Luring new customers and maintaining existing customers

Luring new customers and maintaining existing customers

Burhanuddin Abe
Contributor
Jakarta

Even for purchases of basic daily needs like soap and
toothpaste, Maya does not mind the longer distance to Matahari
department store instead of a nearby mini market.

The main reason is by using her Matahari Club Card (MCC) she
is rewarded with points that can be exchanged with free shopping
vouchers. "I have always loved discounts," said the 29-year-old
mother.

The discount is in fact not very large, as it is only one
percent of the purchase value. So, Maya gets Rp 10,000 or US$
1.05 for a purchase of one million rupiah (US$ 105). But, in
addition to the points collected by customers to be later
exchanged with shopping vouchers, Matahari lures these regular
customers with periodic raffles that include attractive prizes
like cellular phones, notebooks, household equipment and even a
luxury sedan.

Almost all customers, especially women, are attracted by
discounts, vouchers, prizes and the like. The huge number of
members currently holding an MCC proves the effectiveness of this
particular marketing tool.

To date, PT Matahari Putera Prima Tbk, the holding company of
both Matahari Department Store and Matahari Super Market, is
serving close to two million customers who have signed up since
the launch of its promotion on October 27, 2000.

Many companies agree that this type of program has a high rate
of success for both maintaining existing customers as well as
acquiring new ones. In today's cutthroat competition, any new
strategy, especially one that has been proven a hit in other
countries, is welcomed. In the case of major department stores
and supermarkets, take Matahari and Rimo department store, for
example, both are well aware of consumers' fickleness and low
level of loyalty. Hence, next to enormous discounts, enter the
membership cards with their points, vouchers, raffle and so
forth.

Another advantage of membership cards is that the companies
can gather consumer data and compile it into a database for
further finetuning and enhancement of their services, which, in
turn, are expected to create more sales. One of the marketing
managers of Matahari said that the MCC alone had boosted the
company's sales quite significantly: close to a 40 percent
increase on last year's figures.

The club card also helps reduce customer "turnover", which is
probably due to both its tangible and intangible strengths. The
overly used phrases, like "free, save money, grand prizes, rock
bottom prices" and so forth, in the case of this marketing
strategy, strangely, seem to reinforce its strength.

Almost every marketer of major companies agrees on the need to
focus on building long-term relationships with customers in order
to be competitive in today's business environment that calls for
more than astuteness in providing genuine customer satisfaction.
Vic Hunter, a marketing guru, in his book Business to business
marketing, wrote that the cost of acquiring new customers is
about 30 percent higher than retaining existing ones. An increase
of five percent of sales from existing customers can mean a
profit increase of between 25 and 55 percent for the company, he
added.

Membership cards are also issued by giant-sized retailers
selling goods at rock-bottom prices. One of the latest issuers is
Alfa Hypermarket. Its membership card -- Alfa Family Club -- has
attracted more than 100,000 customers in less than two years.

Another hypermarket, Makro, that specializes in wholesale
goods, provides an additional benefit for its Makro cards. In
conjunction with one of the country's largest banks, the Makro
cards can be used for various types of payments and transactions.

Other major retailers or supermarkets and department stores
that offer membership cards to their customers are: Hero
supermarket with its VIP card (launched in 1997); Rimo Department
Store with its VIP card (launched in 1998); Metro department
store with the Metro Yours card (2000) and Pasaraya with Pasaraya
Passport (2001).

Holders of Rimo's VIP cards get an extra ten percent discount
on all items sold in any Rimo's outlet, except some cosmetics
products or those on sale. Two family members of a Rimo VIP
cardholder are also allowed to use the cards with the same
benefits.

Not only retailers, supermarkets or department stores can
benefit from membership cards. Other types of businesses have
also jumped on the bandwagon. For hotels, these privilege cards
have for years been one of the most effective marketing tools in
its "arsenal".

Spas have also caught the fever. Taman Sari Royal Heritage Spa
with its Privilege Card, for example, is another success story
about membership cards.

Within two weeks of its launching last year, 30 percent of its
customers signed up. Taman Sari Royal Heritage Spa has two
centers, one in Jakarta and another in Yogyakarta that serve more
than 30 customers daily. The membership cards are available in
three types: Gold card with a Rp 20 million annual fee, Silver
card is for Rp 10 million and Corporate card is offered for Rp 2
million.

The exclusive services of Taman Sari right from the start
attracted the country's upper class segment including national
celebrities like star of television series Diah Permatasari,
famous model Donna Harun, film actor Jeremy Thomas etc, foreign
ambassadors and their families as well as the country's high-
ranking officials and administrators.

A number of benefits are made available for Taman Sari's
cardholders. Gold cardholders, for example, are given 90 hours
per year of free treatments, including the Royal Heritage
Massage, Merapi Mud Masker, Aromatherapy, Body Slimming and
various other services. The cardholder is entitled to free use of
a number of facilities at Taman Sari, such as fitness, aerobics,
swimming pool and sauna. The cardholder's friend is also provided
with a limited number of free services. A second friend, however,
is given a 25 percent discount.

One of the country's marketing gurus, Rhenald Kasali, said
that while membership cards are quite effective in maintaining
customer loyalty as well as attracting new customers, some
companies issue them without features that are genuine benefits
for the privileged clients.

"The concept of customer relationships behind the issuance of
membership cards should be holistic. Creative breakthroughs in
marketing are indeed the order of the day. A special kind of
astuteness is required so that the cards' features and benefits
are genuine solutions for customers' needs. Me-too products and
services are in abundance, so, differentiation is also vital," he
said.