a calculated risk. But he followed the strategy, marshaled the troops and, most of all, believed. His mantra of “superior customer value in a cost-efficient and profitable manner” was paying dividends. He took a bold step in lowering the discount fee with the promise of making more money through additional merchants and, in turn, more cardholders using their AmEx plastic. It worked.
Today, Chenault is building on the business model created in those tumultuous years. The name of the game is market share. To get it means targeting as many segments as possible.
For example, Chenault has zeroed in on small business customers, developing an array of products and services to meet their needs and pumping millions into marketing these efforts. AmEx believes so much in this sector that it recently acquired Rockford Industries, a leading equipment-leasing firm for small businesses in Santa Ana, California. Along with its 1998 acquisition of CapitaFinance, the company seeks to bolster its equipment financing capabilities for its small business customers.
To make AmEx’s cards more accessible, both Chenault and Golub have invited banks to join the American Express network. However, the company has been hampered by Visa and MasterCard. U.S. banks that issue Visa and MasterCard are prohibited, by arrangement with the card companies, from also issuing American Express cards. In October 1998, the Department of Justice filed an action against the two companies over issues related to restraint of consumer choice and competition. AmEx believes that it’s only a matter of time before a ruling comes down in its favor. In the meantime, AmEx has aggressively pursued partnerships with international banks and financial institutions to increase the number cards it offers to more than 70 in the global market, extending its reach from Puerto Rico to Dubai. AmEx is also developing similar relationships with investment companies. In May it made an agreement with Fidelity Asset Management to offer AmEx gold and platinum cards to Fidelity’s brokerage customers.
When Chenault was promoted to president and COO in 1997, he gained responsibility for all the operating units of the company, excluding American Express Financial Advisors (AEFA), until last year, the only major revenue generator he didn’t previously oversee. Noting that AEFA is perhaps the most profitable of AmEx’s businesses, Chenault decided that it should be one of the key areas for corporate growth-especially in a financial market driven by 401(k) dollars and individual investors. The goal: AmEx should be as widely recognized in the financial services arena as it is in trade and entertainment and cards.
To meet the mandate, AEFA boosted its sales force by acquiring Securities America, an independent broker/dealer based in Omaha, Nebraska. By the first quarter of 1999, the transaction had added 1,100 more advisors, who became part of its current sales force of over 10,480. To increase its international presence, the company also expanded into Japan this past January.
As part of the overall financial planning strategy, the company has been using the division to cross-market such financial products as mutual funds, insurance and