Customer Relationship

Management at
American Express

Submitted By:
Section 4 Group 7
UM15280 Prashant Sharma
UM15281 Pratik Agarwal
UM15282 Pratik Parida
UM15283 Preet Singh Bhasin
UM15284 Priyadarshini Dash
UM15285 Rachna Edakandy
UM15287 Sanchita Nayak
Table of Contents
Introduction .................................................................................................................................................. 2
Products and Services provided by AmEx ................................................................................................... 2
Key Challenges faced by AmEx .................................................................................................................... 3
CRM Vision.................................................................................................................................................... 4
Major Vendors .............................................................................................................................................. 4
CRM Architecture ......................................................................................................................................... 5
IT Architecture .............................................................................................................................................. 5
Customer Interaction ................................................................................................................................... 6
Contact Centre Services ............................................................................................................................... 6
Operational/Analytical CRM ........................................................................................................................ 7
CRM Initiatives by American Express ...................................................................................................... 7
Market Segmentation .................................................................................................................................. 9
Customer segmentation............................................................................................................................. 10
Primary Research Survey results ............................................................................................................... 11
Recommendations to improve its consumer base and consumer loyalty ............................................... 15
Measuring Impact of CRM Initiatives ........................................................................................................ 16
Internal CRM............................................................................................................................................... 17
Internal CRM Motivations .................................................................................................................. 17
American Express Employee Engagement Policy .............................................................................. 17
Viable System Model.......................................................................................................................... 17
American Express Engagement roadmap .......................................................................................... 18
Measuring Metrics (Internal CRM) .................................................................................................... 18
Conclusion .................................................................................................................................................. 19
Introduction
American Express Company is a financial company which is best known for its credit card business.
American Express credit cards, also known as Amex cards make up nearly a quarter of all credit cards
transactions in USA.

In 1850 American Express started as an express mail business in Buffalo, New York. It was than an instant
success throughout New York state primarily because US Postal Service was slow and expensive.

In 1882 it launched money order business to compete with the US Post offices money order.

In 1891, American Express introduced Travelers Cheques in denominations of $10, $20, $50 and $100.
These traveler Cheques established American Express as an international brand.

In 1903, American Express was 2nd in position among the top financial institutions in the city with an asset
holding worth $28 million. In 1914, when World War 1 started, many people who happened to be
travelling could not get at their money, but American Express offices in Europe were among the few
companies to honor the letters of credit so that the American tourists could get money to travel back
home

Products and Services provided by AmEx

There are 3 categories of products:

1. Personal
The American Express-Membership Reward Credit card
The American Express-Platinum Travel Credit card
The American Express-Gold card
The American Express-Make My Trip Credit card
The American Express-Platinum Reserve Credit card
The American Express-Express Platinum Credit card
The American Express-Platinum card
The American Express-Payback Credit card

2. Corporate
The American Express Platinum Corporate Card
The NEW Jet Airways American Express Corporate Card
The American Express Corporate Card
American Express Purchasing Solutions
The American Express Corporate Meeting Card

3. Insurance
Travel Insurance
Motor Insurance
Health Insurance
Personal Accident Insurance
Life Insurance
Key Challenges faced by AmEx
Its been a very tough year for American Express Co.'s shareholders. In 2015, news that the company had
lost its significant client relationship with Costco Wholesale Corp contributed to an annual share price
decline of over 40%. The fact that the credit card companys fourth-quarter results fell short of analyst
expectations also pushed the price down.

American Expresss business model comes with its own set of challenges.

