The American Express Mess

A company that never cared about its customers

January 2008 By Denny Hatch

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What triggered this column was a letter to this publication from Anthony Greene in London on my musings last week about how to gussy up important e-mails in order to give them gravitas. In our exchange, he wrote:

Thank you, Denny. A nice and utterly relevant piece. Your story about the Ticketmaster e-mail, and how much you appreciated their thoughtfulness, has reminded me of what I regard as one of the greatest missed opportunities in the history of marketing. Every time I use my American Express Centurion Card I cannot help but notice the following words printed on the front, “MEMBER SINCE 82”. So, during the whole of last year, every time I used the card a lightening thought crossed my mind, “Gosh, that’s 25 years!” But did American Express remember this auspicious occasion? Unfortunately no. Despite having the relevant data, there was no email, no thank-you card, no offer, no invitation to spend more, no phone call. Nothing. That really made me feel that American Express doesn’t give a damn about my custom and 25 years of brand loyalty. I would recommend for American Express to headhunt the marketing people from Ticketmaster, who at least know how to show they care!

I go back 58 years with American Express.

Anthony Greene is correct.

Backgrounder
In 1949 my biographer/historian father Alden Hatch was contracted to create the official biography of the American Express Company on the anniversary of its centenary the following year.

The company had a storied past, beginning with its founding in 1850 as an express delivery service by Henry Wells, William G. Fargo (as in Wells Fargo) and John Butterfield. In 1882 it started a money order business, and nine years later introduced the traveler’s checque. Early in the twentieth century, it entered the travel business and began opening branch offices around the world that became headquarters, banks and post offices for American voyagers and expats. If you wanted to contact a friend or family member anywhere in the world, you needed only the itinerary and then to write the person c/o American Express Office in a distant city. It would be held until the person picked it up. When you received a letter from a friend from abroad, the return address could well have been:
American Express
Venice

In 1944 Ralph T. Reed became president. He and his wife, Edna, summered at the Rockaway Hunt Club in Cedarhurst, Long Island, and along with their daughter Phyllis were frequent guests at our house, which was next door to the club. It was Reed’s idea to hire my father for the corporate biography. In 1956 I had a summer job as a mail boy at American Express headquarters in downtown Manhattan.

From TIME, September 22, 1958:
Diners’ had no serious competition until old, bold American Express three months ago dealt itself into the card game, enlisted the aid of its worldwide contacts to drum up members. Through banks, American Express mailed applications to 8,000,000 depositors—people who obviously have some money to spend. President Ralph T. Reed also sent personal letters to 22,000 corporation presidents. More than 300 American Expressmen started knocking on doors of executive suites all round the U.S. to sell the credit card (charge: $6 per year for initial card, $3 for other members of the same firm). To bolster its membership, American Express bought out the Gourmet Guest Club (membership: 45,000). Diners’ fought back by picking up the Esquire Club (100,000 members). Then American Express scored a real coup: last month it bought the American Hotel Association’s Universal Travelcard (160,000 members and 4,500 hotels) that Diners’ had long and vainly wooed.

As a book-publishing neophyte in 1964, I got my first American Express card and was hugely proud of it. Eleven years later David Ogilvy came up with the legendary television and print campaign that used celebrities, who introduced themselves with, “Do you know me?” After a short, witty monologue about themselves and their work, they would end with the iconic tag line, “I never leave home without it.” Meanwhile, the actual card (with a fake account number) would come up on the screen with the celebrity’s name on it.

(I found a vintage “Do you know me?” commercial on YouTube.com and have included a hyperlink below. You’ll love it!)

At some point I traded up to a Gold Card—which was introduced in 1964—I guess for the prestige of the thing. Then in 1984, American Express introduced the Platinum Card with the most spectacular mass mailing I have every seen. Every element was individually hand fed into the same IBM Selectric typewriter so that the type would be identical on each piece, causing the prospect to believe it came directly from the office of the president of the division and was hand-typed by his secretary. (See the image below for a complete description of that mailing.)

That was a time when my wife, Peggy, and I were taking some fairly exotic trips to wilds in such places as Africa, Anatolia, Belize. One of the selling points of the Platinum Card was the promise that if you needed serious medical attention anywhere in the world and you could not get to a good hospital, American Express would come after you in the wilds and bring you back to civilization—with no charge for special excursions into the bush, helicopters, private jets and ambulances. Platinum Cards also got us into certain airline lounges for free—Northwest and, as I recall, Continental. From the June 1990 issue of my newsletter, Who’s Mailing What!:

After three years of blandishments to spend $300, I decided to turn in my America Express Gold Card and step up to Platinum to see how American Express treats its highrollers.

In the ensuing weeks I received a splendid array of mailings: the Platinum Card itself ... a welcome package listing the various services ... an offer to make me a Hertz Rent-a-Car Gold customer for free (regular cost: $50) ... a list of private clubs around the world where I am welcome ... a $10,000 line of credit, including a book of checks from AmEx’s Centurion Bank. Every mailing was a masterpiece of elegance and personalization. I was made to feel part of a very exclusive network of high-powered travelers.

