REV: APRIL 22, 2011
JOHN A. QUELCH
The American Express Card
Marketing is fully integrated into our overall strategy. Our largest investor, Warren Buffett, is very focused on brand health and customer metrics.
— Kenneth I. Chenault
In April 2008, Jud Linville, president and chief executive officer of U.S. Consumer Services at American Express Company, was preparing for a meeting with Ken Chenault, American Express’s chairman and chief executive officer since 2001, and Al Kelly, president of American Express Company. The purpose of the meeting was to discuss further growth prospects in the United States for the American Express consumer card business while maintaining the brand’s premium positioning. The performance of the American Express card, launched 50 years earlier in 1958, had been remarkable. By 2008, there were 52 million American Express cards in circulation in the U.S., held by 41 million “cardmembers” (see Exhibit 1). American Express commanded nearly a 24% share of U.S. credit card payments.1
As Linville prepared for the meeting, he wondered whether he could continue to rely on the same business growth drivers that had served American Express well in the past. With the U.S. economy slipping into recession, the proliferation of cards in the market required American Express to deepen its consumer understanding to provide innovative, value-added products that would attract and retain cardmembers.
The American Express Company was a leading global payments and travel company with revenue net of interest expense of $27.7 billion in 2007, up 10% from 2006.2 American Express’s principal products and services included charge and credit card payment products and travel-related services offered to consumers and businesses around the world. American Express was the world’s largest issuer of charge and credit cards as measured by the annual value of purchases charged on these cards.3 Yet American Express maintained a “best-in-class” credit quality, reflecting in part the company’s traditional focus on the affluent segment, its expertise in evaluating the credit risk of individual consumers, and its ongoing commitment to investing in risk capabilities.4 In 2007, around 70% of American Express’s revenue net of interest expense and 85% of its pretax income from continuing operations5 was generated in the United States. The global diversity of the business included 86 million cards in force worldwide, more than 115 card-issuing or merchant-acquiring ________________________________________________________________________________________________________________ Professor John A. Quelch and Research Associate Jacquie Labatt prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2008, 2011 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-5457685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School..
This document is authorized for use only by YUJIE SUN in Intensive in American Business taught by Robert Calamai from September 2012 to December 2012.
For the exclusive use of Y. SUN
The American Express Card
arrangements with banks and other institutions, and over 650 American Express network branded products.6 Fortune magazine ranked American Express the “Most Admired” megabank/credit card company in its 2008 annual survey.7
American Express’s roots date back to 1850, when Henry Wells, William Fargo, and John Butterfield founded an express delivery company. The very nature of handling and transporting customers’ assets...