American Express Outlines Next-Generation Rewards

American Express plans to roll out a new Membership Reward in the next few months, which it predicts will "turn the typical process of using frequent flyer miles on its ear."

Speaking to investors at a semi-annual conference last week, Ralph Andretta, senior vice president and general manager of Membership Rewards, described the upcoming Flight & Room Finder as a one-stop, hassle-free resource for points redemption.

Instead of calling or visiting the Web sites of multiple airlines to check availability and make a reservation, cardholders will need only make one stop--at the AmEx Web site.

"Once there," Andretta said, "you pick a destination and a date, and find out immediately if flights are available for redemption. Then you book your ticket--right then and there." A similar one-stop process will apply for booking hotels, he said.

In addition to Flight & Room Finder, Andretta said, a new tier structure to rewards will give card members "a reason to upgrade" from a Gold to a Platinum or a Platinum to a Centurion charge card.

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Instead of a "one reward fits all approach," AmEx will begin offering varying levels of service for different cardholders with the value of rewards, and dining and shopping partners, escalating with the spending level of the cardholder.

"We have used our marketing and analytical capabilities to move away from mass marketing, and target only those Cardmembers who are most likely to respond to a particular offer. So, Cardmembers benefit because they receive more personalized and relevant offers," Andretta said. "This has changed the way we think about our marketing. It is also something that the competition cannot replicate because of our closed loop network."

The three rewards program tiers are MR Express, a basic free rewards program for all cardholders; fee-based Membership Rewards for green and gold cardholders that allows users to transfer points to airline and hotel loyalty programs or pay for services with points; and Membership Rewards First for Platinum and Centurion Charge Cards, which provides greater service and super premium offers from upscale partners.

"We know that our three tiers broaden our appeal, but we have not lost focus on our most affluent customer segment," which he said, continues to be "the core of our franchise."

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