American Express Co. is adding white to a rainbow of credit and charge cards that already includes green, gold, platinum, blue, black, plum and clear. The new color graces the Zync card, a charge card AmEx is marketing to 20- and 30-somethings with customized rewards, variable annual fees and a social network called the Zync Tank.
The Zync card’s whiteness approximates the bluish-white hue of its namesake, the element known as zinc, says Mary Hines, AmEx vice president of marketing, charge card. “The color represents the element zinc in its pure form,” says Hines. “It’s a unique card, and we wanted to have a unique name and a unique spelling.”
Whiteness also brings to mind other aspects of the target audience and the card’s flexible rewards, according to AmEx spokesperson Marina Hoffman Norville.
“The white represents a clean financial slate as well as a blank canvas for cardmembers to create their own benefits,” she says, noting AmEx first came up with the color white for the card and then tied it to the metal.
AmEx’s target are the young adults now coming of age, and it is exploring individualized rewards and social networking that eventually may prove valuable to older consumers. But melding the two could prove difficult for AmEx, which has a reputation of supplying products to consumers already well-established in their careers, observers say.
The company began beta testing Zync in December, and it expects to roll out the card officially in the first half of this year.
Research began in “co-creation sessions” conducted in the months leading up to the beta test, AmEx says. Those sessions helped shape a card that carries a $25 annual fee and augments the usual AmEx purchase protections and 24/7 customer service with four optional reward “packs,” Hines says.
The packs offer bonus reward points and special offers based on the cardholder’s interests. Enrollment is free for the Eco Pack, while the Go, Connect and Social packs each carry a $20 annual fee, according to an AmEx Zync fact sheet.
Eco pack offers double points for purchases at “green” Web site partners. AmEx is maintaining two Web sites, one to guide Eco pack cardholders to eco-friendly businesses and another to grant a 25% discount for redeeming points for eco-friendly merchandise. AmEx promises to buy a $1 carbon offset from TerraPass Inc., a company working to reduce carbon emissions, for every cardholder who enrolls for the pack.
Travelers may choose the Go pack, which offers double points for airfare purchased on the card, lost-wallet and passport protection, and special travel offers.
Connect pack cardholders earn double points when they use Zync to pay for a mobile phone and receive a 25% discount when they redeem points for a mobile phone.
Choosing the Social pack brings double points for using the card at restaurants or for buying concert or theater tickets. The pack comes with a weekly e-newsletter that includes opportunities to purchase advance tickets.
Worth The Price?
Paying $20 annually for a relevant pack may seem like a bargain compared with the annual fees of $95 to $450 for the established green, gold and platinum AmEx charge cards, not to mention the elites-only black Centurion AmEx card with its $2,500 annual fee, analysts say.
Moreover, breaking down rewards into relevant and less-costly packs could prove especially popular among younger consumers who have not yet reached their peak earning power, says Scott Strumello, an associate at Westbury, N.Y.-based Auriemma Consulting Group Inc.
“You can add on those features that are of interest, as opposed to buying a bunch of things you don’t want,” Strumello says of the packs.
The Go pack seems particularly appropriate for younger adults, says Ken Paterson, vice president of research operations for the Waltham, Mass.-based Mercator Advisory Group. “Younger people with fairly modest means do manage to do a fair bit of travel,” Paterson observes. “A product like this can serve that segment very well.”
A charge card, with the entire balance due each month, also should appeal to younger consumers, analysts agree. Many potential cardholders already carry credit card debt or have student loans. They have learned debt can create difficulties as they try to establish careers during rough economic times, the analysts note.
Still, the Zync card fails to resonate with some observers. “Why does anyone think Generation Y would be attracted to this card?” wonders Jacob Jegher, a senior analyst with Boston-based Celent’s Banking Group. “I’m not sure I see the excitement.”
Savvy younger consumers research their purchases assiduously and may turn their backs on the Zync card, choosing instead to sign up for a card with no annual fee that puts cash back into their pockets, Jegher says.
If such reservations trouble Zync cardholders, however, they can advocate changing the card by logging on to the Zync Tank site, an online social-networking community where cardholders can express their opinions to peers and to AmEx.
Using Zync Tank postings, AmEx intends to reshape the initial packs and come up with ideas for additional packs, Hines says. The site also will influence marketing, she adds, and AmEx intends to keep operating the site indefinitely.
“People in their 20s and 30s want to collaborate as products change over time,” Hines says.
AmEx declines to specify how many cardholders have visited the Zync Tank during the beta test or what the visitors are saying, yet Hines sounds optimistic. “We are extremely pleased with the response,” she says.
