8 ms·

The Mastermind Behind Chase’s Sapphire Reserve Card Sets Her Sights on Banking

52 points by uptown 9y ago

hkmurakami 9y ago
What a fluff piece. Strong sign ups driven by 100,000 bonus points doesn't prove anything much regarding the card's ability to retain its users. They gloss over the actual outcomes of the bank's efforts to reduce attrition, then provide very little in the way of what they're actual going to do differently with their retail banking division.
- astura 9y ago
  Especially since, last I heard, they are still trying to figure out how to make money from the Sapphire Reserve. http://www.foxbusiness.com/features/2017/07/28/sapphire-reserve-cards-arent-very-rewarding-for-j-p-morgan.html http://www.foxbusiness.com/features/2017/07/28/sapphire-rese...
didgeoridoo 9y ago
So she’s a marketing genius for selling $2300 of rewards for $450? (100k points at around $0.02 per point [0] plus $300 of travel credit) Also, you had to go on a “listening tour” to discover that wealthy young professionals enjoy traveling and eating at restaurants? [0]: https://thepointsguy.com/2015/03/redeeming-chase-ultimate-rewards-points-for-maximum-value/ https://thepointsguy.com/2015/03/redeeming-chase-ultimate-re...
- InclinedPlane 9y ago
  The whole reason why credit cards provide benefits is because "points" cost less to them than the nominal dollar value. I'm pretty sure that Chase has done the math on that.
  - didgeoridoo 9y ago
    It’s irrelevant that it’s marginally profitable. The problem is that the article makes it sound like nobody ever thought of giving away free money before. It’s not genius marketing by any stretch of the imagination.
    - danso 9y ago
      If it was simply a matter of giving away benefits and points for free, why is it (as alleged by the OP) that Chase/JP Morgan managed to such a major encroachment into the premium market due to the Sapphire? Sure, “anyone” can brainstorm a benefits package and viral branding and yet Chase seems to have dominated this phase at the particular moment.
      - specialp 9y ago
        Because they were giving people $1500 to sign up for their card effectively. I am one of those people that signed up. I signed up for no reason other than I am getting a tremendous amount more than what I am paying for. Last December Chase announced that they lost about 2-300 million off their profits due to the generous promotion. If I taped a dollar bill to every can of Coke and sold them for 50 cents and the sales of Coke exploded, would you say I put a marketing coup on Pepsi? Chase still has extremely generous benefits even without the promo I am wondering how long it will last. As long as it does I will keep the card.
        wan23 9y ago
        > As long as it does I will keep the card. So you see value in their product and you're a satisfied customer. Is it even possible for a bank to offer anything more?
        intev 9y ago
        I think you're missing his point. He never said that the card isn't valuable, or that the rewards were not worth it. All he said was that it's not considered "genius" if you need to continuously lose money hand over fist by giving away freebies to attract people to your product. It's "genius" when you don't have to do that.
- perseusprime11 9y ago
  They beat amex at their own game. That’s a big deal.
  - bsder 9y ago
    AMEX basically shot themselves in the foot. AMEX had one of the highest renewal fees for users and one of the highest transaction fees for vendors. Consequently, they lost the ubiquity required to be a useful credit card and wound up in a downward spiral positive feedback loop.
    - prepend 9y ago
      Losing Costco was a big problem for Amex.
- mabbo 9y ago
  > So she’s a marketing genius for selling $2300 of rewards for $450? They've done the math. They know how quickly the points will be spent (slowly). They probably have a deal that when you buy something with points, they don't have to pay the company itself for say 6 months, or maybe they get a discount on the service like 15% off. They could even decrease the value of points over time. They also know that you'll renew, and they won't have to give you $2000 worth of points again. They know the probability of renewal for each customer, each year. Each time you do, the deal gets sweeter for them. That's how someone can "give you $2300 for $450" and still make money.
  - AFNobody 9y ago
    /r/Churning For some of us, taking VC/marketing money and laughing all the way to the bank is a hobby. I didn't renew my CSR or 3 other cards I had with chase. I walked away with ~$5k in benefits for ~$700. That doesn't even get into the free $$ from a bank account or the other stuff I've done in the past 12 months.
    - r00fus 9y ago
