John Hayes: A Culture
of Reinvention
Excerpted from CMO Thought Leaders: The Rise of the Strategic Marketer, published as a
strategy+business Book by Booz Allen Hamilton, July 2007.
John Hayes:
A Culture of Reinvention
by Seamus McMahon and Barbara Bacci Mirque
The CMO of American Express Company on a
strategy that encompasses Webisodes, scalable
events, emotion, and proactive risk taking.
Reporter: Geoffrey Precourt
JOHN HAYES
Chief Marketing Officer
American Express Company
John Hayes:
A Culture of Reinvention
by Seamus McMahon and Barbara Bacci Mirque
, when John Hayes left his position as president of
Lowe & Partners, he was not just leaving the agency business. By
becoming the visionary chief marketing officer of American Express
Company, he would help reshape the dynamics between the world’s
leading marketers and the agencies that positioned their products
and services.
Hayes works with a core group of agency partners who have
helped him walk away from the traditional (but static) agency-ofrecord alignment to oversee a dynamic consortium of best-in-class
marketing communications suppliers. By supplementing those
efforts with the creative input of a select team of “influencers” —
people such as Robert De Niro, Annie Leibovitz, and Jerry Seinfeld
— he fulfilled his own job description of “getting the most creative
minds in the world thinking about my business.”
American Express was founded in 1850, but the freight company didn’t move into the credit card business until 108 years later.
“Reinvention is in our DNA,” Hayes asserts. And this legacy of
innovation has propelled American Express from what he calls a
monologue with its customers 12 years ago to a multitiered dialogue
today. Webisodes, reality TV, concerts in Central Park, and advocacy of global health programs are all part of that conversation.
Prior to joining American Express, Hayes held senior positions
TWELVE YEARS AGO
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at Ammirati & Puris and Saatchi & Saatchi Compton. In addition,
he led the development of product positioning and global campaigns for Citibank, Aetna, Procter & Gamble, Prudential
Insurance, RJR Nabisco, Mercedes-Benz, and Reebok.
American Express has always been a great global marketing institution. While your emphasis has changed, how have you changed the
marketing culture here to keep it moving with the times?
HAYES: In the early days of my career, we used to think about how
companies were prepared to change — with new products and new
offerings — faster than the consumer. Our challenge, in those days,
was getting consumers to adapt to the new way of doing something.
That has flipped 180 degrees. The consumer is moving faster
than most companies. That’s either a threat (“Wow, can we keep
up?”) or it’s an opportunity (“You know that thing we’ve been thinking about? We can actually do it and consumers are ready for it.”)
Change is in the American Express DNA, and because marketing is such a big part of our business, reinvention in marketing is
crucial. The reason marketing is such an integral part of our business model is that it’s our distribution system as well. For many marketers, there’s marketing and there’s distribution. For us, marketing
is our distribution, and the linkage between gaining business results
and what we do in marketing is inseparable.
With reinvention ingrained in our marketing culture, being at
the forefront of the technology available to us is a priority. We have
successfully utilized new media platforms to give our customers special access to sneak previews of popular television programs, such as
Prison Break and Lost, and backstage interviews and concerts with
celebrities — from film directors to musicians. We have also facilitated customer storytelling through online competitions, such as
our 15-Second Clips competition, which coincided with our
Tribeca Film Festival activities, and through the creation of an Ellen
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John Hayes: A Culture of Reinvention 175
DeGeneres avatar to support our brand advertising campaign.
We’re culturally focused on what we need to do next.
Remember: The American Express brand already was 108 years old
when we launched the first American Express card. This is a company with a culture of reinvention.
A lot of people in marketing learned about the importance of
exquisitely crafting the monologue for target segments. And they got very
good at it. When you learn to listen to the customers — especially when
they’re moving faster than you — you move marketing in a new direction. What did you have to do to get people to really pay attention to this
new way of thinking?
HAYES: American Express is a very results-oriented culture. To put
forward a new idea or a new way of working, you first must identify the metrics that will accompany that new behavior. Our number
one focus is delivering premium value to our customers, regardless
of how new or innovative the idea we are executing is. By premium
value, I mean offering something in the marketplace that is, one,
superior to our competition and, two, relevant to our customer base.
There are a number of measures that can help demonstrate
whether we’re putting premium value in the marketplace, which
include organic growth and attrition. But in relation to consumers,
it is the “net promoter” factor that is the most important. We ask,
“Would you recommend us to somebody?” That’s the ultimate
measure of satisfaction.
