The Hindu Business Line : Invitation card

The Amex Platinum card provides free access to the top golf clubs of Delhi, Mumbai and Bangalore for non-members, who can enjoy the facilities of the prestigious clubs.

The last thing you'd expect your credit card company to do is deliver a hot and sour soup to your son in Cambridge (just to let him know that you care, especially when he's down with the flu), or flowers to your new business contact in Beijing, but the people who manage the American Express Platinum Card take such demands in their stride.

A holder of this exclusive, by-invitation-only card, which comes with a Rs 50,000 annual membership fee, even asked them to organise social meetings with Julia Roberts and Kate Winslet on his honeymoon. And they did it, but the Platinum Card holder finally decided to route the requests through charities so that they could earn the interview fees charged by the divas.

On a much less ambitious scale, a Platinum Card holder asked the company to have a perfume, which had just been unveiled at an Orchard Road store, delivered to a friend transiting through Singapore's Changi Airport. Another cardholder found to his dismay, after landing in Delhi, that the laptop bag he'd bought in London wasn't big enough for his computer. He called the American Express number and got the replacement.

"What we pay as membership fee is much less than the value proposition they have to offer," says Dr Jai Kishen, who has been an American Express loyalist since the time he returned to Chennai from Harvard Business School 15 years ago (those were the days of the green card, he reminds you).

Recently, the medical doctor who heads the healthcare business division of a leading American IT company, asked American Express to deliver orchids, which grow only in a particular plot of land in Amsterdam in November and December, to his niece in Mumbai who had just turned 18. The orchids cost Rs 4,000, but what was more important to Dr Jai Kishen was that the job got done. Not surprisingly, when his son, a budding biotechnologist, turned 18, he wanted only one gift. A Platinum Card.

Delhi-based fashion designer Madhu Jain, though, has a different story. She opted to revert to the gold card because she wasn't getting her money's worth. "I appreciated the complimentary bottle of wine that used to be opened whenever I went out for a meal," she says. "It was a good gesture, but I don't drink wine, nor do my friends. The returns on my membership fee were just not enough."

Dr Jai Kishen, who graduated to the Platinum Card when it was first introduced five years ago, says it's indispensable for the frequent traveller. Because a Platinum Card membership comes with benefits that cannot be pegged to a price. "They deliver what they promise," he says.

The doctor cannot forget the day he was woken up in London, from where he was scheduled to take a Paris flight for an important business meeting, by a call from American Express. The card company informed him that the air traffic controllers in France had announced they were going on a strike, so if he didn't leave within an hour, he would have to cancel his Paris meeting. He acted immediately and was able to board the last flight to Paris before the strike began. He didn't have to bother about the ticket. He is a Platinum Card holder, after all.

For a jet-setting professional who travels first class at least 15 times a year, including four times with family, all this matters. It makes a difference, for instance, when you're received in Cairo by a man who takes care of your immigration formalities. When you're in Egypt on a holiday with your family, you can't attach a monetary value to this gesture, because airport officials can barely speak or understand English. Dr Jai Kishen has many stories to tell about how his card membership rescued him from prickly situations in places like Italy and South Africa. And he's quite happy to report that he's had "six lovely overseas family vacations with Amex".

A demand for every occasion

The kind of demands people have can be mind-boggling, but American Express has put in place a worldwide 24x7 `concierge service' so that it never has to say `no'. "If you're in real trouble and there's only one number that you can dial, you'll be better off calling Platinum Card," says K.L. Muralidhara, Vice-President and Country Manager, India and Area Countries, American Express Travel Related Services.

There's a method to this desire to pamper. As he points out, the consuming class is earning more and spending more as well. Their "rising level of spendability," he says, is dovetailing into the phenomenal growth in the avenues for spending.

He thinks that the exponential growth of malls will spur spending habits. As the consuming class spends more, and more vendors start accepting credit cards, consumer confidence in plastic is bound to grow. The number of credit cards (as opposed to debit cards) in circulation in India is estimated to be 15 million. Euromonitor figures indicate that the number of cards (both credit and debit) in circulation increased 49 per cent in 2003 over 2002; the value of financial card transactions, meanwhile, grew at a whopping 95 per cent in the same period.

