Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

AMERICAN EXPRESS COMPANY

(AXP)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

Credit Card Providers Scramble to Update Customer Benefits as International Travel Ban Drags On

09/02/2020 | 06:15am EDT

By Katie Deighton

American Express Co. executive Rachel Stocks pored over consumer data in the weeks after coronavirus lockdown measures took hold in the U.S., trying to imagine what credit-card rewards should look like in the Covid-19 era.

Cardholders increasingly were cashing in their loyalty points for items such as hair dryers and golf balls in place of flights or hotel stays, she said.

"I guess they were having to do their own hair," said Ms. Stocks, the company's executive vice president of global premium products and benefits, "and golf was the only sport they could play while social distancing."

Then she set about helping American Express cards' rewards programs fit the times.

Credit-card issuers' revenue has been hit by declining consumer spending during the pandemic and its resulting economic disruption.

But the card companies also are grappling with a longer term issue: keeping customers happy with rewards that suddenly look a lot less enticing, especially in the realm of travel.

The customer satisfaction rate for the credit-card industry fell 1% in May from prepandemic levels, according to J.D. Power's 2020 U.S. Credit Card Satisfaction Study. The drop appears small, but in the years before 2020, the industry performance had been trending up by 0.5% annually for some time, said John Cabell, director of banking and payments intelligence at the data firm.

"There are cardholders who are paying an annual fee who have experienced a significant drop in customer satisfaction with rewards, and their perception of the amount of rewards gained per dollar spent," Mr. Cabell said.

Card providers can't afford unsatisfied customers, particularly those that pay for cards with hefty travel-rewards programs, said Brian Kelly, the founder and chief executive of travel website The Points Guy LLC.

"All these reward cards are based on aspirational perks, like access to a lounge at the airport, and that rug was pulled out from underneath customers who were paying like $550 for a travel card," he said.

"Travel programs are huge profit centers, so all of the issuers have made pretty quick moves on rewards to stave off mass card cancellations, " Mr. Kelly added.

American Express is trying to make customers feel like they are still getting a good deal while grounded at home.

It has rolled out a number of limited-time offers on some of the cards it co-brands with travel firms, offering Marriott Bonvoy Business cardholders 10 points per dollar spent at domestic gas stations and restaurants, for example.

It also has issued Business Platinum customers with extra statement credits for purchases from Dell Technologies Inc., and is giving all U.S. consumer and corporate cardholders a complimentary yearlong premium subscription to the meditation app Calm.

Other players are taking similar strategies.

Capital One Financial Corp., for example, began letting its Venture and VentureOne customers redeem their miles on restaurant delivery, takeout and streaming services from certain merchants until Sept. 30. These cardholders also can earn extra miles by ordering through Uber Eats. Meanwhile, Capital One's Savor Rewards customers can earn 5% cash back on orders through the delivery platform, and 4% cash back on subscriptions to streaming-video services such as Netflix, Hulu and Disney+.

Matt Knise, the head of Capital One rewards, said his team made those moves after analyzing spending data and speaking directly to customers.

"If we'd just looked at the data, it would have been easy to say, 'Let's only look at categories that were going up, like grocery and pharmacy,'" Mr. Knise said. "But what we heard over and over again when talking to customers was they view their rewards as something a bit more aspirational -- a bit more 'treat yourself' -- which is why we really decided to home in on things like deals for streaming services and restaurants."

HSBC Bank USA NA also spoke to customers to figure out what they wanted benefits to look like in the Covid era, rather than relying solely on spending data, said Nancy Armand, the bank's senior vice president and head of cards portfolio management for wealth and personal banking,

The company runs an online customer community where people post information about what they are spending money on and, crucially, what they want to spend money on. The group became very valuable in helping the company track consumer sentiment around spending and rewards during the pandemic, Ms. Armand said.

HSBC's midpandemic campaigns have included adding rewards such as a 20% discount on items redeemed with reward points, and the opportunity for customers to earn more points back on groceries and home improvement products

JPMorgan Chase & Co. and Mastercard Inc., meanwhile, are introducing a new product on Sept. 15 in response to consumers' demand for rewards, particularly on digital transactions. The new Chase Freedom Flex card will offer perks such as 5% cash back on rides from Lyft Inc. and a complimentary three-month subscription to the premium service from DoorDash Inc., the delivery platform.

