American Express’ Three-Legged Stool For High Quality Revenue Growth

American Express weathered the pandemic with a three-legged stool strategy. American Express’ strategy was, and still is, to protect its customers, its people and its brand, according to an interview with CEO Stephen Squeri for the financial paper, Barron’s. American Express’ strategy is brand-business-leadership common sense. Unfortunately, there is less common sense in brand-business leadership these days. 

Reading about the numerous layoffs in the tech industry, the focus tends to be on cost-cutting. Of course, eliminating waste is critical, especially in perilous times. But, enterprises must recognize that they cannot cost cut their way to enduring profitable growth. American Express contends that to survive a crisis and move forward with strength, investments in its people, its customers and its brand were, and are, the correct and necessary move.

First, people. Mr. Squeri stated that the resiliency of American Express rests on the brand-business’ commitment to its colleagues. This involved investment in its people. During the pandemic, instead of cutting back, American Express spent more on compensation. The brand-business focused on generating colleague commitment.

Generating internal commitment is as important as generating external loyalty. Colleagues must know what is going on and how this affects them. Even if what is happening is not a massive change, it is essential to ground employees in the need-to-know details that affect them.

Colleagues need to know what are the expected brand-business behaviors. But, colleagues also need to know that leadership is on their side. Leadership must say and do the right things. The brand-business mission must be continually reinforced. Communications and behaviors must be anchored in shared values. 

When American Express took the # 1 ranking on Fast Company’s annual list of the World’s Most Innovative Companies for 2023 in the ‘Personal Finance’ category, the award was for winning over Millennials and Gen Z. The president of US American Express Consumer Services told the press, “This recognition is a testament to the passion, ingenuity and commitment our colleagues demonstrate each day to deliver the world’s best customer experience. We’re focused on continuing to innovate our products, services and brand as we bring to life American Express Membership for a new generation of customers.” This public recognition of a brand-business’ people is an exceptional way to generate internal pride and loyalty.

Second, customers. American Express understands that its customer base is a premium consumer and a premium small business, as well as large national and global corporations. Renovating rewards on many of its cards helped maintain current card holders and attract new card holders.

For example, American Express designed new benefits for its small business customers. American Express observed that post-pandemic, there was a surge in small business creation. The acquisition of Kabbage, a financial technology company that offers automated cash flow solutions and automated lending programs addressed small business needs. Kabbage, integrated into American Express, offered programs that American Express’ small business customers wanted.

American Express has also generated a lot of presence among Gen Zers and Millennials. The data show that 60% of the cards in 2022 were Gen Z and Millennial acquisitions.

Fast Company cited American Express’ “… modernization of its travel and lifestyle benefits, providing younger consumers with services they care about, from lounge access at airports when they travel to streaming service deals.” American Express responded that its efforts “… helped us to deepen relationships with existing Card Members and to resonate with new customers, including Millennial and Gen Z consumers, who comprised more than 60% of American Express’ new proprietary consumer account acquisitions in 2022.” 

A brand-business must focus on its core and on attracting like-minded others. American Express demonstrated that the brand-business was innovating, renovating and tailoring membership benefits to meet customer evolving expectations and anticipating customer needs. 

New benefits such as Uber Cash credits and food and drink promotions are popular. American Express enhanced its dining capabilities through the acquisition of Resy, an American online restaurant reservation brand. American Express also launched Global Dining Access. This benefit offers eligible U.S Card Members access to exclusive tables just for them at the best restaurants in the world. These types of offerings have been a huge driver of Gen Z and Millennial card holder growth.

Additionally, in the latest issue of Travel & Leisure, American Express’ travel magazine, there is are promotions with Uniworld Cruises and Seaborne Expeditions as well as tickets for the Healdsburg Wine & Food Experience. 

Third, protecting the American Express brand. American Express understands that brand-business building in an ongoing activity. American Express states that it is focused on the medium to long term. American Express aimed at adding value to the brand through its investments in customers and colleagues. 

American Express was perceived to be a brand for older people with premium credit card needs. Yet, the brand-business knew that it is difficult to grow when your user base in 60 years old and older. This was Oldsmobile’s problem and look what happened to that venerable brand. 

Through inventive approaches to Gen Z and Millennial customers, American Express changed this perception. American Express recognized that owning an American Express Card is aspirational. American Express knew that to attract younger customers it would need to revitalize card benefits and digital capabilities. Additionally, American Express understood that younger customer would be attracted by a new approach to marketing and brand positioning. 

Compared to baby boomers, Gen Z and Millennials are highly digitally savvy. These cohorts want to be not just aware of, but involved in, card benefits. These cohorts are finely attuned to points and perks and are focused on maximizing rewards offerings such as airport lounges. Going beyond its standard travel-related perks, American Express now offers “… streaming services and Grubhub credits.” 

CEO Squeri believes that American Express’s brand-business experience cannot be easily copied by competitors. American Express has spent decades sharpening its relevant, differentiated brand-business promise of belonging to premium membership that helps customers achieve their aspirations. Belonging is an especially coveted desire; belonging has always been part of human nature.  American Express’ relevant differentiation is also based on its customers: a global network of premium users. American Express is successfully rejuvenating its customer base with it refocus on younger card holders. Mr. Squeri also understands that the stability and reliability of American Express’ payments system is a relevant differentiator for business customers.

Many brand-businesses have been focused on quantity of growth, such as streaming brands that seek subscribers, or have been focused on quality of growth, as with automotive brands that prefer to manufacture expensive SUVs and trucks. American Express focused on both quality of growth and quantity of growth. Brand-businesses must have both quality of growth and quantity of growth if they want to have high-quality revenue growth.

High-quality revenue growth requires that the brand-business consistently delivers an exceptional, expected user experience. This leads to increased customer-perceived brand-business value, which in turn, leads to brand-business preference. A preferred brand-business generates more customers who use the brand-business more frequently and become more loyal. These lead to higher share price and lower price sensitivity, which in turn, profits and revenue and shareholder value.

American Express’ three-legged stool approach – colleagues, customers and brand – to resiliency and profitability, through a pandemic and through our current economic uncertainty, should be a model for other brand-businesses.