Perhaps the most onerous of these is the significant regulatory oversight the company requires.
American Express is both the card issuer and the lender (unlike Visa and MasterCard, who are
only payment processors) so as a bank holding company, American Express is subject to additional
regulation by the Federal Reserve and other regulatory bodies within the U.S. financial industry.
o By comparison, competitors like Visa and MasterCard operate under less regulatory
oversight.
o In addition to the increased compliance costs, American Expresss regulatory burden
could impede its ability to keep pace with innovations made by competitors.
The costs of regulatory compliance apply to all large financial institutions but American Express is
also facing specific legal risks.
o The company is currently defending itself against the U.S. Department of Justice, which
claims that AmEx structures its merchant contracts in a way that violates U.S. antitrust
laws.
o If successfully proven, this claim could theoretically force American Express to remove
contractual provisions designed to prevent merchants from issuing surcharges when
customers pay with American Express cards.
o The European Union is also considering regulatory changes that would make such
contract terms illegal in the EU.
These legal challenges have likely contributed to American Expresss low valuation relative to its
peers. Consider that Visa and MasterCard both enjoy price-to-earnings ratios more than double
that of American Express, despite offering significantly lower dividend yields.
While American Express had the first mover advantage, over time the difference between the
audiences for the cards has been washed away. Banks have aggressively courted American
Express corporate accounts, and merchants have found they can get away with accepting the two
larger networks and ignoring Amex, and its high costs.
Because of which the graph today stands as:
CRM Vision
To make each day easier, safer and more rewarding for consumers and businesses to purchase
the things they need.
Customer Commitment which speaks that they develop relationships that make a positive
difference in their customers' lives.
Aim to provide products, services, benefits and rewards that deliver more value than any
competitor

Major Vendors
A new CRM system was needed due to the following reasons:

Suffering state of customer service

Create integrated solution that meets the needs of customers and exceeds their expectations

Deliver local, personalized service to its customers

AmEx associated with Pega and SalesForce.com for its CRM implementation. Currently SalesForce.com
handles most of its CRM operations.

1. Salesforce
The partnership between American Express and Salesforce started with Sales Cloud in 2010.
The Customer Success Platform now connects thousands of employees across organizations,
locations, and time zones.
American Express transformed the travel experience by pairing secure payments with easy-
to-use business tools. The customer can choose to pay with plastic or on the device and the
same device is going to be where they can capture their itineraries, where they can capture
their receipts, and send in their expense report. Chatter facilitates communication and
excitement around solving customer pain points. Sales reps now have complete views of
customers before they walk into meetings, and the Salesforce1 Mobile App also connects to
Chatter for real-time collaboration among colleagues.
2. Pega
It was aimed at building a new end-to-end system designed to provide excellent care for
American Express customers based on their new relationship servicing model and creating an
integrated network to deliver service regardless of location Meet the customers unique
needs. American Express adopted agile solutions to develop the actual solutions, and business
process management and knowledge management technology were brought in.
CRM Architecture

IT Architecture
American Express uses Salesforce CRM, a cloud based CRM solution to turn data into insights. It integrates
sales, accounts, servicing, marketing and people and gives solutions in real time. It developed with Sales
Cloud in 2010.

The data warehouse has been housed by IBM. The data mining is managed by Citrix metaframe. It has
several contracts with REPS, Japa and GNS for different segments of customers and their needs.

There is a card rebate team which processes the contracts accurately and timely of the contracts. It also
ensures that the payments are made timely and card incentive payments are accounted for.

There is a Customer Success Platform which connects employees across time zones, locations and
organizations. It allows communication among employees to relieve pain points as it facilitates real time
collaboration.
Customer Interaction
The customer moments of truth and their respective CRM applications in the case of American Express
are as follows-

1. 24*7 customer service departments exist consisting of customer care professionals who handle
helpdesk and customer feedback. They have been trained to give a personalized experience based
on the needs of the customers and customize the service offering.
2. They can also be redeemed through loyalty schemes, rewards and coupons by having strategic
partnerships with airline companies, Amazon.com etc.
3. They are also available on social media platforms including Facebook and Twitter where they
screen customer feedback to incorporate them in their service offerings, they engage with
customers and also retain them with new deals and offerings.
There was a shift in the post purchase approach in 2005. It shifted from a traditional call center approach
to relationship care approach.
The characteristics of traditional call center includes-
Scripted conversation with Customer care professionals (CCP)
And each call session with the CCP was timed
The steps in relationship care approach include-
Assessment of customers mood
Understand the reason why the customer made the call
Have unscripted conversations by CCPs
CCPs could give information of unused products to existing customers
The customer would decide the duration of call instead of the CCP

The results of this shift included 10% increase in recommend to friend score, 8-10% increase in customer
spend and 10% increase in service margins.