One day I received a gift box containing a perfectly beautiful pocket diary with gilt-edged pages, leather-bound and embossed with my initials in platinum. That same day there arrived a truly snotty (unsigned) letter from C. Hoke in the Collections Department of the American Express Centurion Bank, Wilmington, Del.:

“We have received notification from our office in Fort Lauderdale, Fla., that you have requested your Gold Card to be cancelled,” Hoke scolded. “In view of this, your Centurion Line of Credit account has been cancelled.”

(See the hyperlink below for the actual letter.)

After all the loving care from the folks at Platinum Card, I was made to feel like I had joined the ranks of the unwanted by C. Hoke, Collections, American Express Centurion Bank, whose organization had just extended to me—a brand new Platinum Cardmember—$10,000 in revolving credit and sent me checks the week before.

Could not Hoke have written that he or she was sorry to lose me as a Gold Cardmember, and offer me warmest congratulations and best wishes for moving up to Platinum? No, C. Hoke could not. Nobody at American Express talks to each other. They don’t need to.

The fact is that the success of American Express Travel Related Services is based on one premise: that cardholders need American Express more than American Express needs its cardholders. Quite simply, what American Express offers—unlike Visa or MasterCard—is virtually an unlimited amount of credit on a cardmember’s signature. And its customers accept the unacceptable because they don’t dare do anything that might muck-up the incredible benefit of unlimited credit.

What should American Express—indeed every direct marketer—do? Put together a committee made up of top people from every division—together with their agencies—and spend one week every three months thinking through every possible scenario: Green Card stepping up to Gold ... Personal Green switching to Corporate Green. It means tracking down those people who have Corporate Cards and Personal Cards so that they are not continually cross-sold on products they already have. Every single piece of correspondence should be closely examined with an eye toward what the effect will be from the recipient’s point of view, line-by-line, word-by-word. If that were done, the C. Hoke letter would never have been mailed.

Since those days, American Express has gotten huge—65,000 employees and $27 billion in gross revenue annually.

It is also in a bit of trouble.

In the August 1, 2006 Wall Street Journal, Robin Sidel and Anjali Athavaley wrote:
As part of a sweeping overhaul of its cardholder rewards programs, American Express Co. will no longer give its customers double rewards points when they use plastic for “everyday spending” at supermarkets, drug stores and gas stations.

The move is one of a number of changes being announced today to American Express’s Membership Rewards program, one of the card industry’s most successful plans aimed at building customer loyalty. Other changes include a new double-points program to encourage online shopping at certain retailers, the elimination of a free rewards program on some of its cards and a new insurance plan that will reimburse certain cardholders who miss concerts, plays or sporting events if they purchased their tickets with an American Express card.

One of the changes American Express made was to cease allowing us to transfer rewards points into the US Airways Dividend Miles program, which was a total bummer for Peggy and myself. US Airways has 60% of the traffic at Philadelphia Airport, which is 20 minutes from our house. We fly everywhere on US Airways.

For a number of years we used the American Express Card exclusively for all our personal and business travel and entertaining in order to pile up US Air Miles.

When we got the notice that our AmEx charges were no longer good for US Airways miles, we got a US Airways credit card and went cold turkey with American Express, downgrading from Platinum to Gold.

Astonishingly, I never heard from American Express. After being a member since 1964 and going from spending $3,000 to $5,000 a month down to nothing—zero, zip, nada—you’d think a red flag would pop up somewhere in the corporation and we would get a letter, phone call or e-mail asking why we had stopped using the card and if a problem existed.

“Is everything okay with you folks?” were the words I wanted to hear or see. “You have been cardmembers for over 40 years and we are concerned.”

Never heard word one.

To quote my reader, Anthony Greene, “That really made me feel that American Express doesn’t give a damn.”

Greene’s e-letter made me remember the year 2004—my 40th anniversary as an American Express Cardmember. Like Greene, every time I used the card, I noted the line on the card, “Cardmember since 64.”

I wondered if American Express would write, phone or e-mail me a note thanking me for being a 40-year Cardmember and for spending what must be hundreds of thousands of dollars with them over four decades.

Like Greene, I received zip, zero, nada.

Then this past January 11, Robin Sidel wrote in The Wall Street Journal:
American Express Co., known for its creditworthy customer base, said that cardholder spending is slowing down and delinquencies are rising. As a result, the card company said yesterday that it would take a $440 million pretax charge against fourth-quarter earnings as it sets aside more money to cover soured loans. The company’s stock fell 6.9% in after-hours trading last night after the announcement.

Last Friday, American Express stock fell to $45.44, losing an additional 3.5% after reaching a 52-week low earlier in the week. AmEx CEO Ken Chenault is worrying.

“Now, Mr. Chenault—known for his focused demeanor that leaves little time for chitchat—must find ways to persuade people to keep pulling American Express cards out of their wallet,” continued Robin Sidel on January 26. “At the same time, he must reassure investors that the company’s recent period of prosperity hasn’t run its course.”

If Ken Chenault is sweating, what follows is some business common sense for him to think about.