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AMEX PROGRAM MOVES LOYALTY TO NEXT LEVEL: CUSTOM EXTRAS FINDS A MEDIUM CUSTOMERS CAN'T IGNORE: BILLING STATEMENTS

By Published on .

American Express Co. this week launches a sophisticated loyalty-marketing program that will grab consumers' attention by using monthly billing statements to announce rewards based on personal spending.

Custom Extras automatically awards customers deals and discounts based on frequency of purchases at participating retailers.

The program is the latest example of how companies are sharpening database marketing into an even more powerful weapon in the fast-accelerating world of one-to-one customer marketing.

A FIRST IN THE INDUSTRY

AmEx believes the use of its proprietary charge card system for loyalty marketing is a first in the credit card industry. Thanks to new technology, it's also the first time AmEx has been able to harness its closed-loop system in such a fashion.

"We've turned the monthly bill into a marketing statement that's guaranteed to be seen by everyone who pays their monthly bill," said Bruce Grieve, VP-global rewards.

Billing statements are suddenly becoming hot brand-marketing tools for utilities and telecommunications companies, which have discovered that bills are the only direct mail pieces that have a 100% readership rate.

Since consumers often toss bill stuffers away with envelopes, AmEx will print its reward offers alongside the related transaction on a redesigned billing statement.

AmEx's new program does not affect Membership Rewards, a program requiring customers to enroll to earn points redeemable for goods and services based on total charge card purchases.

The Custom Extras program goes out this month to targeted customers during a pilot phase. To cash in, customers must call a toll-free number on the billing statement and key in a code number to get a coupon or certificate by mail.

For example, a consumer who spends a certain amount via AmEx at a participating toy store might get a coupon good for the next purchase at the same store.

HUNDREDS OF MERCHANTS

An undisclosed number of major merchants are participating in the pilot program, but Mr. Grieve said AmEx expects hundreds to be involved in the national rollout, beginning in January.

In mid-1997, AmEx plans to take Custom Extras a step further by tracking total accumulated purchases at specific merchants for each customer on monthly billing statements.

"We're saving merchants the hassle of running their own frequent-buying program, which can be very costly," Mr. Grieve said.

What's unique about the program is how AmEx has harnessed its proprietary database to create a rewards program with no hassles for customers or merchants.

While Visa and MasterCard can offer general rewards through merchants, each customer's account is handled through individual banks that don't have relationships with each merchant.

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