The new American Express credit card meant to 'wow' Generation YBy Georgina Woodley
Article first published in the AFR by Jamie Freed.
When American Express was researching its latest credit card offering, aimed primarily at older millennials, it knew there would be a benefit to having a "wow factor" beyond the ability to earn rewards points on a card with zero annual fee and 14.9 per cent interest rate.
Enter the beloved smartphone. The American Express Essential Credit Card, to be released on Monday, is the first in the market to offer screen protection insurance of up to $500 per claim for customers who buy either the smartphone on the card or use it for their monthly phone bill payments.
"It was attention grabbing," Georgina Woodley, the managing director of market research agency BVA BDRC Australia who ran focus groups in Sydney, said of the smartphone screen insurance. "It was often the thing they talked about first in being unique and different, the 'wow factor'. Then their rational brains kicked in and the zero dollar fee and the rewards was a standout."
The competition to lock in older millennial customers, aged 28 to 35, and others with a similar mindset who are technologically savvy but seeking value and authenticity, is fierce. American Express only has a 19 per cent share of the Australian market, which is dominated by rivals Visa and MasterCard, although it tends to attract the highest spenders. The Essential card, however, requires a minimum annual income of just $40,000.
"As we were looking at this product we wanted to design something that would attract some new audiences we hadn't necessarily catered to before," American Express vice-president consumer marketing Dean Chadwick said, noting that traditionally his company had focused more on charge cards and on travel-related benefits. "We are filling a gap in the marketplace as it relates to value."
The Essential card will allow customers to earn one membership rewards point for each $1 spent, giving customers the flexibility to choose how they want to redeem them, whether for cash back on their card or for frequent flyer points with one of nine airlines.
Cardholders will also be able to link the card to Apple Pay for transactions on iPhones, iPads and Apple Watches later this year, which digitally-savvy millennials could find attractive. Then in the event they drop their smartphone and crack the screen, they will be protected twice a year as long once they have paid their monthly phone bill on the card for at least 90 days.
Ms Woodley said her research found a unique proposition was needed to encourage millennials and fellow value-seekers to apply for another credit card, since there was no desire to take up one simply to fill a hole in their wallet.
"If they could see a role for it in their lives, they were interested, but they didn't want clutter in their world," she said.
Mr Chadwick said the white pearlescent colour of the card was chosen in part to reflect the customer preference for simplicity. "People felt it looked clean and classy and they would feel comfortable taking it out of their wallet," he said. "Lots of people across Australia have multiple credit cards in their wallet, but this one was designed for the everyday spend."