If you have an
) card, you probably have Visa (
) or MasterCard (
) as well. Likewise, most retailers who accept American Express
cards also accept Visa and MasterCard. After all the marketing and
advertising, partnering with retailers and third-party financial
institutions, the thing that really matters is which card a
consumer pulls from his wallet to make a payment. So, what
determines which card a shopper picks?
All payment networks have a long list of benefits and cash-back
offers, to the extent that they are often difficult to
differentiate (they all offer the "best" value). One easy way to
differentiate is customer service - accessibility of card network
representatives, ease of receiving clarifications, and transparency
of the billing process. This is exactly where American Express
looks to set itself apart.
What is American Express Doing?
American Express intends to go beyond rewards programs to offer
a more personal touch to its customer care service. American
Express has developed a program called
, wherein front-line employees are trained to go beyond simply
responding to a customers' questions and build relationships by
offering customized advice on getting the most value out of
American Express cards.
While increasing the number of American Express cards in use and
the number of retailers accepting American Express cards is an
important business driver, getting customers to actually use the
card is a more critical factor in generating transaction fee
commissions. Customer care is one way to increase the likelihood
that shoppers will reach for their AmEx card at the point of
How Much Could Improved Customer Care Impact AXP
American Express reportedly sees an 8-10% increase in credit
card spend from a customer after talking to that customer about
their card benefits. Going forward, the company could potentially
see similar upside outside the U.S. if it sharpens its customer
focus in Europe, Asia, and South America.
We currently estimate that average card member spending on
American Express issued cards outside the U.S. will grow from about
$10,000 in 2010 to nearly $19,000 by the end of our forecast
period. If, however, cardmember spending were to rise at a faster
pace, in line with the customer behavior in the U.S., it could
imply 2% upside to
our $49 price estimate for American Express
You can drag the trend line in the interactive chart above to
see how different scenarios for average non-U.S. cardmember
spending could affect American Express' stock value.
See our complete analysis of American Express stock