Is American Express Running Scared or Playing It Smart? - Running with Miles
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Is American Express Running Scared or Playing It Smart?

card churners
Written by Charlie

American Express has had a lot of changes lately, especially with their premium cards. Are they running scared or playing a smart game?

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American Express has had their share of problems over the last couple of years with lost co-branded partners and introduction of new cards from competitors that threatened the very essence of Amex’s prestige – the American Express Platinum cards. They have also had a couple of wins, like with the exclusivity of providing cards for Hilton Honors.

Is American Express Running Scared or Playing It Smart?

There are many things to like about American Express but there are also some things that many of us customers do not like (like the inability to get a sign-up bonus on a card that you have already had – even if it was years ago). With the number of disgruntled Amex customers I hear from all the time as a sample, I would say that there are a lot of unhappy customers!

So, what are we to assume from this latest, really generous targeting of Amex accounts with huge bonus offers? There was the 50,000 point spending bonus on the American Express Platinum business edition and also some very generous bonus point offerings for adding authorized users. Is American Express running scare and trying desperately to keep their customers or are they playing a smart game?

Is American Express Running Scared?

Read More: 6 Things A New Amex Card Needs Against the Chase Sapphire Reserve 

Let’s face it – the Chase Sapphire Reserve really struck a blow at Amex and their Platinum card. Even if Amex didn’t have a rush of people cancelling that card when the Reserve came out, they had to feel the pain when the Chase Sapphire Reserve offers perks that can beat out the Platinum card for many people.

American Express responded rolled out changes of their own but brought with them a heftier annual fee on the personal card. The changes included going to metal and a $200 Uber credit spread out evenly across the months in a use-it-or-lose-it situation. Not exactly taking back territory! But, at least they did add 5X point earning on airline purchases (done through the airline). That was definitely a welcome addition Рto the business platinum as well!

Then they added the great 50% rebate on the Business Platinum before whipping that down to a 35% rebate (that is what you call a successful perk – for the customer). These are all things that happened in less than a year.

Of course, let’s not forget that they also introduced a fantastic, no-fee card for the business masses this spring that pays out 2X Membership Reward points on all purchases up to $50,000 per year!

So, is American Express running scared by rolling out these huge bonus offers to existing cardmembers in an attempt to keep them from bolting when their annual fees are up? It very well could be that but it could also be something else…

Is American Express Playing It Smart?

Playing With Data On Targeted Accounts

On the other hand, American Express could really be relying on data that they have on their customers to make a big play at keeping the customers that bring the most value. We have seen some of this data at work already with the Amex Offers. They roll out targeted offers and then they often gradually increase the targeted group, due to the fact that it is not being saved/used by as many of the original targets as Amex had estimated.

Huge Pre-Retention Offers?

American Express is giving some huge offers to a targeted group of customers – like the earn 40,000 Membership Reward points after spending $5,000 and another 10,000 points after spending another $5,000. That is almost like a sign-up bonus! It is very generous and has certainly made the non-targeted groups quite jealous!

As a targeted customer, I know for a fact that we are going for the 40,000 points and 50% sure we are going for the the next spending tier. This also comes at an opportune time as we were going to cancel the card when the fee comes up since we now have the Blue Business Plus card and do not really need the Business Platinum enough to justify the $450 fee. We will be able to hit the spending, get the points, and still be in a position to cancel the card.

Banking Against Cancellations

But, this might be exactly what American Express is doing here. From many people I have heard from, this targeted offer appears that it may be targeted to people who have their cards coming up for renewal in the next few months. This could be a great play at keeping those customers from closing their accounts – a retention bonus without the phone call, so to speak.

And, let’s take it back to Amex’s data. This spending bonus allows them to see who really cares about spending on this premium card. If someone doesn’t even make an effort, I would bet that Amex won’t cry too much when that person cancels the card. It could also help Amex to avoid giving retention offers since this will prove whether someone uses the card enough to be profitable and also gives Amex the chance to say “we already gave you one.”

Don’t forget about their restoring the Membership Reward – Avios to a 1:1 ratio while adding in a nice 40% transfer bonus recently!

Takeaway

Just like I said months ago – I think American Express is taking things slowly right now and watching the field. The first year of the Chase Sapphire Reserve is coming up and a play like this could give many the chance to consider dumping the CSR and keeping their Platinum cards instead (at least this is what Amex would hope for). It also allows them to throw out some points and make some noise while seeing what Chase does to their premium card in year two. If benefits stay the same then Amex knows where it needs to target next.

Finally, look what else it does. A spending offer like this is basically a sign-up bonus style deal and it could take spending away from a competitor card, like, say the refreshed Citi Prestige (which requires a whopping $7,500 in 3 months to get 75,000 points).

I think American Express is playing it smart and slowly to see how this market is shaping up. Amex enjoyed the top of the heap without innovating on that premium card of theirs for sometime. Now, they need to make some moves and throwing points around gives them some time (and data) to figure it all out.

What do you think? Do you think Amex is scared or smart?

Editorial Note - Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.

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About the author

Charlie

Charlie has been an avid traveler and runner for many years. He has run in marathons around the world for less than it would cost to travel to the next town - all as a result of collecting and using miles and points. Over the years, he has flown hundreds of thousands of miles and collected millions of miles and points.
Now he uses this experience and knowledge to help others through Running with Miles.

5 Comments

  • This reminds me of Apple Computer back in the 90s. At one point the company tried to gain market share by introducing low cost (same price as a PC) computers, and it almost ran the company out of business. So Apple Computer went back to selling high margin computers. Lower volumes but higher profits.

    Same with American Express. If you don’t spend enough to make them money, then buh bye.

  • As a data point, I have 2 business platinum cards, and didn’t get the spending offer on either. One is likely to be cancelled when the renewal comes up in September. It seems as if Amex is telling customers that the customer does too much business to be treated as well as those that do less business, which seems counter intuitive at best.

  • I actually think the random giant spending bonus offer is probably the most effective idea they have come up with yet for one reason I haven’t seen mentioned by anyone. It sends the message to customers (at least this customer!) “Hey you never know, we could just toss you 50k points randomly…but you gotta be in it to win it.” It makes me feel like there is no point in cancelling since I can’t get the signup bonus ever again, and if I stay, I may get a sign up bonus every once in a while. Now if they never do it again, I will feel duped, but I think as long as I still see value in the lounge access, airline credit and amex offers, it sort of justifies paying the annual fee and sticking around to see.

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