If I know that you’re recommending us, I know we have one
pretty loyal relationship, and I know my value offered — as compared to price charged — is in sync. And I’m in a position where I
can drive the business forward effectively.
S+B:
Some CMOs struggle to make their work more accountable to their
CFOs and CEOs. What advice do you have for them?
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Demonstrating the important role marketing plays in growing the business is critical.
Research is important — we do it. But you can’t learn everything you need to learn with research. So you need two other things:
First, you need a broader set of methods to learn about the consumer beyond conventional research, and second, you need to
experiment. Experimenting requires both a great deal of creativity
and a great deal of discipline to ensure that the learning is reapplied
in the next set of activities that you might institutionalize.
Two examples: In 2004 we created an online series featuring
Jerry Seinfeld called “The Adventures of Seinfeld and Superman.”
We shot the two, four-minute Webisodes at the same time. They created strong online buzz and generated so much interest among the
public that NBC came to us about running them as content in a
prime-time slot before the encore airing of the Friends comedy series
finale. We learned a lot from the Webisodes and applied it to many
future business activities. It changed the way we go to market with
promotions. We learned that if we get the content right, consumers
will seek us out; they will spend more than 10 minutes on our Web
site and generate national and international positive word-of-mouth.
A second example: During the 2004 holiday season, we created
My Wish List to connect American Express merchants with our
card members online. The idea was simple: Card members can vie
for the opportunity to purchase limited-supply, high-end items or
experiences at deep discounts. Three times during the day, we would
offer hot products at unheard-of prices. So at 9 A.M. on Monday,
for instance, a BMW would go on sale for $5,000. The first person
there got it. There were nine cars in all. And people would ask,
“When’s the next one going to come?” And we’d say, “Well,
Thursday afternoon at 3. Do you want a reminder?” “Oh, yes,
please put me on your list.”
We didn’t just sell cars; we sold all kinds of premium items at
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different price points. But, more importantly, we created a level of
engagement. We had more than 7 million visitors during a threeand-a-half-week period, and we sold out everything.
The following year, we did something else to try to learn more.
About a week and a half before the program started, we asked our card
members to tell us what their wishes were. I thought we’d get 3,000
or 4,000 people. Our final total was close to 150,000 customers
telling us their wishes in just a week and a half.
Most card companies would think about learning as a linear
extrapolation of a mail test. And you went sideways.
HAYES: One of the big challenges is gaining valuable takeaways from
the various activities. To do that, you need to create an environment
where people will take some risks and experiment and then be disciplined enough to learn from the experimentation in both linear
and nonlinear forms.
S+B:
At American Express, you say that marketing drives strategy.
Strategy drives product development. And product development is measured through distribution grounded in marketing. For all that to
happen means that marketing must be an integral part of senior
management. How do you get the attention of your colleagues and senior management to support these initiatives — not to mention your
“experiments”?
HAYES: Since marketing is such an integral part of our business, senior management at American Express is well versed in marketing,
and everyone in senior management sees it as a component of their
responsibilities.
I have the luxury to be able to focus solely on marketing. I find
that my colleagues will support me if they see the results of our successes and they also see the discipline of our efforts and, quite
frankly, the transparency of our failures.
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S+B: What’s
very interesting about your business model is that branding
and marketing directly drive the performance of the business.
HAYES: Brand management, we believe, is something that has to be
a focus of the entire company. You can talk to the team that manages risk underwriting and ask, “Have you been exposed to the
brand training?” And they’ll say, “Absolutely.” “Do you understand
the American Express brand?” Same thing: “Absolutely.”
There’s also a broad level of respect for the brand and a customer
service focus that’s in the DNA. When the devastating tsunamis hit
Southeast Asia in 2004, our customer servicing team didn’t wait
for instructions; they jumped right in. A card member’s family
would call and ask, “Do you have any idea where so-and-so is?” And
our people took the initiative to work with the family to locate the
loved one.
Being proactive is part of the culture of the company. This certainly drives the business performance because our people are innovative and vibrant as they look for ways to do things even better.
A decade ago, the way to support a brand was by lighting up the
entire night sky, sort of brand painting. You see the whole sky lit up, but
it doesn’t focus anywhere in particular in that sky. In 1994, the way
American Express lit up the sky was with an advertising budget that
allocated 80 percent to television, with the remainder invested in print.
