American Express Co. in early December launched a beta test for a new charge card that targets the 20-something market, a group AmEx says represents $625 billion in annual buying power.
Cardholders pay $25 annually for the Zync card, which features four card “packs.” The Eco pack, designed for ecology-conscious consumers, offers double Membership Reward points on purchases at what it calls “green partners,” provides a concierge service that links cardholders with vendors that support the environment, and offers a 25% discount when redeeming points for merchandise. It also provides a carbon offset on purchases, a feature that typically buys credits toward environmental projects such as tree planting or recycling to offset carbon footprints.
AmEx did not provide specifics on the green partners or describe the types of environmentally friendly merchandise available to cardholders.
For travelers, the Go pack offers double reward points on airfare, lost-wallet and passport protection, and special travel offers. The Connect pack focuses on mobile-phone use, offering double reward points when paying for mobile phones and cable services, and a 25% discount when redeeming points for a mobile phone. The Social pack is for consumers who enjoy attending concerts and going out with friends. It offers double reward points for restaurants, concerts or theater tickets, and a weekly newsletter with notifications of advanced ticket sales.
AmEx says it is considering a mobile application and is planning an online advertising campaign, though the company would not disclose details.
“During the beta stage, we have launched a direct-mail piece and online banner ads,” says an AmEx spokesperson, who notes the company will expand those efforts as the official launch of the card nears in the first half of 2010.
This marks the first time AmEx is working directly with consumers to create a charge card, the spokesperson says. “Throughout the beta phase we will work closely with our online community of beta cardmembers–called the Zync Tank–to gather feedback and ideas about the card on an ongoing basis, which will be applied in our marketing efforts.”
AmEx considers this target market to be the most-diverse generation in terms of preferences, culture and ethnic backgrounds. “Zync aims to give 20-somethings financial freedom while also putting them in command of their money,” the spokesperson says. “They are savvy spenders who look for products and services that fit their lifestyle and passions; Zync is designed with both of these characteristics in mind.”
Analysts say it is not the first time AmEx has targeted the young, affluent market. The card brand had marketed the InCard about a decade ago that focused on promotional deals for activities within certain cities.
AmEx’s challenge and opportunity is to differentiate itself with the next generation of cardholders, says Ed Kountz, senior analyst, e-business and channel strategy, at Forrester Research Inc. “The concept of going after 20-somethings is solid,” he says. “AmEx is a strong brand, but the needs of a digital generation present an opportunity for which the AmEx brand isn't necessarily that well-positioned.”
That’s “not necessarily a bad thing, but it does require AmEx to think differently about how to develop brand in that space,” he says.
Megan Bramlette, managing associate with Auriemma Consulting Group, believes AmEx was right to develop the Zync card as a charge product instead of one offering revolving credit.
“Zync is lower risk because it’s a charge card,” she says. “It’s not as fancy as the InCards were, but it’s structured in such a way that will be compelling to savvy, young people, particularly those who are averse to borrowing.”
The uncertainty is whether consumers will accept charge cards as an alternative to debit cards, Bramlette notes. “It’s inconclusive [at this point],” she says, though Auriemma research found that consumers in the United Kingdom did not view charge cards as being better than debit cards.