      The bet is that for each one of the /r/Churning crowd, there are many many more who are "followers" and simply get the card that their knowledgable buddy has - but less often, and only if the perk differential is dramatic. That is the market the CC companies want. You merely benefit from this by riding the crest of the wave.
    - Kihashi 9y ago
      Yeah, but there are plenty of people visiting /r/churning who are renewing the CSR (myself included) and that I think is a win for Chase. Right now, the math works out to keep putting spend on the CSR (along with Freedom and Freedom Unlimited). Granted, the math is different for everyone based on their locations, spending, and travel habits, but I think we'll see a decent number of renewals.
- patio11 9y ago
  Anecdote: she designed a program which went from 0 to "in the pockets of literally over 90% of SFBA professionals who've eaten with me in the last 12 months", in under a year, and when I ask about it every last one of them said it was their main card. You know the line from the Social Network? If it were as simple as outspending Amex, you would have outspent Amex. Middlebrow dismissal all you want; this was one of the biggest coups in consumer banking in the last 20 years. (The LTV of a premium credit card gets into the five figure region.)
  - oh_sigh 9y ago
    Yes, CSR is hot, but it did cause them to take a $300M profit hit, and their dominance will only last until the next bank offers insane handouts like chase did.
  - hueving 9y ago
    See if that's still the case after a year though. I bought for the free handout and then cancelled before the annual renewal.
- dang 9y ago
  This sort of shallow, hasty dismissal of someone else's work is just the kind of comment we're hoping to convince people to pause before posting here—and then not post. Would you please not do this in the future? It's easy to convert this kind of bad comment into a good one: instead of acting like you know someone's work better than they do, post your points as respectful questions. The odds are that a hasty internet dismissal is missing something, and even if it isn't, it damages the conversation culture to snark this way. The kind of comment we want on HN comes from reflection, not reflex.
  - megy 9y ago
    These sort of cards have been around for years, specifically AMEX has been offering these deals for a long time, with lots of points and free flights every year. I can't see what is different about this card, so I think their complaint stands. This looks like a puff piece.
    - dang 9y ago
      Perhaps you haven't yet read the excellent replies the comment received? Even when an article is a puff piece, though, that doesn't make damaging this community ok.
    - Kihashi 9y ago
      I've never seen a card like the CSR. It really only compares to the AmEx Platinum and Citi Prestige (although some other banks are now trying to compete). The AmEx plat has far too many restrictions to make it valuable to me (and, it seems, many others). The bonus category (5% on travel) is only for one particular airline. I have (almost) no airline loyalty. I will fly with whoever is cheapest (unless the prices are close). The travel credit is for airline incidentals with a single airline. Since I never check a bag or pay for things in flight, that is entirely useless to me. The Uber credit is also useless. I might be able to use the Uber credit-- if it weren't spread out over 12 months. The Centurion lounge access is only useful if you are regularly in places that have a Centurion lounge. Meanwhile, for the CSR, travel (for both the category bonus and the credit) is travel. There are very few restrictions. It offers the same Global Entry credit, the same Priority Pass membership, the same primary rental car insurance, and the same rental car benefits. It also offers things like trip delay insurance that the AmEx does not. Additionally, it offers United as a transfer partner and United still has the most flights out of my airport. If one were based out of a Delta hub, the math changes since the AmEx has delta as a transfer partner and offers Delta Lounge access. tldr: The restrictions on the AmEx make it hard to use and justify the annual fee vs a no AF card like Citi Double Cash. The CSR's lack of restrictions make it easy to get more value than the AF.
- im3w1l 9y ago
  I feel like there is a customer acquisition bubble, where companies pay $1000 to acquire $500 customers and convince investors that they are worth $2000 and use that to get ever more funding which is used for bonuses and acquiring even more customers. If that's true then the marketing genius isn't selling the card to customers. The marketing genius is selling the card to investors.
zephyrus1985 9y ago
paywall
cthalupa 9y ago
