Blog post by Mark Satov
Peter Ustinov. What an elegant sounding name. You can elongate the U to make it sound even more upper crust than it is. Yooooostinov. Ustinov was a famous British actor from the 1940s all the way until the late 90s. But growing up I knew him as ‘that guy’ in the American Express commercials. He was shown travelling as a business person in far flung places. His accent made him sound distinguished (in North America, anyway) and he was made to appear as such by his apparel and surroundings. In one spot his American Express card was chopped up in a Japanese restaurant, all to be replaced seemingly immediately by an obliging AMEX representative who dashed to his hotel to ensure his travel wasn’t disrupted. Ads like this one helped to build the impression of American Express as a brand for wealthy and distinguished people, representing a company that would go to extraordinary lengths to serve its well-heeled clientele. I looked forward to the day I could have such a card and ergo be part of such a club of elite travelers and business people.
A few years’ back I made the decision to invest 700 dollars per year in the AMEX platinum card. I consider myself to be value conscious, but I was taken in by all that Amex had to offer: early access to all sorts of shows, entry to private clubs all over the world, perfect customer service including high end concierge and travel. Or so I thought.
When I noticed a few suspicious charges on my credit card from ‘Skip the dishes.com’, an app I rarely use, I called AMEX. They told me the card had been compromised and I needed a replacement. Remembering the Ustinov ads, I half-expected my doorbell to ring before I hung up with an eager AMEX rep handing me my new card. “Mr. Satov, so sorry for the delay but you know Toronto traffic….here is your new card!” Ok that was unrealistic, but I did expect and ask for my new card to arrive in the next 2 business days, before I left for March break with my family. “That won’t be possible Mr. Satov as it takes 2 to 3 business days to ship that to you once we ship it which should hopefully be tomorrow, so it should arrive Monday or Tuesday.” “Really? I paid for a high-end card, an American Express, for this service I may as well have a Mastercard,” I said. No reply. “May I speak with your manager please?” I asked. “I am sorry sir we don’t have a manager available to speak to you this evening, but I can have someone call you tomorrow.” This last wasn’t a joke; she actually said that. “I have an idea I said – perhaps you can deliver the card to my hotel in Los Angeles: would that be possible?” “Let me check on that, sir….yes we can I will transfer you to our security team to re-verify you and then arrange that. Would you still like a manager to call you tomorrow?” “Yes please.” I will spare you the rest of the detail except to say that that the manager called a full two weeks later, the card arrived two days’ late in LA without any warning or follow-up, and I had to call back to dispute the charges because the phone attendant was not able to handle that all for me. So much for my Peter Ustinov impression. Oh, I almost forgot, when the card did finally arrive it was an actual metal card, heavier and way sleeker than anything else in my wallet. Whatever.
In many consumer goods and service categories today both no-frills, low-cost brands and luxury brands are taking share from middle-of-the-road offerings. The credit card business still enjoys very high margins, especially in Canada, with a similarly evolving competitive landscape. Brands compete with the generosity, relevance and simplicity of their rewards offering and make money with interchange fees and usurious interest rates for late payers. AMEX has chosen to play a bit differently in its upscale cards, promoting a brand of service and access alongside a competitive, but not differentiating rewards offering. They sell the 700/year platinum as well as the 2500/year Black card that you can pull out if you really want your friends to think you are rich. They make money on their higher interchange fees (that many retailers can’t afford, limiting the ability to use the card), their membership fees and by selling other services to cardholders including personal and corporate travel.
I don’t have much to criticize on the strategy front; there is for sure room in today’s market for a high- service high-price card. And given that those who carry an AMEX likely have at least one other card, they can probably live with the lack of use-ability at many retail establishments. But the service and access promises have to be kept, always. And then some. The experience I described was an anecdote, and some of the AMEX experience I have had since getting the card has been great, (not Four Seasons great but great) while other services and experiences have been just ok. Not enough to justify 700 per year in a crowded landscape with tons of more generous or cost effective options. My advice to AMEX: ditch the metal cards, reinvest the dough in the call centre and some other service refinements. Be the card that someone like Peter Ustinov would be happy with.
PS I couldn’t resist sharing Ustinov’s famous quote about the commercial: “The only reason I did an American Express commercial was to pay my American Express Bill!”