Now, less than half of your budget goes to TV, with the remainder going
to a variety of new media channels and events — many of which did
not even exist 10 years ago. In a sense, what you’re doing is lighting the
sky one firework at a time, but there are thousands and hundreds of
thousands of fireworks. Are you beginning to see that firework and this
firework connect?
HAYES: Today’s generation of media consumers is the “I’ll-DecideNot-You” generation. A teenager will say, “Why do I have to listen
to the radio? Why don’t I just download the music I want off the
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Internet and listen to what I want? I’ll decide, not you.” Or somebody will have TiVo and say, “I’ll decide when I want to watch it,
how I want to watch it, and what commercials I’ll watch.” It even
goes all the way to the do-not-call list: “I’ll decide who’s going to call
me during the dinner hour.”
We try to understand what consumers are doing because we
want to be where they are. We really want to understand their needs.
A pivotal point for us was when we realized that reach and frequency and other passive measurements were not going to be sufficient
because they did not reflect whether or not we were really engaging
our customers. Without engaged customers, we are not going to get
what we need in terms of business outcomes.
We stopped looking at awareness as an important measure.
Quite frankly, just about everybody is aware of American Express.
Awareness is not nearly as important as engagement. Is it a brand
you embrace? Is it a brand that you find aspirational and desirable?
Those are the questions that really matter. And so we’ve moved on
to measuring the desirability, the engagement factor, etc.
In 1999, we hosted a Sheryl Crow concert in Central Park. In
fact, we created and produced the event, which was very different
from buying something off the shelf (a network spot, for instance).
We “owned” the city of New York for the two weeks leading up to
it. We had Blue Crews distributing free tickets for the show
throughout the city at different places, at different times. We wanted it broadcast live and Fox picked it up.
The whole program cost less than a commercial in the Super
Bowl, but it was much more valuable. By developing appropriate
programming, we could put the focus and awareness on the card
being launched at the time — Blue from American Express.
Through this event, we signaled to the market that this was a different product with a different personality. Instead of our traditional
philharmonic crowd, we drew a new audience with our talent line180
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up, which included Sheryl Crow, Eric Clapton, the Dixie Chicks,
and Chrissie Hynde. We created and produced the show, so that all
the network had to do was pull it down from the satellite.
What were our lessons? Great launch momentum. Great level
of understanding. Good positioning. We discovered that the challenge with events is scalability. Did we really get the scalability for
the dollars spent? We challenged ourselves on that. And we took our
findings with us as we continued to build things that were new and
different.
Today, we have scalability because we can put on a forum or a
concert for a couple thousand people and then make the content
available to our broader membership base via the Web. We did
this recently with some forums for small business owners at the
Nokia Theatre in New York City. The events attracted thousands
of our small-business card members, but the content was made
available to hundreds of thousands of small business owners across
the country.
Creating content is not a new idea for us. We started doing content in the early 1970s with the launch of our magazine publishing
division, because the company realized that content can help to
shape our customers’ view of the lifestyle that American Express provides. Many years later, Departures magazine is still considered one
of the top appreciated benefits of the platinum card. Why? Because
it helps involve our members.
Recently, you’ve moved into the Internet with some unpredictable
new programs. Does that represent a shift in strategy, as well as a new
way to conduct a dialogue with your customers?
HAYES: The value of the Web is phenomenal. It has become essential to our business model — a powerful channel to interact with
our affluent customers. Our customers come to our site to check
their statements, pay bills, shop with Membership Rewards points,
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and research and book trips.
We’re shifting to the Internet for our acquisition efforts in a significant way. And because the way we’re doing it is so measurable,
we’re getting better-quality cards. And we’re getting them more
efficiently.
The Web allows us to make connections with our customers in
ways that were never possible 10 years ago. For instance, we have a
very strong presence at the U.S. Open tennis tournament in New
York. Although we’re not the title sponsor, we execute it to make
sure our presence is felt by everyone, and so our members feel special at the U.S. Open. On-site at Flushing Meadows, we have great
visibility. Our involvement with the television broadcast of the
matches is more challenging, largely because it always felt somewhat
separated from the on-site event in many ways. In 2006, we ran a
TV spot called “Roddick vs. Pong,” and added an online component. Essentially, we used television to drive people to the Web,
where they could spend time and we could try to engage them. We
also hosted viewing events in Rockefeller Center and Madison
Square Park, where card members could watch and actually get a
sense of the atmosphere at the event itself. It’s another way to bring
the television presence closer to the real event presence.
