Subscribe to this pageLaunched in January 2006, Alfa-Bank’s partnership with Aeroflot was nominated recently as the best new launch of a co-branded card program in Europe at MasterCard’s annual co-branding conference. Based around a carefully crafted customer proposition appealing to different segments of the current and prospective client base of both organisations and supported by a generous bonus program, the scheme’s performance has exceeded targets during its first year with the result that the annual target for 2006 in terms of cards issued had been reached already by October. In order to find out more about this new initiative in the developing Russian card market Affinity Finance International spoke to Kirill Turbanov, Head of Marketing at Alfa-Bank.
An important element of the scheme is the strong fit between the two partners…
“To understand the rationale for the launch of the Alfa-Bank / Aeroflot co-branding program, it is important to take into consideration the background of the two organisations”, observes Turbanov. “Alfa-Bank perceives itself to be a leader and innovator in the Russian retail banking sector with a strong reputation for continuous improvement in products and services. Moreover, it possesses a comparatively affluent and mobile customer base of around 1.5 million retail clients with a lot of business people who need to travel both within and outside of Russia. Meanwhile, Aeroflot remains the leader in domestic air travel and has taken important steps in recent years to preserve this position including the renewal of both its fleet and image and the development of its internationally acclaimed Aeroflot Bonus program which covers more than 580,000 members. Hence, there is a good fit between the two organisations.”
He continues by explaining that the principal challenge associated with the launch was the speed with which the co-branding program was developed given that it was conceived in the autumn of 2005 and then launched in January 2006.
… with the marketing organised in tiers to appeal to different types of customer
Furthermore, he comments that the program is characterised by a number of key features including the fact that it embraces both debit and credit cards and is organised as a tiered scheme targeting different segments of the Aeroflot and Alfa-Bank customer base. In fact, there are four tariff plans — Class, Style, Status and Corporate — with customers on the Style plan receiving a Gold card and those adhering to the Status plan access to a Platinum card. Moreover, all credit cards benefit from a 60 day grace period for repayments of borrowings. Meanwhile, bonus points can be earned through regular in-store expenditure and redeemed with a range of organisations embraced by the airline’s Aeroflot Bonus program including other airlines within the Sky Team Alliance, car rental businesses, hotels, a Moscow-based car dealership, an insurance company and a telecoms firm.
“These are important features as Alfa-Bank’s card is competing against two other co-branding programs set up by Aeroflot, namely those with Russian Standard Bank and Sberbank, as well as Citibank’s Miles&More card with Lufthansa”, adds Turbanov.
45% of cards issued through the program are either Gold or Platinum cards
According to Turbanov, the metrics associated with the first nine months of marketing of the co-branding program are impressive. 45% of the cards issued are either Gold or Platinum cards in contrast to a figure of 25% across Alfa-Bank’s standard MasterCard card portfolio. Moreover, the average monthly value and volume of transactions exceed that of mainstream cards by around 40% and 50%, respectively, with average monthly outstanding balances being higher by the order of approximately 75%. In addition, the year end target for 2006 in terms of cards issued had been reached already by October meaning that it has been possible to scale back the generosity of the bonus scheme while ensuring that the cards are still strong in comparison to the direct competitors. However, this also means that the targets for 2007 will be made more demanding.
The future development of the scheme reflect the wider objectives of Alfa-Bank
“The future development of the Alfa- Bank / Aeroflot co-branding program should be viewed in the context of the bank’s own development objectives”, concludes Turbanov. “In essence, Alfa-Bank wishes to reenforce its position as the bank for successful consumers, allowing them as far as possible to do what they want, when they want. It was the first bank in Russia to introduce a service 24 hours a day, seven days a week with full access to customer accounts available across the entire branch network. It also has a strong reputation for product innovation as epitomised by its high interest savings account, available in Euros and US dollars, as well as Roubles, which also offers debit card withdrawals. As such, the program with Aeroflot is an important component of its wider strategy for serving a comparatively affluent customer base and the bank will examine what additional benefits it can introduce on a tiered basis in future.”
