Thursday, December 27, 2007

The American Express Plum Card

American Express has always been the leader in creating exclusivity around credits cards. Their best example of this is the Centurion Card (a.k.a. the black card) which was once available by invitation only. Now you can apply directly for the card, but you have to be a big spender (at least $250k annually) to be approved. American Express’ newest attempt at massclusivity is their Plum Card. Designed for small businesses, this card gives the card holder access to trade terms and/or deferred interest for two months on purchases. In order to give the Plum card that infamous American Express allure American Express is limiting the initial offering to 10,000 cards and using the tag line “Who is getting one?” in their advertising. I’m not sure how American Express landed on the number 10,000, but I’d argue it’s a number that doesn’t create demand. 5,000 maybe, but 10,000 is just too large. If I said you were 1 in 10,000 would you feel special? Probably not. My guess is American Express set the limit at 10,000 to see how many people take advantage of the trade terms, a potentially costly offering. If after six months of experience American Express notices there’s not a lot of uptake on the trade terms you can bet there will be another “offering” on the table. On the other hand if there is a big uptake on the trade terms American Express may decide to stick with their original 10,000 plum card members (provided they get 10,000 plum card members), maybe even create a wait list (one card member gives up his or her card another person gets in). If that should happen American Express would have 10,000 plum card members with no easy way of entry for non-plum card holders. And because nobody likes to be told no that’s the strategy that would give the plum card the allure that I suspect American Express is looking for.

Valerie Conyngham

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