In the past — back in 1995 — we would have made a TV buy
for the U.S. Open and put up some on-site posters. Now, we’re
weaving together more and more of the pieces. And we don’t allow
them to be stand-alone pieces. By weaving all these things together,
we grow the value geometrically. Our customers start to feel the
whole thing, as opposed to, “Oh, yeah, I saw a piece of this” or “I
saw a piece of that.”
In the old days — back in the 20th century — the monologue to
customers typically had one brand message. You stayed on message and
you tested whether they heard it and what they felt about it. It was all
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monolithic marketing. Now, messages are bidirectional and morphing,
because you’re actually listening. How do you herd all those cats to
ensure that the brand articulated by Group X feels like the brand articulated by Group Y?
HAYES: The most important thing that’s changed in the past 10
years is the measurability of what we do. New channels are regularly emerging that allow us to understand what it is we’re doing as it
relates to acceptability within the marketplace. And we can do it
with much faster turnaround.
Technology allows marketers to give consumers a voice. And
that’s a dramatic and powerful change, as long as we pay attention
to what our customers are saying. In the 1900s, we did monologue
marketing. We did most — if not all — of the talking. And we
expected the consumer to listen. Now, in the 21st century, we’ve
moved to a dialogue. Consumers want to be heard. In fact, they will
not tolerate not being heard.
This kind of fresh thinking — this kind of risk taking —
inevitably invites second-guessing. How do you protect marketing and
ensure that it gets bottom-to-top support?
HAYES: I am fortunate to have a CEO [Kenneth I. Chenault, chairman and CEO] who has a profound understanding of the benefits
of branding and marketing. Having a CEO who’s aligned with the
things that we’re trying to get done is instrumental. Marketers need
a leader who is a champion of saying, “What these people are doing
is important and is helping the business.” And marketers need to
align key thinking and objectives with the CEO.
It is also crucial to keep senior management informed on the
initiatives and the outcomes of our marketing efforts. Because our
initiatives are so public, senior management will ultimately be the
ones to hear the feedback from customers. They need to have an
understanding of marketing in order to respond.
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Obviously, every marketing judgment is vetted at certain levels,
depending on the size of the initiative. But the drive for innovation
really starts with our CEO, who really believes in the brand, believes
that brands drive businesses, and believes that the things we’re doing
help to make the company a market mover.
American Express is an aspirational brand. In a very real sense, it’s
about self-actualization and expanding your emotional horizons and
engagement process. But what if you’re the chief marketing officer in a
less-engaging sector of financial services: What do you do if you really
don’t have much more to offer than a checking account or a mortgage
program?
HAYES: Marketing is about understanding the human condition
and recognizing that emotional and rational thinking are what drive
decisions.
What I like to say to people when we have these discussions
about the importance of emotion is, “Would you share with me
your decision-making process when you got married? Did you
research it?” No, they’ll tell you. They’ll tell you it was an emotional judgment. And people will say to me, “But in financial services,
CFOs are not emotional.” And I say to them, “Why do businesspeople stay at premium hotels? There’s got to be some emotion in
the decision.”
The last car you bought? A lot of it had to do with how you look
driving it. I’d tell that person in the retail banking business, “You
know what? You’re trying to create a multifaceted relationship with
that customer. You want their mortgage, you want their checking
account, you want their debit card, and you want their credit card
business, potentially. How are you going to get them? Are you going
to sell them all one at a time? Or are you going to create a relationship where the customer will see it as a natural progression to adopt
more of your products?”
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S+B:
To tap into that emotion, do you need a little bit of intuition and
gut?
You bet. Most financial-services functions require analysis
and deductive thinking. But in marketing, you also need synthesis.
But if that process is incompatible with the analysis and the deductive thinking, you’re going to be at war. So find a way to link them
together.
Now, there are some things you can deduce. There are results
that you need to analyze. But if you lose the inductive piece, you lose
the leap that gets you to a place where consumers say, “Wow, I
wasn’t expecting that.”
HAYES:
Here’s a paradox: With all the metrics you have, you really don’t
need to take as many risks to create a breakthrough message. But even
with all these measurement tools readily available, you’re much more
intuitive than you were 10 years ago.
