Customers Define Brand
Kenneth I. Chenault
Chairman and CEO, American Express Company
Excerpt from remarks to Boston College’s Chief Executives Club
March 31, 2015
TAKEAWAY: Customers Define Brand
Advertising may get people to try our products, but it is the day-to-day commitment and service performance of our frontline people that establishes and builds the loyalty of our customers, because another important point about our brand—or any brand, for that matter—is to remember that a brand is not what I, as CEO, believe it to be. A brand is what the customer believes it is. The power in this relationship rests in their hands, not mine. Customers ultimately define brands.
For example, Ritz-Carlton is a brand that is all about service. They advertise it, promote it. They’ve incorporated it into their culture. But if a customer walks into the Ritz and has a bad experience, then, for that individual, the Ritz brand has just been redefined. If customer expectations aren’t met over time, if customer experiences aren’t satisfying, then a brand is weakened. But if you have a strong brand, customers will oftentimes give you the benefit of the doubt. They’ll give your brand some breathing room and give you another chance.
Now, I have to tell you, this is a lesson we learned the hard way at American Express in the late ’80s and ’90s. Leading up to this period, our brand had gained a reputation as being prestigious, elitist, and expensive. And for years, we reveled in those attributes. We took our prestige so seriously that, as a company, we too became elitist and arrogant.
Should we change our pay-in-full feature just because some customers wanted the flexibility to revolve their balance and pay over time? No way. Allow our card to be accepted at places customers wanted to spend, like gas stations or supermarkets or discount stores? Please. Establishments like that were beneath us. Give someone a reward for using our product? They should feel privileged to have our card in the first place. After all, we were American Express. We were so proud of what the company stood for that we tried to protect it by freezing in time.
We assumed a brand name, particularly our brand name, mattered more than the product itself. But we were wrong. Our customers’ expectations had changed. They wanted value, not just image. They wanted flexibility and relevance, not just prestige. We forgot who was in charge. And as a result, we almost missed the boat. But because of their historical relationship with our brand, our customers gave us time. They kept us afloat as we recovered, as we improved our products, expanded our merchant base, and provided more choice.
And we ultimately found that, instead of being damaged by all of this, our brand actually strengthened. It remains a premium brand, an aspirational brand, but it’s now viewed as less elitist. In fact it is now, viewed as more welcoming and inclusive. It is relevant to more people and therefore more valuable.
Over the years, we’ve learned not to take our brand for granted. We’ve learned that it has flexibility and depth, but only if we listen to our customers, because they are the ones who ultimately control it. Because of the importance of our brand, we’ve made it an essential part of every action we take, including our digital transformation, which is currently well underway.