Muscovites Learn the Price of Loyalty
Marina Prokhorova recently bought herself a second wallet to accommodate her 17 bonus and discount cards, which she
uses virtually each time she goes shopping. As a savvy marketing strategy, a growing number of Moscow stores and
companies are issuing loyalty cards to lure customers and, more importantly, to make sure they come back.
"Firms used to concentrate mainly on increasing their client base and multiplying their profits," said
Alexei Krivoshapko, a consumer goods analyst with United Financial Group. "But now they are becoming more and more
concerned with customer loyalty."
Ramstore, one of Moscow's 20 supermarket chains, issued its first loyalty cards in May 1999. Today there are
more than 750,000 Ramstore cardholders, which makes for about 62 percent of the company's customers, said Mustafa
Saglam, general director of Ramenka, the company that operates the Ramstore chain.
A Ramstore club card, which provides for a 10 percent to 20 percent discount, depending on specific promotions, can
be purchased for 25 rubles. Cardholders can also take part in lotteries and prize drawings.
"Such a card system is primarily aimed at increasing customer loyalty," Saglam said. According to company
estimates, cardholders account for roughly 73 percent of overall sales. Club cards are also used for information
gathering, such as learning about a consumer's preferences.
Limited discounts are the norm, and few companies can compete with the club card system of Arbat Prestige, a chain of
11 cosmetics stores. Arbat Prestige discount cards are based on a cumulative system: the more a customer spends, the
greater the discount rate.
Earlier this year, Arbat Prestige launched a program wherein a customer starts with a 5 percent discount, then sees
his or her own private discount rate increase as more money is spent. Upon accumulating $377 worth of purchases, the
customer receives a VIP card, which discounts products 30 percent. Largely thanks to the loyalty scheme, the
company's sales increased 40 percent to 45 percent. Its active customer base is now 500,000 names long.
Along with discounts, some companies also reward customers by giving them bonus points that they can later exchange
for a gift of their choice. Such is the idea behind Mnogo.ru, a club uniting more than 230 companies where clients
receive bonus points for purchasing products or services.
Mnogo.ru club members include Sbarro restaurants, Yukos gas stations, Soyuz music stores, Sobinbank and Apelsin
bowling club. According to the company, there are currently more than 500,000 Mnogo.ru cardholders.
Irina Zudina, public relations manager at Mnogo.ru, pointed out the difference between the two major systems.
"There is always a limitation as to how big a discount you can get -- it can never be 100 percent," she said.
"With us it's different. You can be collecting bonus points endlessly."
According to Zudina, the main service the company provides to its member firms is increasing the customers'
loyalty and making sure that they return to the store. From December 2001 to December 2002, the company estimated the
growth of second-time purchases by Mnogo.ru cardholders at more than 200 percent.
"More than 40 percent of our club cardholders return to make a second purchase, while 27 percent become
permanent customers," Zudina said, speaking of purchases made in outlets and restaurants that accept Mnogo.ru
cards.
Along with brick-and-mortar firms, Mnogo.ru also comprises several online companies, such as the online electronic
equipment store 003.ru, a member since November 2002. "In less than one year our sales went up approximately 20
percent," said Lavrenty Kutsiya, a manager at 003.ru.
Yuliya Pavlova recently won two tickets to the Pobeda movie theater after accumulating 1,000 bonus points together
with her husband in two months' time. "Of course you have to accumulate a lot of points," she said.
"But if you go specifically to Mnogo.ru restaurants and shops, you can do it."
Mnogo.ru doesn't get rave reviews from everyone. Yevgeny Bogorad, editor of the Russian edition of Popular
Mechanics, complained that Mnogo.ru bonus points are sometimes incompatible with discounts offered in several Moscow
stores.
"I was shopping at Rivoli once and I was told that since I had already received a discount from them I was not
eligible for any Mnogo.ru bonus points," Bogorad said. "It was one or the other."
Bogorad also believes that while the amount of bonus points one needs to accumulate is very high, "what they
offer is also uninteresting and not worth the price."
Mnogo.ru offers house appliances, electronic equipment, cosmetics and services such as car insurance or dental care.
Yves Saint Laurent mascara is worth 3,800 bonus points, while a Siemens S45i cellphone is worth 31,000.
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