This trend prompted the number crunchers to predict a compound annual growth rate of 51 per cent for the sector in 2003-2008. Though this growth will be powered mainly by debit cards, the expanding population of users of plastic money will create the future customers for upper-end products like the Platinum Card, as card users climb up the value chain and trade up.

"Consumers in India were not only more open to the possibility of owning a financial card but were also not averse to using their cards as a payment mode," the Euromonitor report states. "The fact that financial cards are still perceived as a status symbol in India also serves as a contributing factor to the healthy performance registered by financial cards." Of course, India has a long way to go, because Indians, by global standards, are still conservative about living in debt.

A recent MasterCard International survey found that 73 per cent of Indian cardholders spend less than $35 a month; 72 per cent use a card just once or twice a month; 25 per cent are in the $35-300 bracket and 23 per cent use a card 3-6 times a month; a minuscule 2 per cent spend above $300 and 5 per cent use a card more than six times a month.

Defining the `very rich'

The National Council for Applied Economic Research (NCAER) pegs the number of `very rich' individuals at 33 million, which is the population of Argentina, in 2000. A major limitation of the NCAER data, though, is that they don't take into account black money, which considerably adds to the splurging power of the consuming class, or the existing wealth of the individuals it surveys.

Nonetheless, in the absence of any other reliable figures on consumer demographics, Muralidhara follows NCAER's Market Information Survey of Households (MISH) data to figure out the concentration of consumers he'd wish to target. His target clientele is clustered mainly in seven cities, which form the footprint of the Platinum Cards. "Beyond these cities, the Pareto curve kicks in," he says.

These "high-value, high-spend" customers, whose spending capacity is three to four times higher than the national average, also have business networks overseas, which means they're outward bound more often.

From the perspective of credit card companies, what is significant is that when these individuals travel abroad, they are increasingly combining business with pleasure. It is happening only because Indians are getting comfortable with their Indianness and are less intimidated about going beyond traditional favourite destinations. More importantly, they are going out and meeting people on an equal footing.

Not only that, the consuming class is travelling purely for pleasure more often. "Foreign travel is no big deal. They are taking three or four short holidays as opposed to one long holiday, which used to be the case in the past," he explains. "As a result, we're seeing a whole bunch of new spends. People are buying experiences. They're investing on themselves."

Muralidhara's anecdotal observations are in sync with KSA Technopak data, which show that between 1999 and 2002, the consuming class was overcome by the urge to splurge, spending substantially more on clothes, footwear and furnishings, movies and entertainment, vacations and eating out.

These three spending heads account for 38.6 per cent of the annual income of consuming class households, even as the percentage of money set apart for savings and investments has dipped from 12.1 per cent to 5.2 per cent.

Standing out in the clutter

But when there's a jungle of cards out there — at the last count, 42 banks had issued cards and Visa International reported a 42 per cent growth in the number of cards it issued in the 12-month period ending June 2005 (of the 30 million cards issued, 9 million were credit cards) — you need a serious product differentiator, especially for the affluent segment. The Platinum Card, with its single-minded emphasis on "pure experience and customer experience," has been able to achieve exactly that.

Says Muralidhara: "Our customer segment values attention exclusivity and service. They know what to get out of what they spend." The typical Platinum Card member has the ability to spend, but is looking for convenience and peace of mind while making both planned and impulsive spends.

To make this high-spending market feel special, the Platinum Card is driven by a "unique business model" — it has no pre-set spending limits, it allows emergency cash access, its interest rates are low and its offerings include an array of deals: from medical and legal translations services during emergencies to a joint promotion with Indian Airlines that assures a saving of Rs 10,000 for every business class ticket bought on a Platinum Card, to free access to the top golf clubs of Delhi, Mumbai and Bangalore (for non-members, this means enjoying the facilities of prestigious golf clubs, without paying a whopping entry fee).

For big spenders, the membership rewards range from an Elantra (the first winner got it with a bottle of champagne) to a cruise to the Antarctic, or a zero-gravity flight followed by a dinner with a cosmonaut or an astronaut, or even the Great African Savannah Safari. "The emotional affinity and experience will far outweigh the economic rationale of possessing this card," says Muralidhara.

But the catch is that you can't just ask for it. You have to be invited to own it, and the criteria are a combination of eligibility factors including income, spend and credit behaviour.

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