Analysts agree that AmEx may gather profoundly valuable insights from the Zync Tank, and they predict a solid future for social networking in the card business (
‘Jury Is Still Out’
But Mercator’s Paterson cautions that “the jury is still out” on how well the Zync site will work.
“The question is whether the cardholder would trust American Express and be as candid as they would on a site run by somebody else.” Auriemma’s Strumello adds. He maintains that an atmosphere of distrust has descended upon the card industry because of interest-rate hikes, sizeable overdraft fees and other practices.
Distrust aside, Celent’s Jegher simply doubts younger consumers will want to take part in the Zync Tank. “Why would a Gen Y person want to go and spend their time in a community or forum discussing the Zync Card?” he asks. “What’s in it for them?”
For Hines, the answer lies in the quantity and quality of the Zync Tank posts. “Unlike previous generations, they want to respond,” she says.
And AmEx admits it wants to respond right back at that generation. Depending upon how demographers slice the statistics, today’s young adults are called Generation Y, the Millennial Generation, Generation Next, the Net Generation or the Echo Boom.
Large Market Potential?
The nation’s 80 million Echo Boomers are the offspring of the postwar Baby Boomers, the largest generation in American history. Born between 1982 and 1995, Echo Boomers are now 15 to 28 years old and will become the largest living generation as the Baby Boomers fade into history.
That makes for a lot of potential Echo Boom AmEx cardholders, but how much do they know about the brand? The public may associate AmEx charge cards with an aging clientele, analysts say.
“There’s a notion that American Express caters to the group that already have their finances established,” as Strumello puts it. “Is your demographic moving into retirement?”
Hence, AmEx has work to do to familiarize younger Americans with the Zync card packs and community, plus the relative security of charge cards compared with credit cards, observers say.
So far, AmEx has sent only a limited number of Zync direct-mail pieces and has yet to advertise Zync. It declines to share any but the broadest details of what shape ad campaigns might take.
However, the Zync page on the AmEx Web site carries slogans that fit some of the card’s themes and could provide clues to future advertising. Most of the site’s slogans, including “Lets You Live Your Life,” “Create the Card You Want,” “Works With You” and “Customizable Like Your Playlist,” suggest the flexibility of the packs.
The site’s other slogans, “The Card That Keeps Things Running Smoothly” and “Managing Your Account Has Never Been More Important,” remind potential cardholders of the relative safety of charge cards versus credit cards.
Large Audience Potential
Whatever direction the marketing ultimately takes, the Zync card’s flexible rewards, social networking and charge-versus-credit security could find a larger audience than just the 20-to-40 crowd, analysts say. “Being able to sell those features on an a la carte basis certainly fits with the economic times and may have applicability beyond the 20-something audience,” says Strumello. “Maybe this will be the way to sell going forward.”
A potential cardholder might be willing to pay $5 annually for bonus points in American steak houses but be reluctant to pay $25 yearly for rewards in all types of restaurants throughout the world because he or she does not travel, Strumello says. “Why would they care if they had coverage in Spain?” he asks.
Packaging more-specific rewards in lower-cost bundles reduces annual fees and could help the card industry re-introduce the public to an expense many have learned to avoid, he continues. “Consumers have been taught for the last 20 years that only the fool pays them,” Strumello says of annual fees. “If you can be taught to pay fees in a different way, perhaps it’s a way of making them a lot more palatable.”
Issuers are contemplating ways to impose annual fees to compensate for restrictions imposed by federal law in the Credit Card Accountability, Responsibility and Disclosure Act of 2009 on interest rate hikes and billing and payment practices, says Paterson. Mercator research conducted in the middle of last year found that among consumers who were controlling spending by using their charge cards more and their credit cards less, three-quarters planned to continue the switch after the recession, he adds.
Social Networking ‘Here To Stay’
Despite the analysts’ reservations about the Zync Tank, they note that card brands are using social networking for small-businesses cards. The analysts also expect social networking in general to continue to spread to older segments of the population.
“Social media is here to stay regardless of what us older folks may think about it,” says Paterson.
So the features AmEx is introducing for younger adults also appeal to their elders, in the view of industry analysts.
That notion would not bother AmEx’s Hines in the least. “We want them, and we love them,” she says of older potential customers for the Zync card.
Young and old, consumer and business, AmEx has expanded its cards across a broad spectrum in hopes of filling various demographic niches. Its hope is the market is not colorblind to its marketing strategy. PS
Thoughts on this article? We'd appreciate your feedback. Please
