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Drew Neisser: Why American Express Continues To Dominate In Service

John Hayes, American Express's CMO, discusses the philosophy that determines the company's marketing strategy.

Drew Neisser, Renegade
Drew Neisser, Renegade on January 28, 2014. @DrewNeisser

Where you start a problem-solving exercise often determines the outcome.  If for example, your first question when evaluating a potential marketing program includes the letters R-O-I, then it is likely you will end up with a short-term direct response effort.  However, if you start with the question, “How could this marketing activity be of service to our customers?” then in all likelihood you’ll end up creating something of lasting value for your business and your customers.  But don’t take my word for it.  Just talk to John Hayes, the long-time CMO of American Express whose organization has consistently produced some of the most legendary AND effective marketing programs in the industry (like my fave, Small Business Saturday.)

But on the oft chance that Mr. Hayes won’t take your call, perhaps you can find the proof you seek in the interview below. I caught up with him around the CMO Club Awards during which he offered a glimpse into the intensely service-focused world that runs American Express from the inside out.  From creating an Open Forum that lets small businesses help each other out, to starting a publishing arm way before “content marketing” was a buzzword in—wait for it—1971, to offering live streamed concerts to its music fans, Hayes and his team are are not just believers in “marketing as service,” they are the poster children for this approach.

One of the big issues that big companies have is how to keep their marketing fresh and nimble and not get stuck in a rut. Over the years, you have been incredibly innovative in terms of your marketing. Have you been able to institutionalize this innovation?

There are a couple of answers to that question. The most fundamental is that you have to continue to focus on the customer. If you become focused on the issues that present themselves inside the company instead of looking outside at the customers, you’re sacrificing innovation. If we’re going to be a great service company, we need to be serving them, we need to be communicating with them, we need to be marketing in the places where our customers or our prospects spend their time.

Being customer-focused is the first part of innovating because what you’re trying to do is anticipate the needs that those customers have and looking for an advantage over your competition, which usually comes from serving your customers in a unique way. The second part is to generate a level of curiosity about what’s happening in the world, both in terms of the talent you bring into the company as well as the culture that you build and maintain over time. We have been able to build a culture of curiosity where people are curious about how to make things work better.

You’re a great service company, yet one might argue that you also sell a lot of products. Has a service mentality always been front-and-center at American Express? How does being a great service company affect your marketing?

American Express has been around since 1850, and when we first started, we were a freight forwarding company, not a payment company. Then we slowly moved into the traveler business and the travelers check business. The company was 108 years old before the first American Express card appeared. Since the beginning, there has been a focus on being a great service company, whether that service was freight forwarding, opening up markets for people to travel and experience, offering people a safer way to carry their money with travelers checks or offering them something like the American Express card to simplify their lives and make it more rewarding. All of those things come from a service culture, a company focused on service.

This brand has been about 3 things from its very origin: Trust, security, service. So the iteration we experience today happens to be mostly in the form of plastic payments, whether that’s corporate, small business, consumer or for our merchants, but that’s just the way we’ve taken service to market today. It starts with understanding what business you are in and understanding that this is a company that believes it’s noble to serve. From that comes the way we go to market.

American-Express-Easy-Register-SXSW

I saw the case history on Small Business Saturday, and there’s a lot of evidence that it drove a tremendous amount of traffic. That was probably among your more measurably effective initiatives, at least from a small business standpoint. But my understanding of Open Forum is that you can’t find a direct link to revenue, yet you’ve been investing in Open programs for years.

I think there are some general trends that are very positive but you’re right. When you get to a granular level, it’s difficult to say this program generated this many cards and this much spending for American Express.

We have a belief that if you serve people well, they will become your customers, because people find it rare to be served extremely well. We don’t require people to be a cardholder to use Open Forum. We created the site because we knew that part of enabling the success of small businesses was helping them understand what other small businesses had already learned to help them be successful. That’s why we created it, and that’s why we made it an “open” network – so people could find the people that would be of most value to them.

When you’ve contributed in a meaningful way to a small business’ success and then say, “Hey, I’ve got some other services for you. I’ve got a card that could help you manage inventory better,” they are quite open to it because they’ll say, “Well, you guys have already been enabling my business, enabling my success,” and that’s the philosophy. Some programs we can measure on a granular level, and some we can’t, but we’re careful not to overvalue the things we can measure or undervalue the things we can’t. 

You’ve been developing content, one way or another, for small businesses for years. Given that everybody is creating content, and other companies are targeting small businesses like you are, what are you doing to stay ahead?

What’s really important is that we don’t do things just because they’re a trend; we do things because we think it’s the right thing to do for our customer. In 1971, we started a publishing group called American Express publishing. Wow, what a concept. Who was talking about content in 1971? But this company has the foresight to understand that if you’re going to be a lifestyle services company, you’re going to serve businesses and people. You need to talk to them about their life, not what they’re going to use to pay for something.

The philosophy that got this company to create a publishing group in 1971 is no different than the way we think about our company today. If you’re in the service business, every interaction with a prospect or a customer should be a service interaction. We provide those magazines as a service to those customers. If you look at what we do on stage – bringing music to so many people on a live-stream basis – the philosophy is the same. That is our way of serving customers who we know have a passion for music because of the things they do, because of the way they spend their money. We should be helping our customers experience what it is they want to experience, and many of these experiences are open architecture because we want prospects to know that’s what it feels like to be a member.

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Have you seen your role, in the last 10 years, evolve as a CMO? 

My role has evolved a lot. First, it’s evolved from the standpoint of understanding what is happening in the world related to media. How are people consuming media? How are they absorbing new messages? Those things have changed fairly remarkably in the last decade. Part of my job is to make sure I understand how the world works today from a media standpoint, whether that’s social media, digital, or traditional, and how it’s changing. How are brands being established in the landscape today?

