Charles Duhigg over at the New York Times discusses the battle between American Express and Chase for new cardmembers.
While much ink has been spilled about the huge success of the Chase Sapphire Reserve and the massive amount of free social media advertising that Chase benefitted from, this article covers the launch of the CSR through the lens of executives at American Express.
Noting that millennials are a highly-coveted demographic for credit card issuers, the article discusses how Chase has managed to position the CSR as the “cool” card, while AmEx has fallen behind and is perceived to be a stodgy, rich person’s product.
At a focus group dinner held by Chase,
Everyone was asked which of the many credit cards in their wallets they might consider using to pay.
“I don’t think it would be American Express,” one diner said. “I feel like that would be braggy, like I’m trying to prove I’m a big shot.”
Others nodded in agreement. “I’d probably use this,” said another, pulling out [the CSR]. “An Amex says you’re rich, but this says you’re interesting.”
As millenials become an increasingly important target market for the travel industry (who else could the wordsmiths behind the new World of Hyatt status tiers possibly have had in mind?), companies are shifting their advertising strategies. It’s fascinating to see, for instance, how Chase has actively tried to appeal to the younger generation:
“The message we send is, this isn’t your father’s credit card,” said Pam Codispoti, who created the Chase Sapphire Reserve after 18 years at Amex. “For millennials, travel might mean taking an Uber to a hole-in-the-wall restaurant in Chinatown, and then riding the subway to karaoke, and then catching a taxi home. So we’re going to give you accelerated travel points on all that. This is a card for accumulating experiences.”
The article continues on to note that an exodus of AmEx executives to rivals like Citibank and Chase have led to those competitors beating AmEx at its own game.
The head of Citibank’s credit card division as well as the heads of its branded cards, global rewards, customer acquisition, proprietary products and analytics all came from American Express. The woman credited with creating Chase’s Sapphire Reserve is an Amex alum, as are her boss and two top colleagues.
I would argue that in addition to all of the above factors, Chase has done a much better job of marketing the promise of “cheap” or “free” travel to the mainstream consumer. While nearly everyone who has heard of the Chase Sapphire Reserve is at the very least aware that points can be redeemed for travel (though they may not be as well-versed as we in the points/miles community are on the best values), far fewer people are aware that AmEx has a number of lucrative transfer partners as well.
Ultimately, the best we can hope for is that competition between banks continues and that “all of us … [continue] getting paid to spend.”