"Mastermind" - giving away a ton of points for a card that is doing it's best to be an Amex Platinum? I don't see how "copy the most successful prestige card" and "Give a huge point bonus higher in value to the consumer than the cost of the card to the consumer" is a mastermind strategy.
- cylinder 9y ago
  It seems like the most visionary idea in America these days is "just buy your customers by giving away a lot of money." Chase, Uber, Amazon all seem to enjoy it as well as many wannabe startups.
  - bloaf 9y ago
    See also: Jet.com before it got bought.
- matte_black 9y ago
  It’s anecdotal but Chase Sapphire Reserve is easily the best card I own and I have an Amex Platinum.
  - kilroy123 9y ago
    How so?
    - matte_black 9y ago
      There’s endless articles comparing the two online but to give my personal input I find quite a few of the perks Amex Platinum offers really don’t matter to me, and the reward points and travel credit for Chase Sapphire Reserve are just way better.
      - deleted 9y ago
        [deleted]
    - mter 9y ago
thisisit 9y ago
> Something that offered flexible rewards for the categories they cared about: dining and travel. So, the article's posit is that millennials care about these two things hence the card sold well. Were there no cards which covered this category? Was it only traveling and fueling which earned reward points?
Finnucane 9y ago
It may be that I am too old for this, but when I go to the bank I do not want a 'high touch' experience. I'm reasonably certain about that. No matter how 'interactive' it is. I'd really prefer a 'no touch' experience. One where I settle for old school 'talking to the guy at the bank.'
- foota 9y ago
  High touch means talking to people.
  - Finnucane 9y ago
    Yeah, I get that. But she couldn’t just say that, could she? She had to have some dumbass business jargon.
- ryanobjc 9y ago
  Too old for this == I prefer to use ATMs only? Because human interaction == high touch. Especially if you only want to talk to a man at the bank! That's extra high touch!
ddaygold 9y ago
There was an interesting story going around the desk December 2016. The head trader was laughing and shaking his head about [1], JP's $200MM write down on the card. He then turned to the younger (millenial-aged) traders to ask if they had it. They all did. Perhaps JP is taking a calculated risk? Perhaps they created a $200 buck giveaway? I don't know much about consumer lending, but it seems like somebody convinced a management comittee that it's a money maker. What's the play? Gradually reduce benefits and hope that switching friction leaves enough people on the card to make it up in fees? Is it just a straight forward transfer from merchant fees to card holders? Is it driven by wealth disparity: the higher income people likely to be enticed by the card are such a large proportion of the money flow (and therefore fees) that they are a critical target? Is it millennial hysteria? [1] https://www.bloomberg.com/news/articles/2016-12-06/dimon-says-new-card-cuts-profit-by-up-to-300-million-in-quarter https://www.bloomberg.com/news/articles/2016-12-06/dimon-say...
- snowwrestler 9y ago
  Cross marketing with the data they collect, perhaps.
- bonestamp2 9y ago
  I think it's a lot of these things. The other thing not mentioned is "Status". When you hand over that metal card you feel special, sometimes the person receiving the card comments on its weight or its thickness. If not consciously, at least subconsciously this is a card that rewards your pleasure centers when you use it. There's no doubt I use it more than any of my other cards. My guess is they're crushing it on fees and giving ~40% of those earned fees back to the cardholder as benefits.
  - pricetag 9y ago
    How often do you get people commenting on the weight of the card and where do you live? I have the Amex platinum and the CSR and honestly I was concerned that they’d draw too much attention. They haven’t, and I’m happy about that. I suspect it’s because I’m in the bay area and both of those cards are common out here.
mter 9y ago
I'm not sure if it's just the people I work with, or if chase has a problem because credit card ownership has changed. I don't use credit cards in the same way as parents where I'd have 1 card then make all of my charges on it. For example: instead of making the csr my only card, I have the amazon card for 5% back on a.com. I have the csr for 3% on restaurants/travel which covers lunch/dinner + traveling and the 2.5% usaa card for everything else. Online bill payment and auto debit has really made it less annoying to have multiple cards. The bad part right now for these cards is that if they slash their rewards, they'll just lose all of their customers because we have no real loyalty to them.
- 8ytecoder 9y ago
  With mobile wallets this will get even easier. I keep my brand specific cards in Apple Pay and don't even carry it anymore.

