Financial services companies’ use of personal data to make relevant offers is a fascinating emerging topic. See today’s Wall Street Journal article on how Visa and Master Card are using credit cards to target online advertising—and there’s also some interest down the road in using information from DNA databanks to target people online(!).
The following post presents some highlights of how American Express is drawing on what it knows from its "closed loop" of cardholders and merchants to present relevant offers on the social sites cardmembers use. The post was my October 5, 2011, contributionto the Marketing Executives Networking Group (MENG) Blend site. The MENG Blend is a blogging initiative featuring bloggers from multiple marketing disciplines and industries. I blog on online marketing and social media.
Social Media Week came to my hometown of Chicago in late September. Finally! But, as luck would have it, I managed to get free to participate in exactly one (1) of the week’s events. I was determined to hear what American Express had to say and the discussion didn’t disappoint.
In the last year or so, American Express has established the world’s most followed financial services Twitter account, according to the VB Twitter watch. In fact, Visible Banking’s Christophe Langlois has pronounced American Express financial services’ “king of social media” altogether, for both business-to-business and business-to-consumer.
Out-innovating Google, Groupon
But beyond its social communicating, American Express has been turning some heads and changing some minds in the area of digital commerce. The company’s innovative partnerships with foursquare and Facebook prompted TechCrunch (no pushover in evaluating innovation) in July to publish this headline “160-Year-Old American Express Out-Innovates Google and Groupon.”
Just three examples of what American Express has been up to:
- In March, the company partnered with Austin, Texas-area merchants to offer cardmember-exclusive specials to those who’d link their foursquare accounts to their Amex account during South by Southwest. Cardmembers just needed to check in on foursquare, pay using their Amex (but offer no other coupons) and receive a statement credit. The program went national in June.
The first three weeks after the announcement saw thousands of cardmembers opt-in to synch their Amex card to their foursquare profile, according to remarks made by CEO Kenneth Chenault at an August 3 American Express Financial Community Meeting. Initial analysis showed that the synched cardmembers skewed significantly younger than the overall base but have income levels consistent with the overall average—“a very positive sign for the merchant value we can generate.”
- Also in July, Go Social was launched. Go Social is a platform that assists merchants to use social media, such as Facebook and foursquare, to easily create offers for cardmembers to access on their mobile devices. For more information, check out this video.
What American Express is doing with online payments may be of specific interest for the financial services industry and retail marketers, but the thinking driving the initiatives, as described by American Express Vice President of Global Marketing Capabilities Dave Wolf in the Social Media Week session, is worth noting by marketers in all industries. Wolf didn’t present slides, by the way, so the graphics accompanying this post are from the Chenault presentation at the Financial Community meeting.
American Express believes that it’s earned its place in the payments business but it recognizes the many payments disruptions that are being driven by PayPal, Amazon, Google, etc. “We don’t want to get stuck in our ways. There’s a concern in financial services that traditional players will be displaced. Our primary goal is to make sure that our company remains relevant,” Wolf said.
Takeaway: Now is no time to be complacent.
Why Facebook and Foursquare? “We need to go where are our cardmembers are,” said Wolf. In fact, he said the company may focus more on social media sites than on its own American Express offers site. “Our Website is not the foundation of our digital strategy,” Chenault said in August.
Takeaway: Get over your site—go where the customers are.
In the real world, I’m quite sure that a merchant would balk at accepting American Express payment for a small value transaction. On Facebook, Wolf said, $1 is the minimum transaction supported. The company is “starting to look at micropayments more aggressively,” he added.
Takeaway: Be as flexible as the medium requires.
The company’s foursquare partnership was monumental given that it was the first time American Express worked with a partner to leverage its Smart Offer API (a capability that allows cardmembers to opt-in and register for targeted offers based on their specific actions and spend). Wolf said that the discussions began in late December and the program was launched in March—in other words, from idea to launch the process took 2.5 months.
Takeaway: Don’t dawdle, speed to market.
The notion of linking a Facebook account to a credit card account caused a noticeable stir even among the social media-savvy attendees at the Chicago meeting. “We can’t end up on the front page of the Chicago Tribune because foursquare exposed our card data,” acknowledged Wolf. “No data goes in and no data goes out, that’s tablestakes.”
Takeaway: Controls need to be in place but, once they are, the social graph can be used safely to deliver relevant offers.
The Go Social platform provides value by simplifying a process that many merchants, large and small, would find daunting. In answer to a question, though, Wolf said there is no fee structure, it’s free for merchants to use. “The day may come but it’s early days and we want to encourage usage,” Wolf said. Future fees, if any, may come from the merchant or from the digital partner, he added.
Takeaway: Provide the value before attempting to extract an explicit return.
For more including the company’s perspective on its digital value proposition and especially the data it has access to, I encourage you to read Chenault’s full remarks.