BrandFinance® Brandirectory

BrandFinance® Journal: American Express was one of the fastest-growing brands on the BrandFinance® Banking 500 league table this year, moving from 13th to seventh place after an increase in brand value of 17 per cent. To what do you attribute the rise?

John Hayes: We do lots of things every day that contribute to the value of the brand, but at the heart of everything we do is our relentless focus on our relationships with our customers, whether merchants or cardholders. Those relationships with our ‘members’ are underpinned by the three core values that define us as a brand and will never change: trust, service and security. Occasionally we’ve got that balance wrong.

At the height of the financial crisis in 2008, for example, when we were trying to manage high financial risk while maintaining superior customer service, we stopped listening to our customers. We reduced their buying power in some cases without involving them in the decision, but they made it clear to us that they wanted a voice in that. We realised that they needed opportunities to ask us questions and to state their point of view, and we gave them a forum to do that — which, in itself, they found empowering.

That experience changed the nature of the dialogue between us, because it demonstrated that customers demand to be listened to as well as spoken to. But it also showed us that if you do listen, and act on what you hear, you can quickly regain the ground you lost and increase the value of your brand through creating positive sentiment.

BFJ: To what extent did the banking crisis and subsequent recession in 2008/09 affect American Express?

JH: The downturn had a major impact on the entire financial sector. We aren’t a bank, but we were affected by the change in consumer spending habits: we saw a fall in spending levels as consumers started to save more. 

But there were significant differences between the way the crisis affected us and the way it affected other finance brands. Our financial and brand performance was far more stable than those of the overall category, for example, and our most recent numbers (see Figure 1 on page 7) show higher growth rates and lowerwrite-off rates than some of the other players.

And that stability goes back to the depth of the relationship we have with members. We measure all elements of our brand strength and our relationship with our customers on a continuous basis in order to improve on them, and we enjoyed the same level of member trust throughout the crisis that we had before. Trust is a fundamental measure of the value of our brand. 

BFJ: Was the downturn a watershed in your approach to marketing and building customer relationships?

JH: I think it marked a new stage in our evolution, certainly. American Express has reinvented itself several times: it started out as a freight forwarding business, moved into travel, then financial services — we introduced the first American Express card in 1958. But throughout our history we have focused consistently on service and relationships, and we have always sought to be where our customers and prospects are.

Recently, for example, we have embraced social media — not for the sake of it, or because it’s exciting, but because that’s where our customers and prospective customers are spending their time. 

So, in essence, while our fundamental values remain constant, both the way we market ourselves as a brand and the way we build our relationships have fundamentally changed. We have also been launching new products designed to meet the changing needs of a wider customer base.

BFJ: We talk about ‘the empowered consumer’ — but just how much control do consumers have these days?

JH: I call today’s generation of consumers, regardless of age, the ‘I’ll decide, not you’ generation. Marketers need a different mind-set to deal with that. We don’t need to be an authority on everything, but we need to be able to help consumers make the right decisions. And we have to accept that we really have lost control. With any new product we might care to launch, consumers will review it, talk about it and pretty much position it in the way they want to. They will decide whether or not it has value.

But though we can’t control what consumers say about things, we are still 100 per cent accountable for the outcome. That may not seem fair, but it is the reality of the world we live in — and actually, it makes it a much more exciting time to be a marketer, because if you come up with a really great product it can ignite the marketplace.  

BFJ: How do you cede control without diluting or even destroying your brand?

JH: If you are firmly rooted in who you are as a brand — with AmEx, for example, that’s about relationships based on service, security and trust — that allows you to best understand how, when and to what extent you can give over control. A good example is our ‘Unstaged’ programme, which we launched in 2010 as a way of extending our ‘special experiences’ beyond the 800 to 1000 people who can fit into an arena, to a wider global audience. 

We partnered with YouTube and Vevo and influential film directors like Spike Lee and David Lynch, to create and stream online concerts by artists such as Alicia Keys and Coldplay. We get up to seven million live streams from any of those shows, and the average engagement is 18 minutes — six times longer than the typical three-minute brand engagement.

BFJ: How has American Express achieved the balance between ‘igniting the marketplace’ and remaining true to its values?

JH: One of the best examples is Small Business Saturday, which we launched in the US in 2010 as a way of supporting local businesses on the holiday Saturday after Thanksgiving. We promoted it via a nationwide radio and television campaign, but created ‘a movement’ through the network effect and momentum of Facebook.