52 points by uptown 9y ago

What a fluff piece. Strong sign ups driven by 100,000 bonus points doesn't prove anything much regarding the card's ability to retain its users. They gloss over the actual outcomes of the bank's efforts to reduce attrition, then provide very little in the way of what they're actual going to do differently with their retail banking division.

astura 9y ago
Especially since, last I heard, they are still trying to figure out how to make money from the Sapphire Reserve. http://www.foxbusiness.com/features/2017/07/28/sapphire-reserve-cards-arent-very-rewarding-for-j-p-morgan.html http://www.foxbusiness.com/features/2017/07/28/sapphire-rese...

didgeoridoo 9y ago

So she’s a marketing genius for selling $2300 of rewards for $450? (100k points at around $0.02 per point [0] plus $300 of travel credit) Also, you had to go on a “listening tour” to discover that wealthy young professionals enjoy traveling and eating at restaurants? [0]: https://thepointsguy.com/2015/03/redeeming-chase-ultimate-rewards-points-for-maximum-value/ https://thepointsguy.com/2015/03/redeeming-chase-ultimate-re...

InclinedPlane 9y ago
The whole reason why credit cards provide benefits is because "points" cost less to them than the nominal dollar value. I'm pretty sure that Chase has done the math on that.
- didgeoridoo 9y ago
  It’s irrelevant that it’s marginally profitable. The problem is that the article makes it sound like nobody ever thought of giving away free money before. It’s not genius marketing by any stretch of the imagination.
  - danso 9y ago
    If it was simply a matter of giving away benefits and points for free, why is it (as alleged by the OP) that Chase/JP Morgan managed to such a major encroachment into the premium market due to the Sapphire? Sure, “anyone” can brainstorm a benefits package and viral branding and yet Chase seems to have dominated this phase at the particular moment.
    - specialp 9y ago
      Because they were giving people $1500 to sign up for their card effectively. I am one of those people that signed up. I signed up for no reason other than I am getting a tremendous amount more than what I am paying for. Last December Chase announced that they lost about 2-300 million off their profits due to the generous promotion. If I taped a dollar bill to every can of Coke and sold them for 50 cents and the sales of Coke exploded, would you say I put a marketing coup on Pepsi? Chase still has extremely generous benefits even without the promo I am wondering how long it will last. As long as it does I will keep the card.
      - wan23 9y ago
        > As long as it does I will keep the card. So you see value in their product and you're a satisfied customer. Is it even possible for a bank to offer anything more?
        intev 9y ago
        I think you're missing his point. He never said that the card isn't valuable, or that the rewards were not worth it. All he said was that it's not considered "genius" if you need to continuously lose money hand over fist by giving away freebies to attract people to your product. It's "genius" when you don't have to do that.
perseusprime11 9y ago
They beat amex at their own game. That’s a big deal.
- bsder 9y ago
  AMEX basically shot themselves in the foot. AMEX had one of the highest renewal fees for users and one of the highest transaction fees for vendors. Consequently, they lost the ubiquity required to be a useful credit card and wound up in a downward spiral positive feedback loop.
  - prepend 9y ago
    Losing Costco was a big problem for Amex.
mabbo 9y ago
> So she’s a marketing genius for selling $2300 of rewards for $450? They've done the math. They know how quickly the points will be spent (slowly). They probably have a deal that when you buy something with points, they don't have to pay the company itself for say 6 months, or maybe they get a discount on the service like 15% off. They could even decrease the value of points over time. They also know that you'll renew, and they won't have to give you $2000 worth of points again. They know the probability of renewal for each customer, each year. Each time you do, the deal gets sweeter for them. That's how someone can "give you $2300 for $450" and still make money.
- AFNobody 9y ago
  /r/Churning For some of us, taking VC/marketing money and laughing all the way to the bank is a hobby. I didn't renew my CSR or 3 other cards I had with chase. I walked away with ~$5k in benefits for ~$700. That doesn't even get into the free $$ from a bank account or the other stuff I've done in the past 12 months.
  - r00fus 9y ago
    The bet is that for each one of the /r/Churning crowd, there are many many more who are "followers" and simply get the card that their knowledgable buddy has - but less often, and only if the perk differential is dramatic. That is the market the CC companies want. You merely benefit from this by riding the crest of the wave.
