American Express (Amex) has been making waves in the financial industry by successfully attracting and retaining Gen Z and millennial customers. This younger demographic, known for their digital savviness and financial acumen, now makes up over 60% of new American Express accounts globally. This shift in focus has not only increased the number of new accounts but also boosted spending and engagement among these younger cardholders.
Amex's strategy to capture the attention of Gen Z and millennials has evolved significantly over the years. Initially, the company employed a "low and grow" strategy, offering no-fee cards with limited benefits to attract younger customers. However, as these generations proved to be more financially savvy, Amex shifted its approach to provide a better value proposition. Today, Amex's cards targeted at younger customers offer substantial rewards and benefits, making them highly attractive.
For instance, the Platinum Card, which comes with a $695 annual fee, can provide up to $1,400 in value through various perks and rewards. These benefits include access to exclusive airport lounges, hotel credits, and credits for streaming services and food delivery platforms like Grubhub. Such perks are particularly appealing to younger consumers who value experiences and convenience.
Moreover, Amex has enhanced its digital offerings to cater to the preferences of Gen Z and millennials. These generations are heavy users of digital services, and Amex has responded by improving its mobile app and website functionalities. According to Stewart Kendall, SVP of Enterprise Digital Experiences at Amex, the company has ensured that the functionalities available on the website are also accessible through the mobile app. This seamless digital experience has resonated well with younger customers, who prefer managing their finances on the go.
Evan English, VP of Product Design and Research at Amex, highlighted that younger cardholders are more inclined to explore the breadth of benefits offered by their cards through the app. This engagement is crucial for Amex, as it not only enhances customer satisfaction but also drives higher spending. In fact, millennials and Gen Z customers spend 70% more in restaurants with Amex cards compared to other age groups.
Amex's focus on digital experiences extends beyond just the app and website. The company has integrated peer-to-peer payment services like Venmo and PayPal, further appealing to the digital habits of younger consumers. This integration allows for seamless transactions and enhances the overall user experience.
The company's efforts to attract and retain younger customers have also been supported by its merchant partners. Amex's customer base is enticing to merchants who want access to affluent and engaged consumers. These partnerships help fund the value proposition for Amex, ensuring that the company can continue to offer attractive rewards and benefits.
Despite the higher annual fees associated with premium cards like the Platinum and Gold cards, younger consumers have shown a willingness to pay for the value they receive. Approximately 70% of Amex's new cardholders last year acquired premium cards, with millennials and Gen Z making up three-quarters of this group. This trend underscores the importance of offering compelling value propositions to attract and retain younger customers.
American Express has successfully captured the attention and loyalty of Gen Z and millennial customers through a combination of attractive card rewards, enhanced digital experiences, and strategic partnerships. As these younger generations continue to drive spending and engagement, Amex is well-positioned to maintain its growth trajectory and solidify its position as a leader in the financial industry.
