaurants and modest fashion outlets.

The scheme was rolled out in early 2015 and MasterCard has indicated that this is a test run, which, if successful, would be followed by other schemes to be rolled out in the UK, Europe or the U.S. and specifically aimed at Middle Eastern travellers.

This scheme is part of MasterCard’s ambition to engage fully with the Islamic Economy.

According to Safdar Khan, the company’s group country manager for Indonesia, Malaysia and Brunei, the company sees opportunities in the halal ecosystem, especially in the travel sector, and have a long-term strategy to position itself as the card and payment gateway provider of choice for the Muslim world.

We will need to watch this space to see how this idea matures but an initiative like this may be a good example of the power of convergence across the halal sectors, especially if some airlines were to join in.

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