  - Kihashi 9y ago
    Yeah, but there are plenty of people visiting /r/churning who are renewing the CSR (myself included) and that I think is a win for Chase. Right now, the math works out to keep putting spend on the CSR (along with Freedom and Freedom Unlimited). Granted, the math is different for everyone based on their locations, spending, and travel habits, but I think we'll see a decent number of renewals.
patio11 9y ago
Anecdote: she designed a program which went from 0 to "in the pockets of literally over 90% of SFBA professionals who've eaten with me in the last 12 months", in under a year, and when I ask about it every last one of them said it was their main card. You know the line from the Social Network? If it were as simple as outspending Amex, you would have outspent Amex. Middlebrow dismissal all you want; this was one of the biggest coups in consumer banking in the last 20 years. (The LTV of a premium credit card gets into the five figure region.)
- oh_sigh 9y ago
  Yes, CSR is hot, but it did cause them to take a $300M profit hit, and their dominance will only last until the next bank offers insane handouts like chase did.
- hueving 9y ago
  See if that's still the case after a year though. I bought for the free handout and then cancelled before the annual renewal.
dang 9y ago
This sort of shallow, hasty dismissal of someone else's work is just the kind of comment we're hoping to convince people to pause before posting here—and then not post. Would you please not do this in the future? It's easy to convert this kind of bad comment into a good one: instead of acting like you know someone's work better than they do, post your points as respectful questions. The odds are that a hasty internet dismissal is missing something, and even if it isn't, it damages the conversation culture to snark this way. The kind of comment we want on HN comes from reflection, not reflex.
- megy 9y ago
  These sort of cards have been around for years, specifically AMEX has been offering these deals for a long time, with lots of points and free flights every year. I can't see what is different about this card, so I think their complaint stands. This looks like a puff piece.
  - dang 9y ago
    Perhaps you haven't yet read the excellent replies the comment received? Even when an article is a puff piece, though, that doesn't make damaging this community ok.
  - Kihashi 9y ago
    I've never seen a card like the CSR. It really only compares to the AmEx Platinum and Citi Prestige (although some other banks are now trying to compete). The AmEx plat has far too many restrictions to make it valuable to me (and, it seems, many others). The bonus category (5% on travel) is only for one particular airline. I have (almost) no airline loyalty. I will fly with whoever is cheapest (unless the prices are close). The travel credit is for airline incidentals with a single airline. Since I never check a bag or pay for things in flight, that is entirely useless to me. The Uber credit is also useless. I might be able to use the Uber credit-- if it weren't spread out over 12 months. The Centurion lounge access is only useful if you are regularly in places that have a Centurion lounge. Meanwhile, for the CSR, travel (for both the category bonus and the credit) is travel. There are very few restrictions. It offers the same Global Entry credit, the same Priority Pass membership, the same primary rental car insurance, and the same rental car benefits. It also offers things like trip delay insurance that the AmEx does not. Additionally, it offers United as a transfer partner and United still has the most flights out of my airport. If one were based out of a Delta hub, the math changes since the AmEx has delta as a transfer partner and offers Delta Lounge access. tldr: The restrictions on the AmEx make it hard to use and justify the annual fee vs a no AF card like Citi Double Cash. The CSR's lack of restrictions make it easy to get more value than the AF.
im3w1l 9y ago
I feel like there is a customer acquisition bubble, where companies pay $1000 to acquire $500 customers and convince investors that they are worth $2000 and use that to get ever more funding which is used for bonuses and acquiring even more customers. If that's true then the marketing genius isn't selling the card to customers. The marketing genius is selling the card to investors.

zephyrus1985 9y ago

paywall

cthalupa 9y ago

"Mastermind" - giving away a ton of points for a card that is doing it's best to be an Amex Platinum? I don't see how "copy the most successful prestige card" and "Give a huge point bonus higher in value to the consumer than the cost of the card to the consumer" is a mastermind strategy.

