American Express Case: the story of American Express Canada
Key Takeaways: Ivey MBA, Howard Grosfield CEO of Amex Canada Article
- Total Service Experience: replace cards easily over night in the event of a lost card.
Recognize me: be valuable; engaged employees = engaged customers. Empower me: to pay the balance in full! Enable me: leverage technology integrate service provisions.
- Luxury AMEX Card: differentiated from the Diner’s Club Card (Visa). AMEX has high fees, the rolling debt balance is very bad.
- Amex is more expensive for merchants however Amex has better customers: wealthier customers. The merchant network is weaker (charge them a higher fee) but the customers are better.
- Centurion Services: centurion members have access to professional assistance every minute of the day. It’s the Concierge: dedicated team of highly skilled professionals. Centurion webs: privileges platform.
- Product Expansion
- Branding / Positioning
- Strategic Diversification
- Distribution / Co – Branding
- Product Innovation
1850 – Founded as express courier service
1891 – Launched travellers cheques
Early 1900’s – opened offices in Europe
1957 to 1978- green, gold, platinum card
1987 – launched Optima Card
1991 – Boston Fee Party
1999 – Exclusive arrangement with Costco
1999 – Launch of Centurion “Black Card”
Travellers Cheques Advertisements
1981 – acquired Shearson Rhodes
1984 – acquired Lehman Brothers Kuhn Loeb
1984 – acquired IDS
1988 – acquired EF Hutton
1991 – wrote off $300 million on Optima credit card launch
1992 – spun off First Data
1993 – spun off retail brokerage arm
1994 – spun off Lehman Brothers
2005 – spun off Ameriprise
Push to capitalize on brand / expand co branded cards beyond Costco – Starwood, Jet Blue, Delta
2008: GFC affected all credit card issuers, forced to tighten up credit – less impact on AMEX
2010: Paid $300 M for internet payments processor for consumers without bank accounts (Revolution Money became Serve)
2012: Launched BlueBird with Walmart – prepaid credit card as option as lower option to chequing accounts and debit cards
Cost pressures: Airline mergers forced Amex to open airport Amex lounges versus giving cardholder access to airline lounges
Attack on high end customers from Barclays and JP Morgan Chase – Chase now leads card penetration among $125K plus households
2015: Costco switched credit cards to VISA, 10% of Amex’s 112 million cards were Costco
Question about value of Amex brand – 23% of $1 trillion in spending from co branded cards
– “Partner” vs “Vendor”
- 19 card options
- Card Type: Personal vs Small Business
- Card Benefits: Rewards, Concierge, Cash Back
- Loyalty Programs: AeroplanPlus, Air Miles, SPG, Membership Rewards
- Card Attractions: No Fee, First Year Waived, Welcome Bonus
- Blue Sky Credit Cards
- Response Time When Apply?
Card options
Drop in new customers in 2014 from 150K to 80K – half via referrals, others via traditional methods
Tested pop-up in a shipping container in shopping mall parking lots / in malls (take up eight parking spots) – local area marketing to drive traffic
Signed up more customers in two months than best Scotia branch in a year
Key is credibility of Scotia and single minded focus on customer acquisition – salespeople only in the pop up branch, videoconference customer to an advisor if needed
Now have nine pop up branches that shift location every 60 to 90 days
Now back to 150K; if 8K per popup = 160 weekly / 25 daily