Customer feedback was collected from calls to CCPs and social media platforms like Facebook and twitter.
Positive feedback was used to build relationships and customer loyalty. Negative feedback was followed
up with customers to understand concerns. Amex has integrated customer data which eliminate the need
to access multiple screens during a call and get all information at one place. There is a virtual service
center which is improving customer-centric navigation continuously thus enhancing ease of use.

Contact Centre Services

Customer Touch Points:

The toll free no.

American Express Office

Through the website.

Benefits of the Contact Centre services:

 The contact centers help us with all kinds of assistance and information for personal and business
needs of any customer.

Enable and guide us to use the online services

Enlighten us with the added benefits that each division has for its customers

Help us with different kinds of alliances that we want to have with amex be it personal, merchant
or as a corporation

Amex has also developed a Relationship Care, a service ethos based on the idea that the
companys most powerful loyalty-builders are the thousands of Customer care Professionals who
speak with customers daily.

Online and Call Service Centre (Problem Solver)

Customer will call the contact center on the toll free no. or login on the online customer service
portal

He/She will give primarily card no.

From this number the customer data will be fetched from system

The complaint details are recorded

After filling the complaint successfully a ticket no. will be generated and an acknowledgment will
be sent to the customer.

Operational/Analytical CRM
CRM Initiatives by American Express
1. Pay with Points program
To use Pay with Points, you must charge your eligible purchase through American Express Travel
website. The card must be enrolled in Membership Rewards program. You can book plane tickets,
hotel rooms, and vacation or cruise packages through this program. Points will be debited from
your Membership Rewards account, and credit for corresponding Rupees amount will be issued
to the American Express Card account used.

2. Loyalty Program Plenti

Plenti is an innovation by AmEx where it lets the customer earn points by shopping at
supermarkets, dining at restaurants and making other purchases and later use these points for
savings by using them at certain Plenti partners. Unlike other loyalty programs such as frequent
flyer plans, Plenti isn't tied to a single company or credit card issuer. Users can join for free and
don't have to be American Express members. It is the first cross-brand program of its kind and
hopes to get repeat customers by this. American Express cardholders who are part of the
Membership Rewards program will be able to convert Membership Reward points into Plenti
points.
 3. Membership rewards program
AmEx has membership rewards program for corporates as well as individual customers. The more
you spend, the more Membership Rewards points you can accumulate. These points can be
redeemed for a wide variety of travel rewards, shopping rewards, and entertainment rewards etc.
Points can also be transferred to other loyalty programs such as airlines (frequent flyer programs)
and hotels (frequent guest programs). To enjoy this benefit you need to have an AmEx card.

4. Serve digital wallet

This was a method to target a segment which AmEx calls as the under-banked population - that
is, those who either dont have traditional bank accounts, or who tend to pay more often with
cash than with credit or debit cards. In addition to being able to load cash onto their cards for
free, customers will also be able to add paychecks and government disbursements directly into
their Serve accounts using Serve.com. The platform also supports mobile check capture, allowing
consumers to load checks, including non-payroll checks, using their smartphone. Serve allows
point-of-sale checkout which is not provided by PayPal. Serve also provides a lot of functionalities
similar to traditional banks like direct deposit support, cash deposits, ATM access, online bill pay,
peer-to-peer payments (online and mobile app), sub-accounts for family members, mobile app
access for balance checks and payment histories etc.