cylinder 9y ago
It seems like the most visionary idea in America these days is "just buy your customers by giving away a lot of money." Chase, Uber, Amazon all seem to enjoy it as well as many wannabe startups.
- bloaf 9y ago
  See also: Jet.com before it got bought.
matte_black 9y ago
It’s anecdotal but Chase Sapphire Reserve is easily the best card I own and I have an Amex Platinum.
- kilroy123 9y ago
  How so?
  - matte_black 9y ago
    There’s endless articles comparing the two online but to give my personal input I find quite a few of the perks Amex Platinum offers really don’t matter to me, and the reward points and travel credit for Chase Sapphire Reserve are just way better.
    - deleted 9y ago
      [deleted]
  - mter 9y ago

thisisit 9y ago

> Something that offered flexible rewards for the categories they cared about: dining and travel. So, the article's posit is that millennials care about these two things hence the card sold well. Were there no cards which covered this category? Was it only traveling and fueling which earned reward points?

Finnucane 9y ago

It may be that I am too old for this, but when I go to the bank I do not want a 'high touch' experience. I'm reasonably certain about that. No matter how 'interactive' it is. I'd really prefer a 'no touch' experience. One where I settle for old school 'talking to the guy at the bank.'

foota 9y ago
High touch means talking to people.
- Finnucane 9y ago
  Yeah, I get that. But she couldn’t just say that, could she? She had to have some dumbass business jargon.
ryanobjc 9y ago
Too old for this == I prefer to use ATMs only? Because human interaction == high touch. Especially if you only want to talk to a man at the bank! That's extra high touch!

ddaygold 9y ago

There was an interesting story going around the desk December 2016. The head trader was laughing and shaking his head about [1], JP's $200MM write down on the card. He then turned to the younger (millenial-aged) traders to ask if they had it. They all did. Perhaps JP is taking a calculated risk? Perhaps they created a $200 buck giveaway? I don't know much about consumer lending, but it seems like somebody convinced a management comittee that it's a money maker. What's the play? Gradually reduce benefits and hope that switching friction leaves enough people on the card to make it up in fees? Is it just a straight forward transfer from merchant fees to card holders? Is it driven by wealth disparity: the higher income people likely to be enticed by the card are such a large proportion of the money flow (and therefore fees) that they are a critical target? Is it millennial hysteria? [1] https://www.bloomberg.com/news/articles/2016-12-06/dimon-says-new-card-cuts-profit-by-up-to-300-million-in-quarter https://www.bloomberg.com/news/articles/2016-12-06/dimon-say...

snowwrestler 9y ago
Cross marketing with the data they collect, perhaps.
bonestamp2 9y ago
I think it's a lot of these things. The other thing not mentioned is "Status". When you hand over that metal card you feel special, sometimes the person receiving the card comments on its weight or its thickness. If not consciously, at least subconsciously this is a card that rewards your pleasure centers when you use it. There's no doubt I use it more than any of my other cards. My guess is they're crushing it on fees and giving ~40% of those earned fees back to the cardholder as benefits.
- pricetag 9y ago
  How often do you get people commenting on the weight of the card and where do you live? I have the Amex platinum and the CSR and honestly I was concerned that they’d draw too much attention. They haven’t, and I’m happy about that. I suspect it’s because I’m in the bay area and both of those cards are common out here.

mter 9y ago

I'm not sure if it's just the people I work with, or if chase has a problem because credit card ownership has changed. I don't use credit cards in the same way as parents where I'd have 1 card then make all of my charges on it. For example: instead of making the csr my only card, I have the amazon card for 5% back on a.com. I have the csr for 3% on restaurants/travel which covers lunch/dinner + traveling and the 2.5% usaa card for everything else. Online bill payment and auto debit has really made it less annoying to have multiple cards. The bad part right now for these cards is that if they slash their rewards, they'll just lose all of their customers because we have no real loyalty to them.

8ytecoder 9y ago
With mobile wallets this will get even easier. I keep my brand specific cards in Apple Pay and don't even carry it anymore.