When it comes to card sourcing, referral programmes are some of the best ways to source new cardmembers. After all, what is better for cardmembers to receive a referral from an existing cardmember who has used the product and can vouch for it? However, since the pandemic and the explosion of social media, a few folks have exploited the American Express “Member Get Member” Referral programme by adding inducements such as vouchers to get people to sign up via their American Express membership links.

American Express rejigs referral programme to close loopholes.

One of the other consequences of the referral programme being so generous was that customers were signing up for some of the American Express cards using referrals of other members and then using these for approximately 11 months, and then cancelling these cards, applying for new ones under the free scheme after the cool-off period would be over, a practice normally known as churning.

There is no way to get ahead of Indian Jugaad Mentality, but, of course, American Express was losing money on this exploitative customer base and decided to do something about it. After all, American Express plays in the premium card segment in India, and the eventual hope is that a card member will like the value they offer and stay for good. All the free card offers were made in good faith, with this being the baseline expectation in return.

Now, American Express has changed its referral programme for new signups.

The following changes have been made to the referral offerings:

• American Express Gold Card: First Year Annual Fee of INR 1,000 + GST
• American Express Membership Rewards Credit Card: The first-year fee on this card used to be nil; however, it is now set to INR 1,000 + GST. You also get 6,000 bonus MR Points on paying the annual fee in the first year and a minimum spend of INR 10,000 during the first 90 days. The bonus is now 5,500 points more than the earlier version.
• American Express Platinum Travel Credit Card: The first-year fee on this card used to be nil; however, it is now set to INR 3,500 + GST. You also get 12,000 bonus MR Points on paying the annual fee in the first year and a minimum spend of INR 10,000 during the first 90 days. The bonus is now 11,500 points more than the earlier version.
• American Express Platinum Reserve Credit Card: The first-year fee on this card used to be INR 5,000 + GST; however, it is now set to INR 10,000 + GST. You also get 15,000 bonus MR Points on paying the annual fee in the first year and a minimum spend of INR 25,000 during the first 90 days.

I find this fair and refreshing. Customers can pay the fee with more points in exchange for their first-year fee. Unfortunately, this also means that people who were earlier used to the genuine “try and buy” approach that only American Express used to offer will also not be able to sign up for an Amex Card anymore without having to pay the fee.

Bottomline

American Express has amended its Member-Get-Member programme to eliminate churning practices and, hopefully, target customers who want to pay for their products rather than get them for free. Fortunately, for severe customers, there are also a lot more points on offer, subject to minimum spending being achieved.

What do you make of the changes to the American Express Member Get Member Programme?

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