March 8, 2017 was American Express’s investor Day and among some of the topics discussed, was to ‘address gaming and reinvest funds in higher quality acquisition offers and channels.’ It should already be known that a boost in incentive bonus has a direct correlation towards those that are “gaming” the system or looking for a quick reward. In recent years, it has become acceptable to use Churning OR Gaming as a interchangeable piece of terminology for such an activity deemed to be inorganic spender who does not commit to a long-term spending incentive structure, in the eyes of most big-branded card issuers like American Express. Detailed transcript down below:
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Investor-Day Transcript:
So turn my attention to efficiency and to a topic that has been popular in industry circles these days, and it goes by various names, gaming or churning. And for purposes of this discussion, I’ll define it as a consumer taking out a new credit card account, engaging in the first 3 or 4 months at the level required to earn the acquisition incentive, a cash back incentive or airline points, and then disengaging and moving on. And certainly, the very intense, at times bordering on irrational, competition based on rich sign-up bonuses and a whole social media ecosystem that’s grown up around this particular phenomena has put pressure on gaming and churning trends. Now our more conservative incentive structure and the controls we have in place have largely kept gaming rates constant over the last couple of years, but we still see a substantial opportunity to use our analytics and technology, surgically remove gaming and reinvest in higher-quality, more loyal new customers, achieving an acquisition efficiency gain on a year-on- year basis. And so we’ll leverage technology and analytics at all of our marketing and underwriting touch points. We’ll suppress gamers across channels and at the point of application.
Key to enabling all of these use cases from corporate cross-sell to member referral to gaming reduction is our new dynamic application and underwriting technology. And this technology supports custom application flows, it’s device responsive, it allows applications to be interactive with a customer with respect to their data entry. And it allows customer underwriting applications as well. In short, this new suite enables us to maximize conversion rates, while optimizing margins through interactive negotiation with applicants…
And listen to what Doug said on gaming. My view is you’re going to hear a lot more about gaming in the next 12 to 36 months in the card industry, a lot more about gaming. What we’re focused on is long-term, sustainable, profitable relationships with our customers. Yes? All right, Ken?
Notable Events:
- Once Per Lifetime Policy
- AMEX Serve – Suppressing Manufactured Spenders (since manufactured spenders are not profitable because most of what AMEX makes derives from a carried balance, MSers usually pay in whole and do not carry over any particular balance)
- Rewards Abuse Team
- Leaked Links of Offers not intended for the public – Consumers reported their accounts frozen after participating.
Conclusion:
Shouldn’t be too skeptical about this event considering that they already have the Once Per Lifetime as well as a functional Rewards Abuse Team to crack down on churning. I’m assuming they would make targeted offers even more targeted. It might be better to make the ‘gaming’ terminology looser in which case, it would substantiate anything AMEX deems as as unprofitable customer, so MSers and those just chasing for bonuses will fall under this category. Lastly, I’m actually curious as to what approach they would have with most of their co-branded partners getting an approval out. Make sure you also check out our complete list of Credit Card Promotions!