Intensifying its focus on retaining cardholders amidst a marketplace array of new and richer card-rewards offers, American Express Co. this week introduced a program to enable its small-business credit card customers to earn more reward points each year they remain customers.
The revamped Blue for Business enables new cardholders to earn a 10% points bonus on points earned based on the previous year’s spending on the first-year anniversary of opening the account, a 20% bonus on the second year’s spending and a 30% points bonus every year afterward for the previous year’s spending, the company announced Oct. 17.
It is the first time Amex has harnessed the tactic of boosting rewards based on the cardholder’s loyalty to the account, an Amex spokesperson tells PaymentsSource. So far the program is limited to small-business cards.
“We’re giving people an incentive to stay,” the spokesperson says. “Once a small-business owner has selected that this is the card for them, we want to reward them for their loyalty.”
Amex is not the first to try the delayed-bonus gambit, which analysts say is likely to spread as the competition to hold onto customers becomes fiercer.
Capital One Financial Corp. in August was the first major credit card issuer to try rewarding customers for sticking around, with its Capital One Cash Card. That card, which targets consumers and carries no annual fee, enables customers to earn 1% cash back on purchases, and after the first year Cap One rewards them with an additional 50% of the total cash rewards earned on the previous year’s spending (
Cap One on Oct. 17 announced a retooling of the look and certain features within its own array of small-business credit cards under the new Spark brand, but its core cash-back card in the portfolio does not provide additional rewards after the first year (
And though credit card companies are notorious for replicating one another’s successful tactics, the fact that Amex and Cap One unveiled a similar approach to rewarding customers for staying at least a year is probably more of a coincidence than a copycat move, Ron Shevlin, a senior analyst with Aite Group, tells PaymentsSource.
“It probably took some time for Amex to run all the scenarios, test their liability for offering a new incremental rewards program, and to build all the back-end systems to support it, so it’s unlikely they came up with this overnight,” Shevlin says. “But issuers are looking for new ways to hold onto their most active card users, so the long-term rewards approach is a logical idea we are likely to see other issuers try.”
It is no surprise that Amex is trying out the incremental rewards program first with its small-business customers, Shevlin suggests.
“Small-business cardholders are more likely to plan ahead, and might be more likely to commit to sticking around for up to three years, while consumers don’t want to think that far ahead,” he says.
Other issuers are trying a variety of strategies to woo one another’s best customers, and the competition is likely to “muddy the waters” in the near future, Megan Bramlette, a director with Auriemma Consulting, tells PaymentsSource.
“What’s changed is that issuers are starting to give cardholders more-complex rewards offers right off the bat, instead of waiting until they’ve been on board for awhile. It’s a slightly new twist that’s aimed at getting new customers to move that card up to the front of the wallet and keep using it,” she says.
New Amex Blue for Business cardholders will receive one Membership Rewards point for every dollar spent with the card, which carries no annual fee, and 10,000 bonus points with their first purchase using the card. Cardholders also may earn double points for travel purchases and 10 times the usual points for using their card to make purchases through Amex’s proprietary online shopping site.
Existing Blue for Business cardholders may apply to qualify for the new card’s features, an Amex spokesperson says.
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