American Express doesn’t just issue credit cards; it’s also in the attribution business.
Because Amex can see both sides of a transaction, it’s able to collect insights about buying behavior directly from the source.
“We know how our card members spend, how they travel, where they live – we know the choices they make as they conduct their life,” said Erin Frankcombe, VP and GM of Amex Offers and business insights at American Express.
Amex Offers is a program within American Express that doles out rewards and bonus points for using an Amex card at certain stores and for specific products.
In the loop
Through the program, Amex’s brand partners offer promotions – $5 off a grocery order, say, or a discount on a dining experience – which later show up in the form of credits on a person’s statement.
At any given time, there are usually more than 2,000 offers available in Amex’s system across roughly 1,000 brands.
Users are targeted with personalized in-app and online offers based on their preferences and past shopping behavior, and Amex can measure the results because, well, it’s the one facilitating the transactions.
“The insights and the data we have come from the fact that we operate in a closed-loop network of cardmembers and merchants,” Frankcombe said. “We’re not just looking at impressions and clicks; we’re looking at real transactions.”
Although recent forecasts point to a recovery in ad spending, and the overall economy is doing not too shabby despite previous recession fears, marketing budgets are still being heavily scrutinized.
Amex only charges merchant partners and marketers when a cardmember actually redeems an offer and spends money.
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Giving credit where it’s due
But the question is proving whether this activity is incremental. Does it make sense to target an offer to someone who already has high intent to make a purchase and may well have been planning to do so without being given a discount?
Amex has enough data to tell whether spending is incremental, Frankcombe said.
For example, American Express can see if someone is lapsed and hasn’t used their Amex card to spend with a particular merchant in a while or whether that person is a brand-new customer.
“And there are other insights we can share, too,” Frankcombe said, “like what time of day people are redeeming offers, where else they shop, their other brand affinities and the volume of transactions across different geographies and industries.”
If, for instance, Amex detects a correlation between people who shop at Lululemon and people who regularly redeem offers at Publix, those retailers could choose to form a collaboration.
“Merchants may use information like this to create opportunities to attract customers they hadn’t thought to reach before,” Frankcombe said.
The ‘action’ in transaction
But the value a brand or merchant gets out of the program really depends on what their business goal is, she said.
A luxury brand probably wouldn’t consider giving discounts on its own stuff, but it can use offers to upsell existing customers using Amex’s platform.
One popular construct merchants use is to issue Amex membership rewards points in exchange for hitting a certain threshold, like 5,000 points for spending $1,000 on their products. Members can later apply loyalty points to flight and hotel bookings with other Amex partners or redeem points in the form of cash back and gift cards.
Regardless of the approach a merchant takes, the purpose of Amex Offers is to drive outcomes beyond views and clicks, Frankcombe said.
“It’s why our partners only have to pay for what they actually get,” she said. “We spend a lot of time educating our merchants, affiliate partners and media agencies about that.”
