How Chase Sapphire Made Credit Cool for Millennials

The Chase Sapphire Reserve credit card was one of the hottest product launches in 2016, enthusiastically received by millennial consumers, a group that had previously eluded JPMorgan Chase and its competitors. Shelle Santana discusses how protagonists Pam Codispoti and Eileen Serra shifted their focus to retaining customers attracted by the one-time signup bonus of 100,000 reward points and on acquiring new customers now that the bonus had been reduced.

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Brian Kenny: According to marketing firm HubSpot, millennials, that's the generation of people born between 1980 and 2000, are excessively brand aware. In fact, 62 percent of them tend to stick with one brand compared to 54 percent of the population at large. These brand loyalists feel a sense of belonging and even a shared consciousness with others loyal to the brand. If it sounds cult-like, all the better from the brands' perspective. Harley Davidson, Trader Joe's, Apple, they've all achieved cult status with legions of devoted, some might even say fanatical, followers. There are lesser-known brands. Dollar Shave Club, La Croix, Moleskin, that have tapped the same fervor. Customers of cult brands want others to know of their association because it makes them look smart or hip or healthy. Achieving cult brand status is the “holy grail” for consumer marketers. So should a credit card brand even dare to dream? Today, we'll hear from Professor Shelle Santana about her case entitled, “Chase Sapphire: Creating a Millennial Cult Brand.” I'm your host, Brian Kenny, and you're listening to Cold Call.

Shelle Santana is an expert in consumer behavior, particularly in relation to spending and credit. Before embarking on her academic career, she was a marketing executive at American Express. Thanks for joining us today.

Santana: It's nice to be here. Thanks for having me.

Kenny: Full disclosure, for our listeners, I am holding up my very own Chase Sapphire credit card. You're my witness.

Santana: Yes, you are. It's beautiful.

Kenny: Thank you. And that's part of what we're going to talk about today is the appeal of the physical card itself. I think about it both as a consumer and as a user of the product, but also it gave me a much more interesting look inside the development of a credit card brand, which I had never really given a lot of thought to. Tell us who is the protagonist, or in this case the protagonists, and what's on their mind?

"It was unprecedented in the market and the entire market froze when this offer came out"

Santana: There are two protagonists in the case. Pam Codispoti, who is actually an HBS alum, is president of Chase branded cards, and Eileen Serra, who is the senior advisor to Jamie Dimon, the CEO of JP Morgan Chase. She is also the former CEO of Chase Card Services. The case begins in July 2017 and they are reflecting back on the prior year after the launch of the Chase Sapphire Reserve card. In August of 2016, they launched this card. It was targeted at millennials. It had an astonishing 100,000-points offer in terms of new cardholders...

Kenny: That's a lot of points.

Santana: It was unprecedented in the market and the entire market froze when this offer came out. They actually reached their full year acquisition target within the first two weeks of the card being available. They ran out of the special metal alloy that makes the card feel so special. It's got a piece of metal between the two pieces of molded plastic so it's got a little bit of heft to it. They ran out of that.

Millennials were posting YouTube videos of themselves unboxing this credit card that they received in the mail. It really just created such a frenzy in the marketplace that is unheard of with credit cards in general, but credit cards amongst millennials was something that was truly, truly unprecedented.

Kenny: Yes, and we're going to talk more about millennials. They come up all the time in this podcast. I have three of my own at home, so I can relate to millennials somewhat. I would assume that maybe part of what drove you to write this case is your experience in this industry, but how did you hear about it and what made you pursue it?

Santana: As you noted, I used to work for American Express. So credit cards and the credit card industry is just inherently interesting to me. To see this new product take the market by storm was just fascinating. The second thing was that it truly was across all products. It was one of the hottest product launches in 2016, and again, it's a boring credit card [but] it's one of the hottest products of the year. There was a cover story on Bloomberg BusinessWeek about how this card was the must have product for millennials who were not big credit card users historically. So to even bring millennials into the franchise and to bring them in with such passion and devotion was an amazing, amazing accomplishment to me. I really wanted to really get into how this all came about and how these women really built this franchise.

Kenny: JP Morgan's a huge financial services company. How important is the credit card piece of that portfolio?

Santana: The credit card business, historically, was pretty small at Chase. What they're probably best known for is their investment banking business. The credit card is part of the community and consumer banking business, which includes their 5,200 retail branches that you see when you're walking down the street. Historically, their credit cards had been very fragmented. There were a lot of co-brands in the portfolio. What Jamie Dimon and Gordon Smith and Pam and Eileen came up with is a strategy to have a proprietary branded presence in this marketplace. They wanted something that said Chase that lived up to the overall JP Morgan Chase brand and really resonates with consumers in a consumer way. So this was part of a much larger strategy. This is part of what I love about the story. It's not just about a credit card, it's not just about a product launch, but it's about creating a brand and what is the strategy behind creating a brand and really making a branded presence in the marketplace.

Kenny: Who else sits in this landscape of major credit cards?

