American Express’s Plenti Launch

The first US coalition loyalty programme which allows point transfers across companies was recently launched by American Express. The initial merchant partners include AT&T, Exxon, Macy’s, Mobil, Nationwide, Rite Aid, Direct Energy, Enterprise and Hulu. The innovative reward platform has a variety of unique selling points and has potential for American Express to reach a wide range of additional US consumers. Following the loss of the network’s co-branded exclusivity agreement with Costco as well as JetBlue, the network faces a significant decline in total processed payment value in 2016. To offset this decline the network has looked to other co-branded agreements and pre-paid and digital platforms. The acquisition of Loyalty Partner in 2011 by American Express for US$685 million sharpened the network’s focus on international loyalty programmes and has since proved successful in Germany, Poland and India. The network has long been known to offer lucrative benefits to its affluent and corporate clientele and has been aggressively trying to capture consumers outside of these segments with limited success in recent years. The Plenti platform, if additional merchant partners are included, could have the potential to do so.

How the platform works

One thousand points equals US$10 dollars, and for each dollar spent at these merchants, one point is given. However, there are several introductory offers as well as specials on its online marketplace that have point promotions. For example, a user might get three times the points for every dollar spent shopping at Macy’s online. The user can then use the accumulated points (in one thousand point increments) to receive a US$10 discount at any of the other partner merchants.  The online marketplace is not limited to the nine partner merchants and includes a wide range of merchants that accept American Express. Any points accumulated that are not redeemed expire after two years. The programme is not limited to American Express cardmembers, and is not limited to financial cards. Consumers can receive points even if they pay using cash in stores as long as they have their Plenti card. American Express business unit “US Loyalty” will manage the rewards, run the centralised marketing activities and manage consumer data collected for Plenti. The Plenti platform has been modelled from another Loyalty Partner programme called “Payback”, which has 26 million active German customers and distributed 16.6 billion coupons in 2014. The platform is also reported to have 34 million active users across Italy, Poland, India and Mexico.

Networks have tried to leverage their merchant relationship to offer promotions to consumers previously, with the most recent example seen in MasterCard Marketplace. This particular platform did not attract the amount of consumers hoped for and is not currently operational. The platform launched by Visa tried a similar platform, but dropped the merchant benefit component shortly after launching. The new platform Visa Checkout is more limited in scope and does not exclusively process Visa cards. Global internet retailing reached US$840 billion in 2014 and is projected to reach US$1.5 trillion by 2019. Card networks eagerly want to remain relevant and to process the greatest portion of this value as possible.

The ultimate success of the platform will be determined by how many more merchants they can get on board and how well they maintain the attention of consumers who are increasingly sceptical of sharing their personal information. It appears that the platform has discovered the right balance of consumer trust, merchant adoption and additional value for users to be successful abroad. Whether it has similar success in the US will depend on how long American Express can focus on promotion before concentrating on profit. Getting merchants to participate and to attract consumers can be costly in the crowded digital payment space.

Providing value to both merchants and consumers

Initially capturing the attention of US consumers can be an expensive undertaking. The Plenti platform was launched with little national attention and without a broad marketing campaign. Whether this will be an additional marketing and advertising push going forward remains unclear. Initially capturing the attention of consumers is only the first step for American Express. To maintain consumer engagement requires additional value to be consistently provided to them. The concept of a coalition loyalty programme in the US could provide this value. Similar to the Plenti platform in concept is the Merchant Customer Exchange (MCX) CurrentC mobile payment platform. CurrentC was developed by a much larger coalition of merchants to bypass card networks and enhance the merchant customer relationship but has failed to gain traction in the US. Among the complaints among consumers of CurrentC has been a lack of simplicity and privacy concerns. In this regard, Plenti offers an alternative that addresses both these issues.

Consumers are becoming increasingly sceptical of giving out personal information and want to know how the data is being used. Making clear to consumers what value American Express is getting from the platform could increase their willingness to sign up and provide the personal information required to make the platform effective at targeting consumers. Card networks are generally more trusted than individual retailers and the Plenti platform might just have the right combination of simplicity and additional value to make inroads into the more diverse consumer base American Express has so long pursued.