Card providers that move quickly to match their reward programs to consumer spending will improve satisfaction over time, said J.D. Power's Mr. Cabell.

They should, however, avoid letting new perks make their rewards programs too complex, Mr. Cabell added. "Customers tend to get confused by a complicated rewards program, and dissatisfaction often follows confusion."

Write to Katie Deighton at katie.deighton@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
ACTIVISION BLIZZARD, INC. 1.05% 99.18 Delayed Quote.6.82%
AMERICAN EXPRESS COMPANY -0.43% 163.81 Delayed Quote.35.48%
CAPITAL ONE FINANCIAL CORPORATION -1.21% 158.71 Delayed Quote.62.52%
DELL TECHNOLOGIES INC. -1.19% 102.74 Delayed Quote.40.18%
DOORDASH, INC. 3.03% 158.83 Delayed Quote.11.26%
HSBC HOLDINGS PLC -1.02% 435 Delayed Quote.16.00%
JPMORGAN CHASE & CO. -1.70% 157.57 Delayed Quote.24.00%
LYFT, INC. 4.10% 58.41 Delayed Quote.18.89%
MASTERCARD 0.28% 366.52 Delayed Quote.2.68%
NETFLIX, INC. 2.28% 499.89 Delayed Quote.-7.55%
All news about AMERICAN EXPRESS COMPANY
06/10AMERICAN EXPRESSá : Ranks No. 1 in Customer Satisfaction in the J.D. Power U.S. ..
BU
06/09AMERICAN EXPRESSá : BMO Capital Adjusts American Express Company PT to $141 From..
MT
06/09MGM RESORTS INTERNATIONALá : Tilak mandadi to join mgm resorts international as ..
AQ
06/08Amazon reviewing bids to replace JPMorgan as credit card partner - source
RE
06/07Today on Wall Street: 15% global corporate tax raises many questions
06/07AMERICAN EXPRESSá : Wells Fargo Adjusts Price Target on American Express to $185..
MT
06/07ANALYST RECOMMENDATIONS : American express, CrowdStrike, Five Below, J.M. Smucke..
06/04AMERICAN EXPRESSá : Launches “Membership Week” June 14 Through June ..
BU
06/04AMERICAN EXPRESSá : Wolfe Research Further Adjusts American Express' Price Targe..
MT
06/02AMERICAN EXPRESSá : Goldman Sachs Adjusts American Express Company PT to $185 Fr..
MT
More news
Financials (USD)
Sales 2021 39 462 M - -
Net income 2021 5 856 M - -
Net Debt 2021 - - -
P/E ratio 2021 22,3x
Yield 2021 1,07%
Capitalization 132 B 132 B -
Capi. / Sales 2021 3,33x
Capi. / Sales 2022 2,95x
Nbr of Employees 63 700
Free-Float 99,9%
Chart AMERICAN EXPRESS COMPANY
Duration : Period :
American Express Company Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends AMERICAN EXPRESS COMPANY
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 29
Average target price 151,12 $
Last Close Price 163,81 $
Spread / Highest target 20,3%
Spread / Average Target -7,75%
Spread / Lowest Target -26,7%
EPS Revisions
Managers and Directors
NameTitle
Stephen J. Squeri Chairman & Chief Executive Officer
Jeffrey C. Campbell Co-Vice Chairman & Chief Financial Officer
Marc D. Gordon Chief Information Officer & Executive VP
Charlene Barshefsky Independent Director
Peter F. Chernin Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
AMERICAN EXPRESS COMPANY35.48%131 589
CAPITAL ONE FINANCIAL CORPORATION62.52%72 532
BAJAJ FINANCE LIMITED0.00%50 125
SYNCHRONY FINANCIAL40.13%28 714
ORIX CORPORATION23.51%21 465
ALLY FINANCIAL INC.49.78%20 310