Amex Outlines Strategy: New Cards, More Service
<FONT SIZE="+3"><B>Amex Outlines Strategy: New Cards, More Service</B>>
By Cheryl Rosen
<I>New York</I> - In a year in which traditional travel ties begin to yield to the tug of technology, American Express intends to leverage both its time-honored name and a series of new partnerships to achieve its corporate mission: "using world-class economics to become the world's most effective service brand," according to Amex vice chairman Chuck Farr.
In an unusually candid talk before his best global corporate travel and card customers in New York this month, Farr outlined Amex's overall game plan for its financial services and travel businesses, acknowledging that "we need to raise the bar of quality service," and that "while we aspire to have a global system, we are having a difficult time delivering a consistent product around the world."
For 1997, Farr vowed to show customers "not the same old American Express"-to be "faster and more flexible" than the competition in bringing smart-card technology to market, and to broaden his focus beyond corporate cards and travel with global corporations, his "most important clients."
Next year, American Express will roll out pre-paid incentive cards, which corporations can "load" with individual bonuses to employees. The company also will focus more on small-business services, renew its efforts to cross-sell financial services and travel, and unveil a program with the U.S. Postal Service that will allow customers to charge bulk-mail fees rather than pay cash up front. In the travel sector, Amex will roll out an 8K chip card that will serve as a hotel room key and carry travel data that can be downloaded directly into Amex's Expense Manager automated expense reporting system.
Farr headlined a full roster of Amex senior executives who spent an afternoon outlining their individual and collective visions for America's largest travel company to its largest customers. A major Amex goal for 1997 will be "savings and security for the corporation, and convenience and comfort for the traveler, in a secure, closed-loop payment and information processing network," said senior marketing vice president and general manager Jud Linville.
On the technology side, corporate services president Ed Gilligan noted that while there are some issues of speed and security involving the Internet, "business-to-business networks are taking off," and the number of online travel providers doubled from 1,000 in May to 2,000 in September.
Gilligan's strategy for 1997 includes four parts: an accelerated focus on both the corporate purchasing card and the middle market, to which 200 salespeople are now dedicated; enhanced relationships with existing customers; and developing "unique cardmember value propositions" by offering different cards for such groups as frequent travelers and home-based workers.
Gilligan said the purchasing card program has run into some difficulty because of "having to sign up vendors by showing volume, while corporations are reluctant to roll out a program until suppliers are signed up." That challenge will be addressed by focusing on large suppliers that dominate specific industries, like the Postal Service and national temporary-help agencies. Amex also plans to have its Rome interactive booking system ready for beta testing in 30 to 60 days, Gilligan said
On the customer service side, Gilligan, like Farr, acknowledged he is "not satisfied with current levels" and that "we have to do a better job of retaining trained travel counselors."
Amex's 1996 corporate contribution of $50 million in investment funding for Corporate Services-already a heftier figure than at any time in history, given that it will be used for development rather than acquisitions-will increase to $70 million in 1997.
Amex's test of the chip card, which can hold the equivalent of 80 pages of information on each traveler, begins with American Airlines this month. Cards are being distributed to employees of Amex and co-developer IBM, and the companies will be seeking beta-test customers shortly. A pilot launch of the card, which will store traveler profiles, track stays and allow checkin through interactive kiosks, is planned at eight Hilton properties, and Amex will look for other hotel and car rental partners in the first quarter of 1997.
The chip card includes seven sections of information: a customer profile area in the middle, surrounded by information on air, hotel, car rental and payment systems, plus an area for passport and visa information and one that could hold health histories. The cards will be offered as debit, charge, or revolving-credit instruments, or as an "electronic purse" that can be accessed in various currencies. The card also could be used for intranet access, Linville said.
Moving to electronic reporting will allow companies to strip out a series of costs, including cutting expense process costs from as high as $35 at many companies to $2 at "best of class" departments; while electronic ticketing will slice Amex's costs for 3 million tickets sent overnight and 1.5 million sent by courier every year. Amex is "sitting down with the CRSs to provide a trail for unused tickets and find ways to send itineraries and receipts to travelers in a less costly fashion," Linville said.
Linville said 90 customers are using Expense Manager, Amex's automated booking system; an Internet version is in the works as part of the end-to-end Rome product line. Also in the works is a dial-in intranet booking product for Europe, expected to begin beta testing in March.