Credit Cards: Reward Fever
Drinks at Manhattan's exclusive `21' club with former basketball star Walt Frazier. A ride in the cockpit of a fighter plane. A walk-on role in HBO's Entourage.
In an age when reward points are increasingly common, credit-card companies are trying to win your loyalty by offering exclusive, often unique experiences. The idea is not to make a bunch of money on the dinners or weekend getaways, which are often priced at cost, below market, or sometimes free, but to get you to reach for that card the next time you go shopping or take a vacation. "Five years ago people were happy to get anything. Now there are Web sites that evaluate different loyalty programs," says Shea Long, a vice-president at Maritz Loyalty Marketing, which designs reward programs for card issuers. Long's clients, he says, are looking for a "consumer wow factor."
American Express (AXP ) began using "experiential" lures several years ago with its upscale Platinum and Centurion (black) cards. They have annual fees of $450 and $2,500, respectively. Now the Visa Signature and MasterCard World cards, with yearly fees of just $30 to $85, are piling on. They're going after the nearly 20 million households earning at least $100,000 a year and are available online or over the phone to anyone with a good credit rating.
The target audience includes New York's Dennis Weiner, a 56-year-old account executive for a software company, who carries cards from all three brands. He's enjoying the competition among the card companies to offer the best special events: In the past month he has attended happenings hosted by all of them. He met former New York Knick Frazier at the 21' Club as the guest of Citibank (C ) American Airlines (AMR ) AAdvantage MasterCard. He was also one of 40 people and their guests to partake of a five-course meal and wine tasting at New York's Country, a nouveau American/French restaurant in Manhattan's Carlton Hotel, for $100 a head.
The card companies leverage their relationship with restaurateurs, promoters, and hoteliers to create one-of-a-kind events, then let customers purchase them on a first-come, first-serve basis with either their card, cash, or reward points. American Express, for example, had no trouble filling the tables when it invited 50 cardholders and guests to sample a seven-course tasting menu at Per Se on May 5 for $1,300 each. Chef Thomas Keller's New American restaurant in Manhattan's Time Warner Center is one of the most expensive in the city. Visa and MasterCard are hoping to win loyalty by offering cardholders more moderately priced versions of such events, such as the Country dinner. "These are customers who still do back-of-the-envelope calculations on how much these events should cost," says Visa Senior Vice-President Jim McCarthy.
`REAL AERIAL COMBAT'
Among the experiences credit-card companies have dreamed up: This year, Visa offered a trip to the Super Bowl for 58 people, complete with player meet-and-greets, deluxe accommodations, and spa treatments, for $6,250 a couple. Citibank held a series of private concerts with the likes of Dave Matthews and Aerosmith for $50 to $200 a ticket. AmEx' recent Hollywood weekend included a stay at the Four Seasons Hotel in Beverly Hills and nonspeaking walk-on roles on the hit show Entourage for three cardholders. Then there's MasterCard's ride in a Marchetti SF260, a plane that is used to train Navy fighter pilots. The full day includes a training briefing, 60 to 90 minutes in flight, and "a minimum of six head-to-head combat engagements in real aerial combat." It costs $2,390 for two, scheduled at your convenience.
Companies are betting that cardholders' fond memories of these special events will override the pedestrian extras offered by competitors' cards, such as points. AmEx says customers who attend its exclusive dinners and trips typically spend three times as much using the card over the following 12 months as they did during the previous year. Then there's the buzz factor: happy cardholders bragging to their friends about hanging out with such-and-such celebrity.
Weiner, for one, concedes that the ploy works. It would be more logical to think about which of his cards gives him the most points, "but we boomers are very capricious about these things," he says. Because of his night out at Country, Weiner now uses his Signature card more than the others in his wallet.
Exclusive events may not be the best reason to be true to a card. But loyal or not, you can enjoy the fun as credit-card companies trip over one another to impress you.
By Burt Helm, with Mara Der Hovanesian
— With assistance by Mara Der Hovanesian