American Express began as a stagecoach delivery business, but it has evolved over more than a century and a half into a pre-eminent travel agency, issuer of credit cards, and operator of a massive electronic payments network. The Canadian operation – which started up in 1853 and now has 3,700 employees – is run by Howard Grosfield, a Canadian who cut his teeth in Amex's New York office.
You are competing with a galaxy of cards from all the other issuers. How do you carve out a distinct niche in that crowded marketplace?
We try to differentiate on products, but they can be replicated pretty much instantaneously, especially in Canada when you are operating against such a consolidated set of very big players. So the differentiator for us has always been about service and customer experience – how we try and make you feel special when you use one of our products.
Is there less of a service culture in Canada than in the United States and elsewhere?
It depends on the industry. I think in those industries in Canada where there is less competition, we are behind relative to the United States from a service perspective. But it still amazes me how many companies, both in the U.S. and in Canada, are overlooking service as a key strategic differentiator. I think it is one of the most powerful tools available to companies today.
What impact has social media had on service culture?
Social media has taken the whole concept of word of mouth and really put it on steroids. We used to worry about how word of mouth would travel at the speed of a cocktail party, or around the water cooler at the office. Now you are operating in an environment where word of mouth is travelling at the speed of Facebook, Twitter, Foursquare, or your favourite blog.
It has also empowered customers of any company to talk about the brand and the company. Every individual is suddenly in a position to be a publisher, journalist, critic, trip adviser, or blogger. That has forced us, and many [other] companies, to think about how we communicate.
How has it changed your approach to marketing?
In the pre-social-media world, companies used to control every bit of the message. You'd create messages that would appear in magazines, on television and in print. Once you had it perfect, you would send it out into the marketplace and that would be the end of it. Now, companies need to learn to let go. They need to come to grips with the fact that there is a dialogue that has been enabled by [social media]. You need to embrace that conversation, get comfortable with it quickly, and participate in an authentic way. You can't do it on some promotional or gimmicky basis.
Amex is often seen as serving just an elitist customer group. Is that the case?
We have enormous demand from the young and up-and-coming segments. And we have many products designed for the mass market. But we also have a subset of products that are designed for the premium and super-premium end of the market. Today we have demand across all segments.
Is the level of household debt in Canada at dangerous levels?
We are concerned about the level of household debt in this country, as anybody should be. But the majority of our products are pay-in-full products [where customers cannot carry a balance on their card]. We tend to attract individuals with a high level of fiscal responsibility [who] want to pay in full.
Do people still use travellers cheques?
In Canada and other countries where there is widespread comfort with credit cards and debit, the product is less relevant. But in markets around the world where there is still some discomfort associated with using plastic, or a concern about whether your plastic will be accepted, [travellers cheques] are still in widespread use.
Are you working on digital wallets, such as CIBC and Rogers' project that will see financial data and transactions embedded in cellphones?
We have a number of pilot projects running around the world in the mobile payments space. We have a mobile payments platform being launched with Verizon in the U.S. We also have a partnership with the largest telco in China. What we have learned will be very quickly rolled out in Canada and other markets around the world.
Will we see a deal between Amex and a Canadian telecom provider soon?
We are always open to the possibility, and there are a lot of conversations going on.
You're a Canadian who has worked in Australia, and in the U.S. for many years. What advice would you give other executives about getting international experience?
The reality of business today is that we are increasingly operating in a truly global marketplace. So opportunities where individuals can get experience and exposure to other markets are extremely beneficial. You can try to understand how other markets work from a distance, but it is not until you wake up every day in a country that you truly understand the nuances of the culture, how business gets done, and the dynamics of the market.
Has the recession and the economic downturn changed American Express?
It reinforced that we had the right business model, which is driven off building relationships with customers who want to use our product for their spending. Most other credit-card companies are focused on making money off lending. The recession proved that our business model can withstand significant recessionary pressure. We never had an unprofitable quarter during the entire recession.
- Title: President and chief executive officer, American Express Canada.
- Personal: Born in Toronto, 43 years old.
- BA and law degree from University of Western Ontario.
- Career highlights:
- Practised law in Toronto, then joined Boston Consulting Group in 1997.
- Worked in Australia for two years with BCG before returning to Toronto.
- Joined American Express in New York in 2004 as vice-president, strategic planning.
- Returned to Toronto in 2008 as vice-president of small business services, and became CEO of the Canadian operation in 2010.