Another reason why Amex may be shutting down accounts

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Over the last month or so, we’ve seen many reports show up about how Amex is shutting down customer accounts. I’ve already outlined a few business reasons as to why American Express is being a lot more stringent. However, if you look closely, there’s a much more vital and long-term rationale as to why they’re doing this. It has got a lot to do with protecting their brand.

Brand Attributes

During my stint in the field of advertising, I worked on campaigns where we took a close look at designing logos, tag lines and worked with clients on creating a brand. It takes many years to build a brand that’s worthy of customers’ trust.

Take a close look at all the major bank logos. They’re all primarily blue in color. Blue as a color signifies professionalism, trust and openness. Beyond obvious financial reasons, Amex shutting down accounts is also party driven by an attempt towards protecting and rebuilding their brand.

Design Studio Pentagram outlines their work with American Express on their website. This will give you deeper insight into the use of colors, text and other factors that contribute to the Amex logo.

American Express Brand

As a kid, I always had a great association with the American Express brand. I used to watch billboards and commercials about how it was a prestigious thing to carry an Amex card in your wallet. In branding terms, it was clearly a premium brand. So what did that really mean? It meant that it was a card carried by people who were successful or were famous in their own fields. A premium brand is often one that is carried by a very few people. The uniqueness and exclusivity is what drives people to want to associate themselves with premium brands.

Powerful Backing

Amex’s latest campaign proudly displays the tag line ‘powerful backing’. From a branding perspective, the idea here is to stand by a valuable customer as a trustworthy banking partner. The blue and white logos go well with this tagline. The idea here is to back customers, provide them great products and reliable service and earn their trust and business in return. While you may disagree about how this actually pans out in the real world, but this is the core idea of delivering their brand value.

Brand Dilution

If Amex has always been a premium brand, then what has changed over the years?The market has seen shifts over the years. A lot more entrants jumped into the market. Amex also expanded its portfolio to cater to various segments of the market beyond the premium segment. In 2016, Chase introduced the Chase Sapphire Reserve. Citi introduced the Citi Prestige as a response. Suddenly, the premium market that Amex had a hold on started getting crowded.

Gaming and Churning

So why should Amex care? I’ve written previously about why top of mind awareness matters. A decade ago, if you’d ask what a premium credit card is, that person would in all likelihood refer to an Amex card. Amex is no longer top of mind for customers. As the premium credit card market heats up, Amex is realizing that they need to restore the positive association with customers as a premium brand.

Small but vocal group

So what does this have to do with shutdowns? Well, there’s a connection. Instead of being ‘the’ premium brand, Amex was suddenly a brand that churners started loving. How was it diluting the brand?

• It no longer remained exclusive – People realized that you could open and close Amex cards and keep getting the bonuses. To combat this Amex introduced the ‘once per lifetime’ rule
• The brand became associated with words like churning and gaming. That’s devastating for a brand that once wore the crown of being exclusive and prestigious

Even though the churning or ‘gaming’ community may be small in size compared to the overall customer base, Amex knows that it’s very vocal and shares information within the community. If you look at the discussions on Reddit, you’ll see a sudden panic amongst people after reports of customers being shut down by Amex.

I wrote previously how about the number of customers shut down by Amex is still relatively small and not a sign of a wider crackdown. However, if you read discussions on Reddit, you’ll already see panic setting in. This actually helps Amex as people in the community suddenly see them as a bank they shouldn’t mess with or try to ‘game’.

The Pundit’s Mantra

Brands are built on strong attributes and a promise to deliver to customers. Brand managers are extremely protective about the brands they build.

American Express has been increasing annual fees on some of their premium credit cards. They’ve adopted a breakage strategy in order to keep some of the money. Increased annual fees may see a slight drop in the number of customers, however it may boost their revenue and attract more high net worth individuals to the brand who don’t really care much about gaming or churning. I won’t be surprised if they ramp up shutting down customers accounts in the upcoming year. In my opinion, Amex is looking to regain lost ground and reclaim the title of being a premium card issuer. While the primary driver may be financial in nature, protecting the value of the brand is also core to these actions.

Are you concerned by the fact that Amex is shutting down some customer accounts? Do you still perceive American Express as a premium credit card brand? Let us know in the comments section.

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