The idea was to help both our sellers and buyers — merchants would build their business and card holders would get value in the form of discounts on their purchase coupled with the ability to benefit the local community. We were able to do that by virtue of our deep relationships with both merchants and card holders (relationships that the initiative helped to deepen further). That is not easily replicable by others.

BFJ: How successful has the Small Business Saturday movement been?

JH: It has been phenomenally successful, winning widespread support from President Obama — who took his daughters to an independent book store a few blocks from the White House — downwards. The governors of five states and the mayors of several major cities support it, as do 130 advocate groups and a range of major corporations. Within two weeks of the initiative being announced in 2010, 1.4 million consumers had joined the movement on Facebook, and there are now several million advocates on social media. 

There have been tangible benefits, to merchants, card holders and to American Express. In its first year, 2010, small retailers saw a 28 per cent lift in revenue over the previous year, compared with only nine per cent for all retailers. On November 26th last year an estimated 103 million Americans shopped at independently-owned small businesses — up from a pre-Thanksgiving forecast of 89 million. Card member transactions were up 23 per cent on the same day in 2010. And hundreds of thousands of consumers registered their American Express cards to receive $25 statement credits when they shopped at a small business on Small Business Saturday.

BFJ: Is this sort of initiative replicable elsewhere?

JH: We are likely to be launching similar programmes in all sorts of different markets to drive commerce, and it is important that we do that. Merchants are the same everywhere — they would all like more business — and our card members have the ability to spend money.

BFJ: Have you shifted your marketing communications focus and spend accordingly?

JH: There has been a shift of focus, but not a full-scale shift in advertising spend. Different channels do different things — TV, print and newspapers can still be very powerful, and we haven’t written them off. But we also recognise the value of experiences, the value of dialogue and the power of the network that social media affords. We don’t ‘mix it up’ for the sake of it — but rather look at what we want to achieve and choose the channel accordingly. 

With Small Business Saturday, for example, we wanted to build a movement, and TV commercials on their own can’t do that. Facebook allowed us to mobilise people, and we used TV to promote the event and remind people about it. And when we adopt new social media, we learn about it first by listening to how our consumers and merchants are using it.

BFJ:  In a sense, then, has American Express reinvented itself again for the digital age?

JH: It’s true that the connectivity and information boom affords us the chance to realise the power of collective action like never before. With Small Business Saturday we put a good idea on a simple platform out there, and we turned it over to the community, who made it their own. But we do it in a way that is true to our brand and that builds on and reinforces the relationships we enjoy with our customers.

BFJ: Do you think the accelerating pace of change — including the proliferation of social media channels — has led some marketers to forget the basic marketing principles, not least the primacy of the consumer and the service imperative?

JH: Being nimble, listening, and understanding the fundamentally important things about your brand are non-negotiable. If you are comfortable with your DNA you can move in the marketplace, and you do need to experiment — a lot. But you shouldn’t mistake motion for action. It is very easy to get caught up in the speed, and rush around doing lots of things, and in so doing forget about the key actions you need to take. Yes, you have to increase your speed to market, but you mustn’t lose sight of who you are, your strengths and your purpose. 

BFJ: Will the current challenges and opportunities sift the best marketers from the rest?

JH: I believe they will, because there aren’t a lot of off-the-shelf solutions to today’s marketing and brand challenges. You have to be very curious and inventive if you are to captivate consumers — which is what the best marketers have always been, of course. But it’s equally important that you are not distracted by shiny objects and the latest buzz words.

BFJ: Small Business Saturday overlaps into cause-related marketing (CRM). American Express is very active in CRM — indeed, some credit the company with having created it. Do you see CRM as a marketing tool?

JH: There is a tremendous amount of synergy between marketing and ‘giving back’. We believe that if you are in a service business, service doesn’t end when the transaction ends. Community involvement means something to most consumers, so we see that as a natural extension of our service ethos. Also, we want to make a difference to where our employees and customers live: if we can enhance their lives, that affects both loyalty and brand perceptions — and that is consistent with being a lifestyle brand. However, not only do we look for opportunities to make a difference in people’s lives, but we also give them a voice in that. Our Members Project initiative gives people a say in where we direct our giving — and that, in turn, furthers the relationship with members because it shows we are listening.

In fact, it was our customers’ response to the Haiti earthquake two years ago that inspired us to reintroduce our Members Project. We put out a brief communication to say that they could use their card to donate to the relief effort and within eight weeks they had donated $100 million. These people really care about CRM. But you have to do CRM with sincerity and integrity: you can’t just bolt it on because then it is seen as a ‘cynical marketing exercise’.

