American Express' Plan to Attract Millennial and Gen Z Customers

Understanding Millennial and Gen Z Preferences

American Express strategically focuses on making value propositions relevant to Millennials and Gen Z, who now account for over 75% of new platinum and gold accounts. These younger customers demonstrate strong engagement, spending 13% more and transacting 25% more than older customers, with higher lifetime values, indicating a preference for premium products.

"bit in that particular from that time. But I think the fundamental thing to take away from the focus on millennials and Gen Z as you take a sort of 40,000 foot look at this is that strategically, we said we want our value propositions to be relevant across a wide range of constituents." --- (AXP, conference, 2024/05/30)

"As you can see from the graph on the left, the millennial and Gen Z share of new accounts across our platinum and gold products has increased to over 75%.And we're not just attracting any younger customer." --- (AXP, event transcript, 2024/04/30)

"Millennial and Gen-Z customers grew their spending 13% and continue to drive our highest billed business within this segment.These younger card members continue to demonstrate strong engagement and we see that they transact over 25% more on average than our older customers." --- (AXP, earning call, 2024/Q2)

"But I think the fundamental thing to take away from the focus on millennials and Gen Z as you take a sort of 40,000 foot look at this is that strategically, we" --- (AXP, conference, 2024/05/30)

"As you heard Howard discuss, these younger customers have a greater expected average lifetime value, which comes with embedded growth opportunities for future years. For new U. S. Consumer platinum card members, we estimate that millennials less than 30 years old have an average lifetime value that is 1.8x higher than Gen Xers acquired at the same time, and that's even higher for Gen Z customers at 2x." --- (AXP, Investor Day, 2024/04/30)

Targeted Marketing Strategies for Younger Demographics

American Express is leveraging a disciplined growth strategy focused on high credit quality premium customers, including younger demographics. They are evolving their product suite through partnerships and innovation to attract and retain Millennials and Gen Z. Increased marketing spending, targeted strategies, and significant investments are key components of their approach.

"to credit and provision on Slide 8, through 10, our credit performance remains very strong and is a direct result of our disciplined growth strategy which has been focused on growing our high credit quality premium customer base, including through the younger customers we attract to the franchise. This strategy, coupled with our robust risk management practices are an important aspect of our business models." --- (AXP, earning call, 2024/Q2)

"Now that I've explained why we believe we operate in the right countries and our focus in the right segments, I want to go deeper on the membership model. And in particular, I will unpack how our product suite across both consumer and small businesses is continuously evolving through partnerships and innovation and how we are able to attract, engage and retain a younger customer base." --- (AXP, event transcript, 2024/04/30)

"But the thing that I would also point out is that, because we have elevated our marketing spending to where it is using the core business and not use the one-time gain and that gives us the opportunity to actually reset our marketing at a much higher level for next year, which will allow us to drive even more growth as we go forward." --- (AXP, earning call, 2024/Q2)

"And we can be targeted and specific around those customers that we know have about close to 75% of their lending on other cards in their wallet and use the product, the value proposition to encourage them to move that lending on. As a result, when you filter that through, it translates into industry leading credit performance that is not only industry leading pre COVID, but as you saw, we've widened that lending gap between us and our industry competitors." --- (AXP, Investor Day, 2024/04/30)

"The strong performance of our core business year-to-date and our expectations for the balance of the year will enable us to increase our investments in marketing and other strategic areas that drive our growth without using any of the proceeds from the Accertify sale, while still delivering exceptional earnings results. In fact, we now expect to invest around $6 billion in marketing this year, up about $800 million versus last year, all of it funded from the results of our core business." --- (AXP, earning call, 2024/Q2)

Digital Engagement and Technology Initiatives

American Express is enhancing digital engagement through innovations like allowing card members to use points directly from digital statements and creating a digital ecosystem with Business Blueprint to simplify transactions and drive customer engagement. These initiatives aim to attract Millennial and Gen Z customers by making financial interactions more seamless and integrated.

"On the number of partners engaged in the program, the ease of redemption as well one of their later innovation that is actually very successful in terms of how many card members are using it is the ability just to select the transaction on your statement, your digital statement and actually using more points to pay for that specific transactions." --- (AXP, earning call, 2024/Q1)

"And around a digital commerce transaction, it could make that transaction so much easier." --- (MA, conference, 2024/05/20)

"Q1 was a good start to the year. We're seeing strong momentum within our Family of Apps and are making important progress on our longer term AI and Reality Labs initiatives that have the potential to transform the way people interact with our services over the coming years. With that, Krista, let's open up the call for questions." --- (META, earning call, 2024/Q1)

"I guess I'm wondering, along with some of those changes in behavior, is there a way to quantify that overall engagement shift, whether that's an increase in time spent, increase in over the level of increase in queries for both sort of traditional search as well as more generative answers." --- (GOOG, earning call, 2024/Q1)

"action we're taking to drive revenue growth through customer engagement by providing our customers the digital ecosystem that makes it easier to do more with American Express.Business Blueprint, the digital home for our small business products, drives this better together connectivity." --- (AXP, Investor Day, 2024/04/30)

Enhancing Customer Experience for Younger Generations

American Express is enhancing customer experience for younger generations by investing in cutting-edge tools for frontline colleagues, expanding acceptance locations globally, and offering premium travel benefits. These efforts aim to attract and retain Millennial and Gen Z customers through improved service, convenience, and exclusive perks.