Analytical CRM

American Express has partnered with SalesForce.com and uses its application to improve its customer
experience. Some of the applications that it uses are as follows:

1. Sales Cloud It helps AmEx in new customer acquisition and in growing its accounts.
2. Marketing Cloud It helps AmEx to understand each of its customers preferences with powerful
analytics and predictive intelligence and automatically tailor content to be delivered across
channels which will eventually help drive more conversions and increase loyalty
3. Salesforce Chatter This is an employee tool which helps connect every employee to all the files,
data and expert through mobile. This gives them an advantage during any ongoing negotiations
as they have all the details about the client.
4. Service Cloud This helps AmEx to provide 24x7 multichannel customer support. It provides
agents with a 360 degree view of the customer to provide quick solutions and also helps monitor
customer satisfaction.
5. Data.com This basically helps to clean, update and manage data effectively. It helps to do
advanced strategic sales planning, market analysis and reporting.

American Express manages a data warehouse by an in-housed department of IBM. Data mining is
managed by platforms deployed by Citrix.

In the corporate card environment clients rank rebate payments high on their list of key satisfaction
drivers. Card Rebate team is responsible for processing accurate & timely calculations for these rebate
payment contracts and for timely payment & accounting of card incentive payments to the clients which
they can do with the help of analytics.
Social Media Analytics

American Express is turning to social networking sites Facebook and Twitter in an effort to better manage
customer relations and boost customer service levels. It integrated Facebook and Twitter into its
Salesforce.com CRM system with the goal of capturing customer feedback unavailable through traditional
channels such as its call centers. By analyzing their customers chats and posts about AmEx services they
can understand the issues and resolve them faster.

Market Segmentation
American Express uses a mix of macro and micro segmentation strategies.

It traditionally operates through 4 main segments:

U.S. Card Services USCS

It issues a range of card products and services to consumers and small businesses in the US. It
also provides consumer travel services to card members and other consumers
International Card Services ICS
It issues proprietary consumer and small business cards outside the US and operates coalition
loyalty businesses in various countries.
Global Commercial Services GCS
It offers global corporate payment services to large and mid-sized companies globally.
Global Network and Merchant Services GNS
It acquires merchants and provides point-of-sale products, multi-channel marketing programs
and capabilities, services and data, leveraging the companys global closed-loop network.
Customer segmentation
Customer segmentation based on income:

Segment Class Annual Income (Rs.)

Highly Affluent + 7,00,000 Maximum credit card holders from this segment

Mid-Income/ Mass 4,00,000 to 7,00,000 Rapidly growing segment with huge potential
Affluent
Consuming / Emerging 1,00,000 to 4,00,000 Few credit card holders in this segment but with rapid
Affluent change in consumption pattern has maximum potential

Behavioral Segmentation:
Using data analytics American Express has further segmented its customers based on their behavior:

1. Prosperous and content

Keep purchases in order
Use credit card for 59% of their purchases
Love rewards
Dislike revolving debt
Look for convenience and minimum effort
Premium network
Positioned as a tool that facilitates financial success through ease of use
2. Deal chasers
Likely to have co-branded cards and pay annual fee for reward card
Highly involved with financial products
Lower income category compared to premium segment
Higher debt
Higher online transactions
Always striving to borrow at the lowest cost
3. Financially stressed
Heavy credit card debt
Unable to control spending
Either they are chronic spendthrifts or mired in circumstances that force them to borrow
to pay essentials
Expect financial trouble
4. Recovering credit users
Avid budgeters who pride themselves on keeping their financial house in order
Avoid stock markets as too risky
Fear bank deposits are unsafe
Blame issuers when consumers accumulate debts and fees they are unable to pay off
Avoid using credit cards for routine purchases
 Seldom respond to high reward offers
Need reassuring that they can use credit card without stumbling into penalty rate
5. Self-aware avoiders
Avoid using credit cards
Blame themselves for their debt problems rather than issuers
Use debit cards and cash for POS purchases
Respond to simplicity and transparency in fees, rates and terms
Feel more in control if they understand payoff horizon for major purchases
Cards that could instantly calculate the scale and duration of monthly payments for a
given purchase at POS would meet their needs

