GDA was customizing sales training for American Express Establishment Services… the division that convinces stores, restaurants and companies to accept the American Express Card. The challenge was that any company that was worth direct sales calls had already been called on by American Express many, many times. These hold-outs, as they were called, were hardened on their conclusions: the American Express card fees were twice as expensive ad Visa or Master Card, and besides, they didn’t need it, because business was good without it. Even more damning, they knew that all of their shoppers carried the other cards anyway, so they weren’t losing any business.

The first parts of the hold-out customers’ position were easy to address, because they were based on old information. Many years before, the AMEX card charges were twice the charges of the competition, but that had been narrowed to a very small difference over the years. These hold-out customers simply didn’t know that or didn’t believe that, because they had not accepted the AMEX card for years. The other part was a bit more challenging… For many of these large local and national retailers, business WAS good, and their customers DID carry other cards in addition to their AMEX cards. They really didn’t need AMEX or the additional cost, no matter how small.

These would have been insurmountable obstacles, because they were true. The good news was that they were not the only issue. This issue and the potential benefits were not about their customers… the issue was about American Express’ customers.

What these rightfully proud and successful customers didn’t know was that there are a great many customers who ONLY carry the American Express Card, and that American Express tracks their spending. American Express knew exactly how much revenue was spent by industry and by zip code from these customers. This data represented unknown lost revenue to stores who deliberately chose not to accept the card. (This data was in addition to those who “preferred to use their American Express card” and would intentionally shop only in stores who accepted the AMEX Card).

Consider data that American Express had by zip code. If the data showed that $50 million for applicable products, furniture for example, was spent by the AMEX customers who ONLY carried the American Express card in the target customer’s zip code, then, here is what we knew was true: NONE OF THAT $50 MILLION was spent in this customer’s store, because this customer made it clear that the AMEX customers were not welcome there. Zero dollars of $50 million from last year’s AMEX-only furniture sales were spent with this store, zero dollars from this year’s AMEX-only $50 million in furniture sales will be spent at this store, and zero dollars from next year’s AMEX-only $50 million in furniture sales will be spent at this store. With a decision as simple as welcoming loyal American Express customers, this store stands to add more potential new customer spending than all of their advertising could possibly deliver. The profit from the store’s share of this market would dwarf any minor differences in card costs… in fact, that difference in fees would have proven to generate a valuable return on investment.credit_card_2The powerful learning point of this true illustration is not simply the power of selling value… although this is one of the things I want you to remember. But don’t miss the bigger point: if your company has done the right job of creating value and earning differentiation in the market place, you deserve to gain market share with your customers. In this case, American Express had developed extreme customer loyalty from their card services, including loss replacement, fraud protection, loyalty programs and the like. This customer loyalty produced a very substantial and valuable buying customer base that represented a unique and differentiated “value-add” for its retail customers. No other card provider could possibly counter that with discounts, because this was a customer base that was 100% American Express only. And they had a high spend volume that could be documented by industry and by zip code.

American Express had earned valuable differentiation in their competitive marketplace, and now they knew how to sell that value to their clients.

– Eric Richardson, CEO – Growth Development Associates

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