United Gains First Client For Amex Joint Card
<I>Chicago</I> - United Airlines has captured its first corporate card customer less than two months after announcing plans to team with National Westminster Bank Plc. on a card that operates on the American Express network (<I>BTN</I>, Dec. 16, 1996).
United's Joe Laughlin, director of sales, business markets, said he could not yet divulge the name of the client. The company expects to distribute more than 1,500 cards to the customer's traveling employees beginning in early April. At the same time, United will distribute the blue-gray cards with the airplane logo to its own employees.
The UA/NatWest card is the first win for American Express, which has been trying to entice banks around the world to issue co-branded or proprietary cards on its network since last May. Visa and MasterCard bylaws prohibit banks in the United States that issue either brand from also issuing the Amex brand--thus the entrance of U.K.-based NatWest into the United deal.
Even before United's sales and marketing team firmed up features for the new corporate card, more than a handful of customers had asked the airline to bid on their card requests for proposals, Laughlin said.
"We're comfortable that we're in the card business," Laughlin said of his sales team. "We've received some RFPs and are hitting the bid list. Before, we were eliminated because we didn't have a full-service option or didn't market the UATP option enough."
Mileage Tie-Ins Offered
At press time, United executives were still finalizing value-adds with hotel, car and telecommunications partners, but had set pricing and mileage incentives for the product. While United won't offer miles for dollars spent, it is offering 5,000 bonus miles as an activation incentive for each cardholder. The first time individuals use their corporate cards, the bonus miles will be posted to their United Mileage Plus accounts.
In addition, cardholders will be able to accrue miles by eating at restaurants participating in the Mileage Plus Dining program. Developed for United's upper-echelon Premier members, the program offers both Premier members and holders of the United Corporate Card 10 miles for every dollar spent at participating restaurants.
United has set the rack rate for its cards at $55 for nine or fewer cards, $35 for 10 to 99 cards, $25 for 100 to 499 and $15 for 500 or more. However, pricing is negotiable, and few expect large customers to actually pay for individual cards. Initially, United is targeting large to midsize companies.
"We're very competitive in putting the economic package together," Laughlin said. "If it makes sense, we'll take a look at revenue sharing. But the economics of the card play a key role in whether you're successful or not. This has very tight margins that you need to work within, or you will not be financially successful." The margins simply aren't sufficient enough for United to offer deeper discounts on airline seats to corporations that sign up for the card, he added.
Trying to jump-start its sales efforts, United in early January ran more than 150 employees through a three-day training course on the card, sales strategy and the competitive environment. In addition to regular sales incentives, United is offering sales reps enhanced incentives to encourage sales in the first six months, Laughlin said.
Although the UAL card won't look like an Amex card, it will be accepted at all merchants that accept Amex. Included are all the standard insurance and traveler benefits, as well as the management reporting that Amex offers corporations. Customers will even have access to the Expense Manager automated travel and entertainment expense software.