American Express—and its 4 billion transactions a year—just re-entered the profession. Should you be worried?
Four years after selling off its tax and business services practice to H&R Block for $220 million, American Express recently launched a newly formalized set of consulting offerings. Although its former offerings were targeting the basic business needs of small to mid-sized companies, the credit card giant is now focusing on larger companies at the much higher-end of the strategy consulting market.
AmEx is betting it can draw out enough insight from the four billion transactions in which its cards are used annually to glean unique consumer insights that can help merchants more effectively design, execute and track their marketing and sales initiatives.
"We see this as a big opportunity for us and the recent launch of our Business Insights group is an indication of our investment in this space," says the practice's newly tapped leader, Ed Jay. Jay says his firm's offerings are different from its competitors because American Express has access to more raw data.
"If you do a comparison of the scale of data to that of our competitors, our level of depth—whether by industry, geography, etc.—is unparalleled. They might draw conclusions based on a data set of a few thousand transactions."
Based on annual averages, American Express is privy to an aggregate of nearly 11 million transactions a day. This bevy of data not only means that it can dig deeper, but it can also track the results of a merchant's marketing efforts in close to real time.
For example, "Leading Hotels of the World was seeking out high-end hotels to be part of their network, by creating consumer loyalty programs to increase the number and length of stays," Jay says. "Rather than basing our advice on consumer sentiment or survey data, we were able to look at the card member data—in aggregate—to show that hotels that are part of the network were more successful than those that were not. By comparing year-over-year data trends, we were able to know how individual hotels were doing compared to other hotels in the same locations. We're able to document what guests are spending on when staying at one hotel verses another hotel in the same city."
American Express is investing significantly in analytics designed to help merchants decide what things to package together to encourage greater spend. "That's really the value of the transaction level data. We can look at the same control set and look at how that's changed. We can analyze what consumers are doing differently today vs. 12 months ago. We know if consumers are shifting their spend to other industries or other products," he says.
It's a highly competitive market to be sure. But few have gotten rich betting against credit card companies.
—Jess Scheer
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