Skip to main content

Customer needs and behaviour in Russia

by: Pia Kähärä, Associate partner of Hofstede Insights

Why should I read this document?

Russia is a country which has encountered several ups and downs in its economy since its independence in 1991. It has been a hard journey for people from socialism to a market economy. At the same time, it has opened a big new market for foreign businesses, and especially in the 1990s many foreign companies earned good money in the country which lacked practically all branded consumer products that existed in the global market. That path and many drastic happenings have left their mark on Russian consumers and customer behaviour.

Important! 

5 most important things to know about doing business in Russia (if you only read one thing this is what you should read).
 
1. Russians rather do business with friends and people they like. They also ask for recommendations from their friends and relatives. Invest in relationship building.
2. Hierarchies matter. Aim at high level in negotiations.
3. Russian customers check the product thoroughly. Specialists test the materials and technical features more thoroughly than in many countries.
4. Make your presentation and product description more detailed than you are probably used to at home. Remember technical details. You must be able to justify the price.
5. Meet often and personally with your partners to get valuable information. Trust but verify.  
 
 
Due to the fact that Russia opened up to the free market and foreign business after the collapse of the Soviet Union in 1991, the market has been interesting for many foreign companies. In many respects, the business environment is still in development and a transition stage. There is still a DIY mentality in many factories, as earlier they were supposed to be self-sufficient and outsourcing is just emerging, for example.
 
Russian businesses have got used to the fact that there are many foreigners knocking on their door and considering the market very lucrative and full of potential. They themselves are used to the unpredictability of the economic environment:  big growth periods, surviving hard times with the help and support of their personal and business networks and the flexible possibility to adapt personnel number, for example. They do not understand if somebody evaluates the market as too risky in difficult times and leaves the market. Russians value those “loyal suppliers and partners” who stay in the difficult times even if they decrease the scope of operations.  
 
As Russians have such a short history of a market economy and emerging of new products has been rapid, they have both really enjoyed the new products, including luxury brands, but have also been disappointed with false promises, surprises in the quality of products and services and even frauds. These disappointments together with an uncertainty avoiding culture makes Russians suspicious of new offerings, partners and products, and make it important for the newcomer to do his homework well.  

 

 

Main cultural factors in customer behaviour

Russian customer relationships are created after first creating personal relationships. Russian culture is characterized by very high power distance (decision making on high level in companies, usage of status symbols), high uncertainty avoidance (checking all possible details of the products, usage of many certificates and other formal documents verified by authorities), and collectivism (making business with friends and people you like).

Trust is the key, so is verifying

Russians trust their own personal network a lot and recommend each other products and services. If they hesitate in their purchasing decision they ask somebody. Russians are also very active in writing feedback, evaluations and blogs about products and services, and there are many readers on the internet for them. According to statistics, there are a lot of product frauds in the market, even in the food industry (non-edible additives in cheese, for example), so people are suspicious also for a reason.
 
As a foreign supplier, creating trust in Russia is time consuming at first, if you don’t have a common network and people who can recommend you as a partner. You must invest in personal meetings to convince them that you are a competent and likable professional, your company is reliable and your product is good. Very good preparation is the key.

When you have a certain history of working with your partners and you have become part of the in-group, Russians are quite loyal and flexible partners and customers. They understand problems of their long-term partners, if you openly admit them and are willing to fix them.
 
It is also advisable for a foreign company’s management in b-to-b sectors to visit end-customers with the distributor. End-customers value this effort highly, as they consider it a sign of respect by the honoured foreign supplier.  In some business sectors in Russia, end-customers see suppliers as the experts and consider the distributors mainly as resellers/box movers even though they in fact can have a lot of expertise.
 
It is important to be in touch with your customers and partners quite often. You get a lot of valuable information orally; Russians do not like to disclose many things in writing. If you need an answer, you are likely to get it when you meet personally. Most problems in the cooperation can be solved best in personal meetings, not by emails.
 
Also, if you remember the birthdays of your partners or clients, it is good for relationship building. Small gifts and souvenirs are commonly exchanged in business in Russia.
 
Trust but verify is good general advice for business in Russia. Don’t believe everything you hear and check the facts from different sources.

Convince with details, understand the hierarchical approach

Russians investigate the products and services in detail. It concerns both consumers who study, for example, clothing they consider to buy very thoroughly, but also distributors of imported products or companies buying technology.
 
As a European company, you are not likely to offer the cheapest product in the market for resale. That is why you must be well prepared for your presentation and in-depth questions about the product’s characteristics and technical details. The larger your company counterpart is, the more in detail their specialists will study the offering even though the bosses make the final decision.  You must sell them both the business value of the cooperation and the technical facts of the product.
 
The specialists who study the technical details are answerable to their bosses and do not want to make mistakes in a hierarchical culture (high power distance) with the fear of punishment.  A ‘trial and error’ or ‘learning from mistakes’ accepting culture does not always exist in Russian companies. Russian authorities also require many formal documents, so the beginning stage of cooperation with all detail checking and official document preparation can sometimes be time consuming and frustrating, but it needs to be done to be able to do business.

Dealing with regional partners and customers

Moscow and St. Petersburg are hectic business environments where it is often ‘business as usual’ already with foreign business partners. When you go to the regional cities, foreign representatives are still quite a rarity, so you are usually treated very well and the hospitality means taking you to see local sights, inviting you to late dinners and leisure time activities in addition to business discussions. You should show that you value that.  
 
Don’t forget to bring souvenirs or small gifts to these meetings. The further you are from Moscow and St. Petersburg, the more people value foreign souvenirs. Most probably they will give you souvenirs from the region during your visit as well, and reciprocity is a good idea. 

Short case study

My team organized a meeting for an equipment producer who wanted to find a distributor in Russia. There were a couple of partner candidates but they complained that the pricing was too high and that there was a similar but cheaper competitive product in the market already. The producer had prepared a product presentation according to the logic of his home country and needs, but the Russians were not convinced.
 
After studying the issue, we decided to make the company a new product presentation, explaining the product’s technical construction in a very detailed way. One of the distributors got really interested after getting this new presentation, as he understood now that the technology in use is more reliable than the competitor’s product and needs less after-sales service. This fact justified the higher price and helped to get the contract, even though the producer had used completely different sales arguments and had considered other facts more important. 

 

Last updated: 12.11.2020 - 14:19
Back to top