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American Express: The Financial Services Giant in Valuespace

American Express is a diversified worldwide travel, financial and network services company founded in 1850. With 1999 net revenues of $19.5 billion and net income of $2.48 billion, it is the world’s largest travel agency serving both consumer and business markets. Its slate of wide ranging financial services include consumer charge and credit cards, corporate cards offered to employees in organizations, corporate purchasing cards to business and government organizations, financial planning and investment, insurance, brokerage services, and banking services to corporations. Its charge card is perhaps the most recognized card worldwide, made famous by its long-running slogan "Don’t Leave Home Without It" and an advertising campaign featuring celebrity Cardmembers who popped up from magazine pages, asking "Do You Know Me?" It was rated #1 in the ‘diversified financial services industry’ in the Fortune’s list of Global Most Admired (Year 2000) as well as in America's Most Admired Companies (Year 1999), the latest years for which these rankings are published.

An important revenue generator for the company, besides the income from its card members, is the fee the company charges from merchants who accept its credit and charge cards. These merchants, large and small, account, in fact, for nearly one-third of the company’s growing revenues. Overseeing the complex operations of its vast and expanding network of merchants is Dave House, Group President of the Global Establishment Services, the unit we studied. Dave House honed his marketing and managerial skills at Pepsi and at Reebok International Inc. With American Express since 1993, House has pursued an aggressive program of merchant expansion—recruiting more and more merchants to accept its Cards. One recent noteworthy victory: Costco Wholesale Club, the warehouse club, which began accepting American Express for the first time in August 1999 and now exclusively accepts American Express!

Costco and thousands of other merchants around the world accept American Express card, even though its fee is often higher than what Visa and MasterCard charge their merchants. Its basic but significant value proposition to them is that it will direct their way a special class of customers – customers with higher annual spending. That, plus its suite of merchant-specific, customized marketing program support, designed to grow the merchant’s business. In the pages to follow is the story of how this financial services powerhouse, one of the world’s most admired companies – on Wall Street and Main Street alike – does it.

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