Last summer I wrote about the importance of segmentation in banking (see here). Alistair Newton and I have also written about the value of letting customers create their own cards and manage them, for example changing rewards options, over time (Gartner clients see “Using Social Networking and Personalization to Transform Your Payment Card Market Approach”).
Amex has just launched a purchase card called ZYNC that incorporates these ideas, but then takes the wrong approach.
Where Amex goes right with this card is customer segmentation. The card is aimed at adults in their 20s. A customer can choose from four different “packs” (which is essentially further segmentation):
- Go Pack – travel incentives and rewards
- Social Pack – restaurant and event incentives and rewards
- Connect Pack – mobile and cable incentives and rewards
- Eco Pack – green and carbon offset incentives and rewards.
Where they went wrong is fees (an annual fee of $25 plus a perk fee of $20 on three of the four cards) and forcing it to be a purchase card. Many cards on the market provide equivalent or even better rewards without the annual fee, and it lacks the freedom a credit card provides or control that a debit card provides in terms of monitoring a bank balance.
The financial industry would do well to provide more segmented payment offerings, but needs to re-engineer its profitability in ways other than annual fees.