Lessons in Loyalty: A Look Inside the American Express Rewards Program: Industry

Lessons in Loyalty: A Look Inside the American Express Rewards Program

Product Type: Market Research Report
Published by: TowerGroup
Published: May 2007
Product Code: R301-1283

Description

This TowerGroup Research Note looks at how American Express uses its payment card rewards and loyalty program as a market differentiator. The stand-alone, closed-loop card network program runs three segmented tiers across its member base in 98 countries. It offers points that never expire, with rewards ranging from the usual air, dining, and discount segments to Porsche Boxters, Piaget watches, and private jets. The company's reward tiers create dream possibilities for high-end card members and aspiration rewards to entice affluent spenders. The program builds value for mainstream customers and is proven to increase spend, lower attrition rates, and improve credit quality.

Table of Contents

TowerGroup Take-Aways
Report Coverage
Background: Exhibit 1 US Annual Consumer Spending by Card Product (1999-2006); Exhibit 2 US Average Merchant Discount Rate and Interchange by Card Product (2006)
Defining the Reward Structure: Exhibit 3 American Express Company Tiered Rewards Program (2007); Exhibit 4 American Express Rewards Program Objectives and Results (2007); Exhibit 5 American Express Rewards for All Participants (2007)
Success Drivers: Exhibit 6 American Express Drivers to Reward Success (2007); Exhibit 7 Time Line of American Express Reward Development (1991-2007)
Targeting Rewards: Exhibit 8 American Express Customer Reward Categories (2007); Exhibit 9 American Express Issuer and Merchant Reward Categories (2007)
Operating Expenses: Exhibit 10 American Express Expenses as a Percentage of Revenue (2000-06)
What Bank Card Issuers Can Learn from American Express: Exhibit 11
Summary

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