"In order for in order to execute upon our vision to provide the world's best customer experience every day, we must invest in cutting edge tools and capabilities for our frontline colleagues so they in turn can provide world class servicing experience to our customers." --- (AXP, Investor Day, 2024/04/30)

"And lastly, I'll highlight how we're driving network volumes by enhancing our capabilities and capitalizing on new opportunities and innovations. Since 2017, we've more than tripled the number of locations worldwide that accept AmEx to more than 89,000,000." --- (AXP, Investor Day, 2024/04/30)

"We expect this growth will come from both higher revenue growth, new customers from new customers acquired and higher organic growth from our tenured con members, especially from younger customers." --- (AXP, Investor Day, 2024/04/30)

"When combined with the recently enhanced benefits, these cards provide a nod to our storied past and symbolize the elevated experiences our customers can expect in their future travels. The Delta SkyMiles Reserve and Reserve Business American Express Cards offer premium travel benefits for Delta loyalists, including an enhanced Companion Certificate each year after renewal, MQD Headstart which helps you get closer to Status, miles accelerators, access to exclusive reservations through Global Dining Access by Resy, and more." --- (AXP, press release, 2024/04/25)

Strategic Partnerships and Collaborations

American Express is leveraging strategic partnerships with third-party card issuers, merchant acquirers, and companies like Stripe, Adyen, and SumUp to expand card acceptance and reach. Additionally, the company employs a network partnership model in various geographies to serve customers, aiming to attract Millennial and Gen Z demographics.

"GMNS manages our partnership relationships with third-party card issuers (including our network partnership agreements in China), merchant acquirers and a prepaid reloadable and gift card program manager, licensing the American Express brand and extending the reach of the global network." --- (AXP, sec filing, 2024/Q1)

"Strategic Move Positions Accertify for Accelerated Growth and Innovation in Fraud Prevention Space MENLO PARK, Calif. and ITASCA, Ill., May 2, 2024 /PRNewswire/ -- Accel-KKR, a technology-focused private equity firm, today announced the successful carveout acquisition of Accertify from American Express (NYSE:AXP)." --- (AXP, press release, 2024/05/02)

"We're expanding the use of partners like Stripe, Adyen, SumUp to accelerate coverage and card acceptance, ensuring we can capture the long tail of smaller merchants." --- (AXP, event transcript, 2024/04/30)

"For the remaining opportunities outside of the geographies where we operate as proprietary, we operate through network partnership model, working closely with our with other institutions to serve customers." --- (AXP, event transcript, 2024/04/30)

Brand Positioning and Messaging

American Express leverages its premium brand positioning and superior service experience to attract Millennial and Gen Z customers. The company employs targeted marketing strategies, such as trigger marketing, to enhance engagement and drive value, ensuring the brand remains appealing and relevant to younger demographics.

"of our brand makes me confident that American Express will continue to succeed well into the future." --- (AXP, event transcript, 2024/05/06)

"What I would say though is that the returns in international are very attractive because as Rafael pointed on some of his slides, it tends to be a more premium portfolio. The brand is a bit more premium and international." --- (AXP, Investor Day, 2024/04/30)

"Amex has always been a premium brand with premium customers. But what's been the catalyst to sort of increase their appetite to fund more value over the years? And as you look forward, Christophe, you had that slide that showed the value funded by partners." --- (AXP, Investor Day, 2024/04/30)

"So statistic so we know a lot, and we have those what we call trigger marketing where specific type of transactions might trigger a marketing message for us to upgrade the card, to take some loans." --- (AXP, conference, 2024/06/12)

"American Express' leadership position is built on a series of competitive advantages, from our suite of small business focused products to our ability to surround our customers with a superior service experience." --- (AXP, event transcript, Investor Day, 2024/04/30)

Competitive Positioning in the Financial Services Market

American Express leverages competitors' slowdowns to gain market share, utilizes a flexible and resilient business model to deliver strong earnings, and benefits from the best credit performance in its premium card segment. Additionally, its integrated payments platform offers superior fraud protection, enhancing its competitive positioning in the financial services market.

"So typically, when American Express does this, it's because -- or at least in the past, you've seen this happen because Amex is either anticipating or already seeing a slowdown from competitors in terms of their market activity and you see a significant opportunity to gain share." --- (AXP, earning call, 2024/Q2)

"And our flexible and resilient model has enabled us to deliver strong earnings through different economic environments and significantly accelerate earnings generation in recent years, which you can see on this slide. This has enabled us to consistently return capital to shareholders in a disciplined way. Unlike many institutions, we" --- (AXP, Investor Day, 2024/04/30)

"It's actually the segment of our balances that is the fastest growing. And from -- I would say from a performance standpoint, because that product, but that service is attached to our charge card products, so typically premium card members the credit performance is also the best that we have in our lending products." --- (AXP, earning call, 2024/Q1)

"In addition, the company's integrated payments platform and direct relationships with card members and merchants provide a unique advantage when it comes to fraud protection. Because we have more data on every transaction, we are able to identify out of patent transactions more effectively than our competitors." --- (AXP, event transcript, 2024/05/06)