Note: Behavioral segmentation is specific to American Express only

Primary Research Survey results

Consumer base: 37
The features that are considered most important for credit cards are convenience and quality of service.
Table 1: Importance of credit card feature
Rank Factor
1 Convenience
2 Quality of service
3 Security
4 Credit Limit
5 Annual fees
6 Special privileges
7 Interest rate

Travel & entertainment is considered as the most important reason for purchasing credit card.
Table 2: Reasons for purchasing credit card
Reasons % Respondents
Travel & Entertainment 56%
Credit Limit 49%
Credit Period 38%
Emergency services 32%
Special privileges 28%
Status symbol 25%
Majority of card spending was on travel, hotels and restaurants

Consumer spending patterns using Credit Card

Travel Hotels and tickets

29%
68% Restaurants
32%

Clothes stores

41%
Provision stores
56%

49% Consumer durables TV,

refrigerators etc.

Importance of factors in providing you with excellent customer

service

Try to sell something

Address you by your name
Follow up with you on your experience
Provide personalized services
Thank you for being a customer
Connect you with someone knowledgeable
Provide a satisfactory answer to your question

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Consumer perception towards customer service by American Express

Table 3: Consumer perception of customer service
% Respondents
Meet expectations 62%
Miss expectations 29%
Exceed expectation 5%
 Why consumers prefer to do business with AmEx

Make it easy for me to find information about

products and services
Provides products and services that meet my
needs

Provides personalized services

Easy to do business online and offline

Delivers promised value at the right price

0% 5% 10% 15% 20% 25% 30% 35%

Face-to-face conversations seem to be the most effective medium to share customer service
experiences

Channels of communication to share

customer service experience

46% Face-to-face
54%
Company website
Text messaging
46%
50% Social media

49% Consumer review sites

In order to provide customers with excellent customer service, representatives must be able to provide
a satisfactory answer to their question (86%) or be able to connect them with someone who is
knowledgeable (78%).

Table 4: Importance of factors in providing excellent customer service

Reasons % Respondents
Provide a satisfactory answer to your 86%
question
Connect you with someone knowledgeable 78%
Thank you for being a customer 45%
Provide personalized services 45%
Follow up with you on your experience 27%
Address you by your name 21%
Try to sell something 8%
Recommendations to improve its consumer base and consumer loyalty
1. Innovation in authentication capabilities
Partner with biometric identity platform provider, to show off an authentication process that
avoids the need for a password altogether and works across a slew of devices and operating
systems. By enabling multiple biometric technologies be it a fingerprint sensor, an iris scan or
facial recognition an app will prompt another biometric technology to kick in when the default
method fails. That would overcome some of the biometric hurdles, like a wet fingerprint or a facial
recognition fail because of extreme lighting. In practice, multiple biometrics on one device could
mean checking banking with sweaty fingers after the gym wont be a problem. With multiple types
of biometrics supported by an app, it becomes possible to make the password a thing of the past.
Focus on enabling a broad range of technologies to address the varied needs of AmExs clients
and cardholders worldwide as there is no one solution that fits all demographics.

2. Integration of other social media sites and consumer review sites in the existing CRM for
monitoring of customer feedback and taking appropriate actions.
3. Create personalized products and change positioning for the segments identified in the need-
based segmentation strategy to gain customer loyalty as well as for new customer acquisition.
4. Customer service can be a profit center and it is important to have a CRM tool that gives them the
tools to sell and tracks their progress. CRM should have the capability to complete credit card
orders within the system from an open shopping cart on the website. This type of sales tool allows
Customer Service teams to deliver not just a great customer experience, but greater conversion.
Customer care framework can be applied here.
Measuring Impact of CRM Initiatives
American Express uses the following metrics:

New customer acquisition rate

12% increase in investment (YOY)

14% increase in spends from new customers acquired through digital medium

16% increase in spend from new customers through all mediums

Share of spend wallet

Lower marketing costs

Higher returns

Share of lend wallet

Higher capital requirement

Deepened customer relationships by meeting borrowing needs

As per reports American express is the market leader in the premium segment.

