NYTimes on the AmEx-Chase War

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.”

Comments

  1. Interesting article and perspective. I’m within the “milllenial” target audience. I used Amex for the longest time until the Chase Sapphire Preferred.

    For me, it’s about value proposition and ease of use. These are two things Amex fundamentally doesn’t understand. I don’t care about prestige or Amex being among, I want the best rewards for my dollar.

    For example, Amex holding my points for an extra month to make sure my payment clears it outrageous. Their computer interface is from the mid 90s. I shouldn’t have to have my card to transfer points (security numbers on front and back). This isn’t for my protection it’s to reduce point transfers. Their new Uber credit is a joke.

    The point is the Chase makes an extremely valuable product that is easy and convenient to use whethe that’s on the phone, their website, or in their branch. I don’t see myself ever going back to Amex and that’s sad.

  2. Too bad 5/24 keeps many from obtaining the CSR. Why don’t they just impose a one time bonus like Amex? I’d certainly use the heck out of it if they’d let me have it. I’m tired of 2x on dining.

  3. if AMEX offered 100k sign up bonus with a $300 travel credit and 3X earnings on dining and travel, im sure it would be just as popular as Chase Sapphire Reseve.

    The reason why Chase is winning millennials over isn’t because they are seen as “cool” and AMEX is seen as stodgy. They just have a better product than AMEX period.

    Chase can afford to take heavy losses on CSR to lure customers in, whereas AMEX doesn’t have the same flexibility. The main issue with AMEX though is that their flagship card is a charge card whereas CSR is a credit card. Chase is making money off people that carry balances while almost no one with an AMEX platinum card carries a balance and pays interest. AMEX needs a serious flagship credit card to compete with Chase.

    • I concur! Amex needs to launch a revolver with all the benefits offered by their Platinum Card combined with the rewards structure of the Everyday Preferred or PRG. I would gladly ditch my PRG and pay $500 yr. if Amex launched a product like that!

    • Not to mention Chase is universally accepted being a Visa. Good luck using Amex anywhere abroad except the most posh/snobby establishments. So much for it being a travel card. It wasn’t even until a few years ago that most of their cards had 3% forex fees.

      Amex MR also has barely any award partners left, that are still worth talking about.

  4. That NY piece was written to make any remaining Amex card holders feel like they’re doing something wrong by holding onto their cards. I wonder what Chase has to pay…

  5. 5/24 prevented me from getting the CSR so I put my loyalty with Amex. Plus my 7 platinum cards all have the pay over time option so basically acts as a credit card. I still prefer being loyal to better service then “chase” the best bonus.

  6. I divide spending between chase and amex, using the heck out of the amex offers. There are actually some good value propositions when it comes to earning bonus amex points by merchant, not to mention annual bonuses (small biz, targeted big spend, etc). Do really care about perception? I would think it would be best value. But what do I know I’m not a millenial.

  7. Ridiculous Chase policy of 5/24 denied my CSP, so I’ve stopped dealing with Chase and canceled all the 3 credit cards and I even closed my bank account with them. Secondly, there is no comparison between the Customer Service of AmEx and Chase, AmEx are so professional and polite when it comes for talking with customers while Chase are so rude and irrogant in dealing with clients.

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