Being a member of American Express (and “member” was indeed the
term) used to mean something. To carry that green card with the
Roman centurion in your wallet was a sign of success, a sign of
independence, proof that you were going somewhere. But the brand
built on the premise of “Membership has its privileges” seems to
have forgotten its cause and become just another company selling
credit-card services. In an attempt to capture all the market
segments, to have something for everyone, AmEx has tarnished its
brand. And worse, it’s hurting its own business.
Anyone who has an American Express card knows that it’s not
accepted everywhere—but we were okay with that. The occasional
inconvenience was acceptable. As with any premium brand, there was
a price to be paid because we wanted to be part of an elite group.
We didn’t carry an AmEx card because of universal acceptance,
anyway; we carried it because it was a symbol of who we were.
But no more. What had once been an exclusive club has thrown wide
its doors to admit everyone. Suddenly, membership doesn’t feel so
special anymore. The entire concept of membership—the whole idea of
premium—is that it’s exclusive. The physics of it are unavoidable:
The more you appeal to the masses, the less exclusive you become,
and the less value your premium possesses.
This degradation is no theoretical matter: With the loss of value
inevitably comes the loss of business. Card carriers hear the
phrase, “I’m sorry, we no longer accept American Express,” more
frequently now than ever before. I understand a small business’s
decision to stop accepting the card; the fees, they say, are too
high. But for me, the real red flag started waving when my American
Express card was denied at H&M. The clothing chain has 175
stores in the U.S. and 1,800 worldwide. Last year, the company rang
up $14 billion in sales—and it no longer takes American
Express.
Only a bit less disconcerting is to slide your AmEx card across the
counter and be told by the cashier that the store “prefers” that
you use Visa or MasterCard, if you have one. There was a day when
“members” insisted on using their AmEx cards. We did this because
the experience of using it meant something to us. These days, more
people are all too happy to flip through their wallets and pluck
out the alternate plastic, as requested.

And that’s a problem. When those who pay to be a member of a
club—and once a year, the membership fee still pops up on their
statements—no longer defend the club as though it were their own,
it’s a sign that the brand is slipping. Almost every AmEx
cardholder also carries Visa or MasterCard, but not all Visa or
MasterCard holders carry American Express. In other words, AmEx
holders have a choice—and they are becoming increasingly
indifferent to that choice.
Consumers’ appreciation of their American Express membership has
never had anything to do with points or air-miles. Those are tricks
that lots of companies use to drive repeat business—but it’s not
the same thing as loyalty. Loyalty is the willingness to pay a
premium, or even to turn down a better product, in order to
continue doing business with the same company. Like any couture
label, the American Express’s centurion was a badge of honor, and a
physical symbol of living the American Dream. “Privilege,” as AmEx
should know, isn’t about perks—it’s a feeling you imbue in your
loyal customers.
And what of the retailers? Retailers rarely have nice things to say
about AmEx anymore. They complain that it takes AmEx forever to pay
them. The retailers are just as much a constituency as the
cardholder; they should be made to feel like members, too. When a
company has a strong brand, its constituents either tolerate the
inconveniences or rationalize them away. But when the brand is
weak, the only thing people focus on is what’s wrong. And it
gets worse. AmEx used to be one of those stocks that people held
onto for the long term. But it’s very different now. Like its
product, AmEx stock is becoming just another equity, and investors
bail out at the slightest hint of a cloudy day.
It all boils down to a few essentials: Great companies are built on
the backs of the loyal, not the masses. AmEx no longer has
shareholders, it has share-squatters. AmEx no longer boasts
members, it gets visitors. And retailers no longer want to be a
part of a purportedly exclusive club when they can get all the same
services at the YMCA. Serving the mass audience and the luxury
audience is fine—but you can’t do it with the same brand. Honda has
Acura. Toyota has Lexus. American Express needs another card. Call
it, say, People’s Express. People’s Express can chase market
segments and go head-to-head with MasterCard and Visa. Meanwhile,
that proud centurion on the AmEx card needs to stand for something
again.
Article originally featured in BrandWeek.