HAYES: When we did the Seinfeld Webisodes, I’d come in at 7 A.M.
and start reading the blogs. There was one guy writing, “When you
go to Jerry’s apartment, the clock on the mantel actually keeps the
real time!” I remember thinking, “Wow, these people are really into
it.” But this detail really mattered to this guy. We were getting
instant feedback without ever having to ask any questions. And,
because the conversations were not directed to us, the feedback was
even better.
Getting that kind of great response means you can experiment.
Even if you break some of the rules, people are willing to go
with you as long as you’ve got a good idea. So you can create a
show like The Restaurant, featuring chef Rocco DiSpirito, in prime
time. Or you can drive people to the Internet in the middle
of a televised tennis match. It’s all starting to converge. And it’s getting to be more fun because there are so many more things you
can do.
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In the 1900s, you spoke in a monologue to your customers. Then,
with new ways to reach your audience, you evolved into a dialogue that
would better engage them. Now, in a third stage of engagement, you’re
listening to customers even more closely to learn more about them.
HAYES: The world is in the middle of an ongoing conversation. And
if you want to know what’s on people’s minds, you can go to Google
and find out which words were Googled most in the last 24 hours.
A marketer’s challenge (and job) is to enter that conversation, to be
a part of the conversation.
And when you do join in, you had better be prepared to add
value. If your attitude is, “We’re going to pound away with this
many GRPs talking about our new product,” all you’re doing is
interrupting the conversation. People don’t like that. Being in the
conversation is worth a lot, because that’s where you create relevance, that’s where you create an affinity for your products, and
that’s how you start to sell.
S+B:
The U.S. has long been the center of marketing and advertising
innovation. Will it continue to be the hub of creativity internationally?
And, whether it’s the center or not, how do you make sure that you seize
global opportunities from other markets?
HAYES: The creative hubs are starting to meld together, driven by
the speed of communications. Twenty years ago, if something interesting was happening in Sweden, you might never have learned
about it. Today, you know the next morning.
You no longer can contain marketing to one area. Everything is
getting closer together; we’re seeing innovation and creativity in
marketing come from all over — it’s happening in Japan, Korea is
really a hotbed for creativity, and Europe also. It’s all for the better,
because different cultures bring different perspectives.
Creativity and marketing are iterative. It happens in the movies
as well: Somebody starts a genre and then you see 12 more films
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in that same genre. Marketing’s no different: Everything is
derivative, but each time people try to bring their own perspective
to it.
We launched the Red Amex card in the U.K., but the whole
world instantly found out about it. We had people in the U.S. saying, “When can I get one of those?” We had people around the
world asking questions about the product.
How do you build a strong connection with younger customers
without alienating your more traditional customers?
HAYES: It all comes back to the values of the brand. The values of
this brand are proven to be universal and have been consistent since
1850. American Express stands for trust, personalized service, being
treated with respect, and recognition. These values do not change
from one generation to the next; they are as relevant today to Gen
Y as they are to baby boomers. However, we do connect with different people in different ways, and we recognize and respect that not
all of our card members have the same interests.
S+B:
Core values might not change, but the competitive set certainly
will change.
HAYES: It’s changing today. It’s changing because of changing purchasing habits, because of commerce online, because of consolidation in the banking business.
We reinvented ourselves from the Travelers Cheque to the credit card, and we will continue to reinvent ourselves to be a brand that
helps define our customers’ lifestyles. We need to make sure we have
products that each generation wants to use, and we will continue to
aggressively innovate to stay relevant.
S+B:
What first steps would you recommend a new CMO take to gain
the support of the rest of the company’s leadership?
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It’s really about collaborating across departments and communicating regularly with management. And it’s an ongoing
process, even in organizations that already have that support.
Each year, we visit 12 to 15 companies and ask them, “How are
you thinking about your brand? How are you growing it? What are
your key marketing channels? What are some of your best practices?” And we bring that information back to our organization as
part of the education process. One of the reasons this program
works so well is that people are often more open to new ideas when
you are talking about other businesses, because they don’t have the
same vested interest.
You also need to be prepared to make trade-offs. Some marketing programs have long fuses, while others demonstrate a shorterterm impact. You need to prioritize opportunities to align with the
best interests of your customers and your business goals.
What is most important, though, is having clear measurements
for all initiatives and ensuring that the organization sees the CMO
hold himself or herself accountable for all marketplace results. +
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