Victory at Sea
How Annemarie creates customer relationship magic
| Vol. 5, Issue No. 11 June 2009 By Denny HatchIN THE NEWS
Credit Card Industry Aims to Profit From Sterling Payers
Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years. Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit. Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.
—Andrew Martin, The New York Times, May 18, 2009
NOTE FROM D.H.: As of this week, here is the revised schedule:
Every other Tuesday, Business Common Sense will be e-mailed to you.
Every other Tuesday, Denny Hatch’s Blog will be online.
Look for regular communications from me on Twitter.
Contact me any time about anything.
Thank you.
Are financial services companies planning to screw over their most affluent customers as a result of the recent credit card legislation?
In October 2008, I wrote in these paragraphs:
Take a gander at this paragraph from a Wall Street Journal story by Robin Sidel on Oct. 20, 2008:
“AmEx recently slapped a $1,100-a-month spending limit on John and Monica Bell's platinum AmEx charge card. The reason: AmEx customers who pay with plastic at the same places where Mrs. Bell shops and have the same mortgage lender have poor repayment histories, according to a letter sent by AmEx.”
The couple pays $450 a year for the card—which promises "no pre-set spending limit." The couple routinely spent $5,000 a month—that's $60,000 a year—and has never been late with a payment.
If the data goons are allowed to start treating blue-ribbon American Express Platinum Cardmembers like chronic deadbeats, what will happen to the rest of us?
AmEx CEO Ken Chenault was punished for his perfidy. In the first quarter of 2009, his customers reduced spending by 16% and his net was down 55%.
On May 19, AmEx announced it would ax 4,000 employees (on top of the 7,000 canned last October) and scramble to cut $800 million in expenses.
A personal note to Ken Chenault, Visa, MasterCard, et al: When you allow bean counters and data analysts to make marketing decisions, you'll be punished.
Now is the time to study the masters of customer relationship magic.
And a good place to start is with Annemarie Victory.
The Voyage of a Lifetime
I'd never heard of The Annemarie Victory Organization. Then one day last September, I cracked the Times book review section, and my eye lit on a quarter-page ad announcing The Victory Organization's seven-day Mediterranean cruise from Barcelona, Spain, to Nice, France, scheduled to depart the following April. It was to be a celebration of the life and work of Patrick O'Brian (1914-2000), legendary author of 20 novels about the British Navy in the Napoleonic Era.
Takeaways to Consider
- When a customer is made to feel extra special by people who run a business, it's a pleasure to spend money with them again and again.
- Every squinty-eyed bean counter, accountant and CFO who believes it’s smart to save money by cutting back on services and cheapening product should be required to take a tour with The Annemarie Victory Organization. Consider it an investment in continuing education that will pay for itself many, many times over—for as long as these turkeys are in your employ.
- For example, at dinner one evening, Annemarie recounted the story of American Airlines going on strike two days before her guests were to depart for a week of sailing the Caribbean aboard Sea Cloud. Without missing a beat, Annemarie chartered a jet and flew 40 stranded passengers to meet the ship at the appointed island at the appointed time. “You do what you have to do,” she said simply. Did she lose money on the deal? “You do what you have to do,” she repeated.
- An example today (May 27): After making the trek to Cézanne’s studio in Aix en Provence and seeing Mont Sainte-Victoire, which the artist painted many times, I got off the dime and made a reservation for the blockbuster show at the Philadelphia Museum of Art, “Cézanne and Beyond.” As 15-year dues-paying members of the museum, we're entitled to free tickets for special shows. When I reserved online, the tickets were refused until I gave a credit card for a $5 fee. Instead of looking forward to the show, I feel ripped off. When the next museum fundraising letter arrives, I'll ignore it.
- If you nickel-and-dime your customers, you'll be punished.
- When you allow bean counters and data analysts to make marketing decisions, you'll be punished.
- To be specific, if you offer something free, and some insecure member of the management team says it’s OK to remove the “r” from “free,” think again.
- Forget the terms “customer retention marketing” and “customer relationship marketing.” That’s the gibberish spouted by number-crunching business school grads and MBAs. If you're in marketing, your business is to create customer relationship magic.