Consumer Spend ($Billion)

250
200
150
100
50
0
2009 2010 2011 2012 2013 2014 2015

Debt outstanding for AmEx ($Billion)

160
140
120
100
80
60
40
20
0
2012 2013 2014 2015
Internal CRM
Internal CRM Motivations
Employee Engagement
o More satisfaction
o Increased commitment
o Emotional connect
Business Result
o Stronger performance
o Higher retention
o Extra effort

American Express Employee Engagement Policy

Viable System Model

The VSM suggests that an integrated organization is a collection of autonomous units that are
interconnected and possess a level of cohesion that results in a unified whole autonomous

Implementation

Coordination

Control

Intelligence

Policy
American Express Engagement roadmap

Challenge Approach Objective: A highly

Drive a level of Develop an adaptable
employee engagement organization where
engagement that strategy focused on employees take
will be a vehicle for Enhanced employee personal ownership
the companys dialogue Employee for the continued
transformation, in a empowerment success and
dynamic and transformation of
uncertain the company.
environment

Measuring Metrics (Internal CRM)

Activity Measure

As cost measures and revenue measures can both present problems, some companies throw in
the towel and settle for metrics based on sales and marketing activity. These can be metrics about
the CRM project itself, or about specific elements of the sales, marketing and customer.

Employee value improvement

o Employee satisfaction can be measured by observing behaviour and through surveys.
o Satisfaction should be evaluated around the employees relationship with the entire
brand, versus any function or department.
o Employee attrition- The reduced cost of new hiring and the less attrition rate
ROI
ROI is the investment made by the company in relation to the long term saving cost by the internal
marketing within company leading to higher efficiency of the employees, less attrition and cost
savings compared to the initial investment made by the company
Cost Saving

If CRM is viewed across all marketing, sales and customer service functions, cost saving
opportunities can be represented in a broad range of metrics:
Campaign expense reduction - When prospective targets are selected more effectively,
campaign volumes decline, and expense-to-revenue ratios fall.
Internal process improvements - The percentage of customer orders that can be handled
automatically, shorter sales cycle time, less reworkall these efficiencies go right to the
bottom line.
Service center efficiencies - When the duration of a transaction or a problem resolution
call is shorter, that translates directly into lower headcount requirements.
Conclusion
The perceptions regarding IT services is favourable and its implementation seems to have
improved the customer satisfaction at American Express
They do not have branches and instead have few main offices. To target the lower income
categories they should increase their on-ground presence.
The CRM practices in place at AmEx appear to be working well for their existing affluent
customer base but to cater to larger mass in India they need to modify their CRM practices to
increase customer acquisition.
The current CRM practices focus more on loyalty programs customer retention
CRM is to be described and used as an enterprise-wide strategy in the bank
CRM should be involved in all the areas of the company to work in synchronization towards a
common goal of stronger and long-term customer relationships.
At AmEx, a customer centric model is designed to support the three phases of a seller/buyer
relationship; new customer acquisition, retention of existing customers, and lifetime value
maximization

References
http://www.investopedia.com/articles/investing/030116/american-express-why-market-punishing-
it.asp
http://amigobulls.com/articles/the-basic-problems-which-were-killing-american-express-still-
remain-in-place?p=n
http://searchcrm.techtarget.com/news/2240079299/Customer-experience-management-gives-Dell-
AmEx-an-edge
http://tsys.com/ngenuity-journal/case-study-five-things-american-express-is-getting-right-for-the-
mass-affluent-market.html
https://www.ft.com/content/d9b0300c-8194-11e0-8a54-00144feabdc0