BFJ: How do you ensure that the American Express brand stays relevant in a world where consumers are more cautious about their spending? 

JH: The majority of our business is in charge cards, which people have to pay off, in full, within 30 days, so there is no danger of running up debt as there is on credit cards. Indeed, we have seen a resurgence of interest in our charge cards because they are convenient and they offer a level of service, rewards and security that you don’t get with debit cards. Both applications and spend are rising, with much of the growth coming from people in their early twenties. But we have also launched new products, such as reloadable pre-paid cards, which offer utility and service — hence the strapline ‘spends like cash, feels like membership’. These will be rolled out into the UK soon. 

We are also attracting younger and more technologically-savvy consumers through our new product Serve, which is essentially an online wallet that they can use at any merchant that takes American Express, whether online or on the high street. Serve is designed for the kind of people who prefer using cash, cheques and debit cards rather than credit cards. So we are moving into new areas to serve different customers’ changing needs, and we are harnessing new technologies to do so.

BFJ: Some companies stand accused of trying to win new customers at the expense of existing customers. How does American Express manage this balance?

JH: We want to continue to be a very vital business. You only get to be 162 years old if you are prepared to change and look to the next generation, so we continue to build a franchise with our existing customers but extend it to new customers too. We want to appeal to a broad spectrum of different segments, from premium to mass market, and part of our strategy is to grow our younger segments, something that is now taking hold. But whatever the segment, we deliver the same level of service and trust to them all. We are also expanding geographically, of course: we have just launched Serve in China, and we plan to make our other products available in the different international markets where we operate. 

BFJ: How has marketing changed since you took on this role 17 years ago?

JH: Channels, consumers and opportunities have changed dramatically. Just think how quickly consumers’ adoption patterns are accelerating: it took about ten years for the microwave oven to catch on, whereas adoption of the iPad was almost instantaneous. That keeps it very interesting. Marketers need the same skills they have always had, but they have to apply them differently. 

One of the most interesting developments is that social media makes it much easier to serve customers at the same time as you market to them. ‘Link, Like, Love’, which we launched on Facebook last year, is a great example. The application uses a card holder’s Facebook interests, including ‘likes’ and ‘check-ins’, to offer relevant and convenient discounts to them. And merchants can create offers on Facebook specifically for American Express card holders, and then measure how well that offer performed.

BFJ: What do you think banks need to do to restore their tattered reputations?

JH: The first thing that any organisation — bank, retailer or manufacturer — has to do in challenging times is listen to its customers and demonstrate that it is listening. It then has to build trust, focus on relationships and invest in service. And listening is harder than it sounds. It’s as hard as talking, because it also requires you to understand and act on what you have heard.  And I’ve not seen one marketing course on how to listen effectively. 

BFJ: What has kept you in the role for so long?

JH: The creative challenge of adapting the brand to a changing world is part of it — and the reason I came here from the world of advertising in the first place was the broader palate that it represented. I got to experiment in new channels. But the fact that marketing had been a mainstay of the business model for 150-odd years was also a big draw. 

On the agency side, I was probably the most business-minded person in a creative organisation, and here I am probably the most creative-minded person in a business organisation. American Express’s commitment to community service is another reason I love my job so much: I share those values. The brand is growing, the business is growing and we get to make a difference. That’s a nice package. ■

 

Hayes at a glance

Current job: Chief marketing officer at American Express. He has overseen marketing at the company for the past 17 years.Joined American Express: In 1995, as executive vice-president, becoming chief marketing officer in 2003. 

Previous jobs: Immediately before he joined American Express, Hayes was president of advertising agency Lowe and Partners. Prior to that he held senior positions at agencies Geer DuBois, Ammirati and Puris, and Saatchi and Saatchi Compton.

Age: 57

Education: BA, Seton Hall University, New Jersey.

Honours: He has been recognised for his contribution to business in the community on numerous occasions, most recently by the Delaney Report as 2010 corporate marketing executive of the year.

Favourite films: ‘It’s a Wonderful Life’, and ‘The Shawshank Redemption’.

Favourite book: 1984. “You have to be optimistic to read it, but it affected me profoundly.”

Favourite pastime: Long-distance cycling – and sometimes racing.

Favourite brands: I can’t single out one. I’m very into brands.