1. American Express’ objective for use of social media is to engage closely with existing customers through promotional events and generate new customers by providing positive perception of the company’s customer service. American Express has fewer cardholders than Visa or Mastercard but the average annual transaction size per Amex cardholder was nearly three times that of the other two. Unlike Visa and Mastercard, whose primary focus was settlement between banks, issued cards and managed merchant transactions through various banks. Amex, however, issues its own cards and performs all other functions as well. The company actually tracks customer and merchant transactions which gives them valuable information over their competitors. Amex wanted to use this information and create a social media strategy to connect better with their customers. More and more companies have started using social media to create direct contact with their customers . In many cases this has enabled companies to address customer issues faster and sometimes even in real time due to the almost continuous connectivity nature of internet usage in the last several years. Amex has a customer-focused approach to social media. For ease of usage and accessibility, it has created distinct social media channels for promotions (@AmericanExpress on Twitter), customer service (@AskAmex), Facebook for a combination of the two and also information services and YouTube for sharing member experiences and events and stories that Amex sponsors.
2. The ultimate goal of any business strategy, even the use of social media, is to generate financial returns for the company by understanding what customers value . Social media is expected to translate to profits via brand identification through monitoring of brand perception and the type and level of company’s interaction with customers . The Members Project was started as a cause marketing strategy aimed at combining social responsibility with increasing market visibility of the brand. It did not allow any interaction between card members which lead it to being primarily viewed as a vehicle for the company’s promotion . The Members Know project was far more interactive and allowed members to share their travel stories. It also led to substantial use of American Express cards in the locations where members were frequently headed. However the economic benefits of these programs were not as beneficial as for another program like the OPEN project which focused on small businesses. One of the reasons was that the OPEN forum addressed issues faced by business owners which resulted in better financial results for these businesses. OPEN gave members outcomes that were valuable, thus creating a stronger brand identity for Amex and more loyalty. The other programs were unable to provide this level of value and did not translate to high level of economic success and were therefore discontinued.
3. One of the most important social media best practices is for companies to understand its consumers and their needs . The continued success of OPEN shows that Amex was able to give customers exactly what they wanted. Their recent video ads on YouTube featuring Tina Fey showcase the dilemmas of working women and how Amex helps in small ways to make their experiences better. The company also actively keeps track of their customer feedback and responds promptly to customer queries on Twitter and Facebook. The company also regularly collaborates with social influencers and media influencers to raise awareness of issues or promote products and services that are valuable to their card members. However, social media strategy alone does not make for loyal customers and good reputation. Operations and services must also match customer expectations. American Express Facebook page contains user comments that indicate issues in the way operations and services are leaving customers less than satisfied (Exhibit 1). A combination of excellent service and operations models along with social media engagement is essential for customer loyalty.
Source: facebook.com/AmericanExpress
References
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