My role is also about identifying which elements of American Express will not change from 1850, and which elements absolutely will in terms of how we go to market. Trust, security, and service will not change. This company has existed for 163 years because it’s reinvented itself, but always around the ideas of trust, security, and service.

What role is Big Data playing in your job today?

Data is a fundamental part of what we do today, and it’s a great opportunity, because data can allow us to optimize on a much shorter cycle. We also see it as an opportunity to serve customers better. I can anticipate your needs, I can help you with the things you want, I can begin to understand what you might need in the future based on data and that data can be very useful in service and marketing standpoint. I won’t talk about marketing without mentioning service because I think there’s a lot of marketing out there that is of no service to anyone and frankly doesn’t have much impact. The things that are sustainable are the marketing elements that serve people well. So data becomes an enormous opportunity not only to find prospects, but to also understand them and to offer things that are a real service to them, so that you can begin the relationship on a service level and not just a sales level.

If you had to justify the creation of Open Forum today based on data that you didn’t have because you hadn’t yet introduced it, how would you do it? I believe there’s a risk today that marketers might not take the giant leaps of faith in an untested program because its’ impact is not going to be linear.

I think your assumption is entirely correct which is that the data allows you to find the opportunity, execute the opportunity, and prove that it was a success; all on shorter cycles than ever before. You’re not waiting 6 months to say ‘did it work?’; you’re saying ‘let me show you the week after Small Business Saturday’. Let’s take a look at the behavioral shifts we saw. You’re able, because data is as robust today, to see insights to what might have cause and affected certain positive outcomes.

You cannot be a great marketer without experimentation. Experimentation requires great accountability. You have to be experimenting with a purpose and you have to have the data and the metrics that will allow you to demonstrate what worked and what didn’t. It’s okay to fail as long as you don’t fail twice on the same thing. That’s the way we try to operate here, we experiment a lot we have some things that work phenomenally well which the world gets to see on a broad scale basis and we have some things that don’t work at all and we say that didn’t work fold it up let’s not do that again, let’s try some other things. That to me is a big part of how the job has changed because 20 years ago, it was not as experimental as it is today because the data wasn’t as robust, the metrics weren’t easy to access, the cycles took longer and there weren’t as many new permutations to try.

American Express Open Forum

Let’s talk about the Link Like Love and Card Sync programs. Are they both social? They have transactional elements, which is very different than some of the other things you’ve done. How would you evaluate those two programs, and do they have futures?

They definitely have futures. They come from a very clear observation of many digital channels, which are unlike many traditional media channels, which tend to be really focused on communications. These new channels are distribution channels, they’re service channels; they operate on so many different dimensions that it allows you to create products specifically for these platforms.

I believe iIt’s a missed opportunity if you’re working in the digital space and all you’re trying to do is create a communication. You’re going to disappoint people, because people who consume these channels don’t see them as just communications channels.

If you start to build products and services that exist within these very robust platforms then you start to create more interesting things that people can spend time with on the platform. You’re building something that mirrors the behaviors you’ve already seen customers take in those categories and on those platforms. Our philosophy has always been to build things that compliment the platforms that we’re building them on.  We are able to distribute products, services, and communicate with our customers because the channel is so robust it allows us to do that.

Let’s take Facebook Link, Like, Love, how does that work?

We have a lot of card members who spend time on Facebook so this program now gives them a way of further utilizing their Facebook presence. We then offer them things based on their social graph, their friends, their behavior, and their traditional spending behaviors. We’re then able to see how well we’ve done because some things have an enormous uptake. We’ve offered other opportunities to customers to sync their cards that have not gotten enormous uptake.

When we launched Tweet Divide, it was basically a similar product on a different platform. We communicated with people who were going to South by Southwest before they went on their route. We also reached them in a variety of ways en route to South by Southwest. There was a special show that we were doing, which we were live streaming with Jay-Z. If they wanted to attend the show all they had to do was sync their card on Twitter, tweet the show, and they would get tickets to the show. The viral effect was unbelievable. It was an incredible show. The headline the next day was something along the lines of “The most innovative new startup was American Express.”

We don’t like to just put everything on autopilot, particularly with something like South by Southwest. If you’re going to do something, we believe it should live up to very high standard of innovation and newness so we didn’t repeat it this year. We are taking the things that worked from it and applying it all over the place.

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As the CMO, how much influence do you have on the entire customer experience?

At any company, that grows with time. I do believe there is a benefit of having been in this position for so many years. You have earned the right to influence many things that ultimately build your brand by doing things, demonstrating the value, measuring the value over time. I feel for CMOs who are just coming into a complex organization and trying to manage all of the elements that they believe are impacting both their brand and their business. It’s very difficult in a short amount of time to get your arms around it. I don’t know of a company structured in such a way that the CMO has control over all of the touch points.

For me, what’s really been tremendous is having the steady support of a CEO who has said “This is important,” and being able to demonstrate to my colleagues: “Here’s the value that we can bring,” and how, if we work to together and bring something that has synergy to the market, we all benefit. We’ve seen the impact that service has on the American Express brand, our customers and their behavior following a positive experience. It’s really been about picking things off and demonstrating the value of each over time.

It took me a few years before I was really able to get people on board and see how we can be more successful with greater synergy. It’s really a plea to consistency. Some people think consistency means boring and tired, and I don’t. We’re demonstrating that we have a consistent level of talent. Our organizational structure has allowed us to build relationships internally, and some things that were difficult 15 years ago are second nature today.

Images: Images Money, Leyla Arsan, Elvert Barnes, American Express

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