American Express – it is a company that we typically have very extreme emotions about! There are some things they do that we absolutely love (like Bluebird!) and then there are things that we really hate (like killing Bluebird, restricting bonuses to once per lifetime). But, when American Express is good, they are great! Here is their latest move that was very smart for current and new customers – and for Amex itself.
The Latest Great Move by American Express
Not long ago, we saw American Express expanded their referral offers to include cards in the same family. This enabled holders of the no-fee Hilton American Express card to refer interested people to the premium Hilton Aspire card – and it rewarded the referrer with the same bonus they would get for the no-fee card!
Last week, American Express went even further and made it possible for American Express cardholders (non co-branded cards) to refer others to just about any American Express card. This was a huge move and one that we don’t have from other banks. Since American Express limits customers to a cap of the number of credit cards they can hold and that they limit the bonuses to once per lifetime, chances are very good that not all of us have the card that someone may want!
Now, if you have something like the new American Express Gold card, you can get a referral bonus by referring someone to get the Delta Platinum Amex card! This is an awesome move and this is why.
How This Move is Great for Current Customers
With the rule by Amex of one card offer per lifetime per card, many of us have simply settled in to the American Express cards that work for us. This means that Delta flyers have a Delta card or two, Hilton guests have a Hilton card or two, SPG, etc. Most of us also have a Membership Rewards earning card (or more!) as well.
One of the more popular versions is the awesome Blue Business Plus card that has no annual fee and earns 2 Membership Reward points on everything! I think it is safe to say that anyone that needs a small business card and likes Amex points has this card.
The problem has been that if you were a Hilton traveler and had a friend that wanted to get a Hilton business card, you were unable to get anything for telling them about the Hilton offers that come up. Before, you had to have that card to refer people to a card (and get the referral bonus). The same was true for all cards.
Refer Friends to Any Amex Card!
With the new move by American Express, that restriction is gone! This means that if you have any Membership Rewards earning card (that is not a co-brand card, like a Mercedes Benz Platinum card), you are now able to refer people to any card in the Amex portfolio! This is great since you get to you use your loyalty to American Express to earn you more points instead of losing out due to your loyalty to a particular Amex card.
This new move makes it much easier for current customers to justify annual fees on some of their American Express cards with this new referral system as well as be able to get many more referral bonus points. For example, if you have the Business Platinum card, you are paying an annual fee of $450. You get the $200 airline incidental credit each year and all the Platinum perks, but you still have that $450 annual fee.
Instead of needing to rely on a retention call to try and get Amex to offer you something to keep it (which is a move that Amex is frowning on more and more), you can instead refer friends and family to any Amex card and get up to 55,000 Membership Reward points each year!
Even a bottom value of 1 cent per point would give you more than your annual fee back with these referral credits!
Put simply, this new referral system makes it easier for customers to keep the cards that work for them but earn referral points off cards that work for other, new customers.
How This Move is Great for New Customers
This new referral system works good for new customers as well because some offers may actually be better than the public offers – or even offers from affiliates! Take, for example, the new American Express Gold card. Most blogs you may read are telling you about this offer with a 25,000 point bonus. Yet, if you have a friend or family member with an American Express card, they can refer you to this new card and you could get 50,000 points instead!
American Express seems to wisely be trialing out this referral offer path to give better offers. We have seen this before and we will likely see it again. If you want a new American Express card, chances are pretty good the best offer at the time is going to be through the referral channel.
How This Move is Great for American Express
I have written about this before but it is actually quite expensive for issuers like American Express to pay affiliates. When I was an American Express affiliate, I would get in the $200+ range for some Amex credit cards that people would sign-up for through me. That was on top of whatever bonus American Express was offering the new customer!
Less Affiliate Cash Going Out!
This is still going on and it is one of the reasons that American Express, Chase, and others look poorly on customers that sign-up and dump the card before paying the next annual fee. The acquisition cost for that customer is too high ($500+ for the bonus value, $100-200 in benefit value, $250 in affiliate fees and only getting $450-550 in annual fees and maybe another $100 in transaction fees leaves Amex at least $300 in the hole, for example).
I have said this before – banks needs blog affiliates less now than ever had. Why? Because the blogs (like this one) have been writing for years about how to get value out of points and what to do with them. This information is all over the internet and easy to find with a simple Google search. This means the issuers don’t need us to draw customers in. The information is out!
So, instead, this move by Amex allows them to give points, not money (and capped), to current customers who encourage other people to become new customers of American Express. This is why Amex can offer 25,000 more points on the Rose Gold/Gold card because that is the difference in the money that they would be paying to affiliates.
This new move by American Express is very smart for Amex since it puts the advertising into word-of-mouth by the customer and rewards them in rewards that are produced by them and not cash. Plus, these rewards are capped. Win-win by Amex – make better offers, get more personal appeals for customers, and they don’t need to pay any money to get any of that.
Does American Express still have problems? Sure! One of them is their cool little widget that seems to be denying people bonuses that they absolutely should be getting.
Still, moves like this are great ones (not for affiliates!) because it is a win for the current customer as a way to reward them for loyalty and speaking to others, it is a win for the new customer since they may be able to get a better offer, and it is a win for Amex because they save money. Situations like this are what make opportunities like this last longer than others since everyone can win.
Your move, Chase!
Featured image courtesy of Katherine Welles / Shutterstock.com