Web sites related to today's edition
“Delinquencies Mount for American Express”http://tinyurl.com/65y3yd
“Credit Card Industry Aims to Profit From Sterling Payers”
http://tinyurl.com/qdwsbq
“AmEx's Customers Leave Cards at Home”
http://tinyurl.com/oeo6ma
“AmEx Targets $800 Million in Cost Cuts
http://tinyurl.com/rcd5b4
Annemarie Victory Organization
http://www.annemarievictory.com/
Sea Cloud Cruises
http://www.seacloud.com/
“What Is Your Home Worth”—More on the Patrick O’Brian Cruise
http://tinyurl.com/ps8qwd
The World of Patrick O’Brian
http://www.wwnorton.com/pob/pobhome.htm
“Patrick O’Brian: A Life Revealed” by Dean King
http://tinyurl.com/qp6hbr
“Patrick O’Brian: The Making of a Novelist” by Nikolai Tolstoy
http://tinyurl.com/pthyv9
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I too was amazed by the un-common sense of AMEX.
We cancelled three Corporate Platinum Cards after they arbitrarily imposed a $5,000 spending limit on us.
Now MasterCard is repeating the profits from our high spending and impeccable payment history.
Capitalism is alive and well!
Sounds like you had a great time. Certainly beats taking NY Waterways to work.
Getting back to the beginning of your story: the bean counters are running the show! At the company from which I was recently laid off, they are the only group to experience no job losses, and numerous promotions. Meanwhile, the vitality of the business is being strangled. 'Tis no less than the death of marketing.
Wow! what a wonderful description. you have done a wonderful thing for AnnMarie Victory. Every one reading this will want to sail with her.
Mr. Hatch,
You roped me in with "Victory at Sea" as thought possible marketing of 1950's CBS TV Rodgers and Hammerstein series about WWII. My take-away points: Will book with Victory if can afford. Will do business with them if opportune. Will NEVER tell anyone my ongoing horror story with my formerly respected company American Express.
Denny,
Loved this article. Monday, June 1, 2009, I called Capital One to ask them why they were raising my interest rate from 9.9% to 17.99% effective 2010. I have been a customer for 9 1/2 years and they keep increasing my credit line so I must be doing something right. The person I talked to, after I explained that I was upset with this nonsense, told me there was nothing I could do about it. I could accept the change or, in effect, turn in my credit card.
Has Capital One gone nuts? They are chasing away their best customers. Who is the executive moron that came up with this assignine plot to destroy Capital One. Wait I know. It's probably someone from WallStreet or a former government employee. We all know how effective these people are with coming up with ideas on how to fix things. Thank you for listening.
Rich
Thank you, Denny -- reading your column today was nice little get-away in and of itself. And I agree (as usual) with your takeaway points on customer service. Good manners really is good business. --Betsey Hartford
P.S. You may want to correct the spelling of "Accommodations" in the headline above the 3rd image. Thank you for including the photos and the menu, too -- it was all delicious.
So Denny, did they let you go up top to grease the mainmast?
Sounds like the trip of a lifetime even for world travelers like you and Peggy. I for one am certainly jealous and look forward to reading all of the books cited.
Just received the revised mouse-print update from my credit card company. Interest rate is now prime plus 24.99%. In the old days this would have been loan sharking.
By the way, I am completely envious. What trip! Much better to have such a magical memory than to let Wall Street make your money magically disappear.
Mr. Hatch,
I felt the need to let you know that after reading your latest issue of Business Common Sense (and not just to extol the wonderful issue) how much I appreciate these newsletters and your wonderful common sense approach to marketing/business. You are akin to a trusted mentor to me – someone with sage-like advice who can reduce the most convoluted aspects of business (and marketing) to the most basic principles.
I thank you for all you do. Your newsletter reminds me very often how simple most things in business (and life) truly are – it is those who over-think things that complicate matters. Concentrating on the most basic principles never steers you wrong – and a “gut-check” often is more right than wrong in many business matters.
Thanks again.
Matt