Santana: In terms of the issuers, there are six major issuers in the credit card space. They include American Express, JP Morgan Chase, Bank of America, Citi Group, Capital One, and Discover. These six issuers account for about 80 percent of all credit card sales. The luxury credit card market, was historically dominated by American Express. That was a domain, a segment that AMEX had really fenced off for itself. They were the only ones who were offering a credit card specifically targeted for the traveler, affluent, high credit score, high earning, high spending type of customer. The rest of the issuers were really playing in the much larger space of mass credit cards.

Around the mid-2000s, Citi and JP Morgan Chase in particular made a concerted effort to move up-market into the more premium space. That's when really this competition at the high end of the market began to intensify.

Kenny: One of the things I thought about as I read this case was are credit cards passé already? Is mobile wallet going to take over this space? But the statistics that you provide in the case would seem to indicate otherwise.

Santana: I also have a case on Apple Pay. Mobile wallets, although they're large and growing, they're still a very small part of the overall market here in the US, which is interesting in and of itself. But it is growing exponentially. It's something that credit card issuers really do worry about. But there are two types of digital payments that concern credit card issuers and for slightly different reasons.

One is if you think about your desktop ... where you put your credit card [number] in, and they refer to it as set it and forget it. The importance of being the top of wallet in that particular environment is so vital because people don't tend to revisit it. Then there's the other [environment] that's more of the mobile wallet: the digital pay, the Apple Pay, et cetera, where the image of the card comes up when you're making your payment. So that branded experience is still really important, but credit card companies spend an enormous amount of money on just the physical look and feel of the card. The color of the card and the weight of the card, et cetera. That's very difficult to have that transfer into a digital environment. So it is something that they definitely have an eye on.

Kenny: In this case, they clearly spent a lot of time and attention on both aspects of the Chase Sapphire card.

How to get that kind of multi-sensory experience into a digital environment, I think is a real challenge.

Kenny: Let's talk a little bit about how they segmented the market as they thought about who they were going to go after. They landed on millennials, I guess thinking if we target millennials we're not competing head-to-head with American Express, because they're not using that card.

Santana: Chase would say that it's not just for millennials, it's also for the millennial-minded.

Kenny: Ah, there we go. I like that. I've been a member of American Express, too, for many, many years. I do remember when I got that card, thinking, "This is kind of cool. I feel like I've arrived." You allude to that in the case.

Santana: They really are targeting somewhat different audiences. There's certainly some overlap, but one of the things that Chase will say is we're not trying to replicate or displace American Express. The things that American Express is good at, they're very, very good at, and it would take a long time and a lot of money for us to try and replicate that. But there are certain things that we're very, very good at, and that we can pivot and really put our stake in the ground with respect to the credit card market and these really attractive customers.

So while they're both targeting high spending, good credit score type people and heavy travelers, the type of travelers, the type of benefits, the type of perks, are very different across the two cards. You can really see how that plays out. One of the classic examples is there's what they call point accelerators where you get more than one point per dollar spent in certain categories of spending. That's very common in credit cards. In American Express, one of the big categories is groceries. You get double points for groceries. Millennials do not shop at grocery stores the way people in my age bracket shop at grocery stores.

Kenny: Or mine.

Santana: It's much more about GrubHub, et cetera. So being able to define dining in a more flexible way, to be able to define travel in a more flexible way, travel is not just an airline ticket or a train ticket. It could be an Uber. It could be a Lyft. It could be anything that you want it to be. So trying to really be flexible and open minded and design a card that really is from the bottom up about this millennial lifestyle, I think was central to the success of the reserve credit card.

Kenny: You mentioned earlier that millennials aren't that comfortable with the notion of credit. Can you talk a little bit more about that?

"The person who's attracted to a cashback card is a very different profile of consumer than a person who's going to go for more of proprietary points reward card."

Santana: This is a segment of consumers who really grew up in the shadow of the great recession and when credit was really crippling a lot of people in the United States. So in the wake of that, a lot of millennials grew up using debit cards as opposed to credit cards in order to avoid getting in over their heads. There really wasn't a compelling product out there specifically for them. Chase, to their credit, recognized that there is this segment of consumers that's high spending. They travel, they're adventurous, and we think we can put a product together that's a credit product, not a debit product, [for which] they would be willing to take a chance on us...

Kenny: And they were right. Apparently rewards programs really do work.

Santana: Imagine that.

Kenny: I mean, in the industry, I don't even know how long rewards programs have been around. I never really thought that much about it, but they give an awful lot of thought to not just the program, but how they're going to break it out and how they're going to target people based on the rewards that they offer.

Santana: Rewards are incredibly, incredibly important in the credit card industry. If you think about rewards broadly, that could be something like cash-back products or it could be what the industry would call proprietary currency products, whether it's points or miles or something like that. So when you take those two broad groups together, that is one of the primary factors that consumers look at when they're trying to select a credit card. That said, the person who's attracted to a cashback card is a very different profile of consumer than a person who's going to go for more of proprietary points reward card.

Kenny: And you mention, I think the term that you use in the case is churners. That's an industry term, for people who are really good at flipping from one card to the next?

Santana: There's this inherent risk in that you put out a really rich offer, like 100,000 points, and a lot of these acquisition offers are fairly standard. You get X amount of points if you spend Y amount of dollars in a particular period of time. The intention is to get people to use their card quickly. Then that becomes habitual and then it just becomes part of your daily routine. The risk is that people will recognize that they can spend up to the exact amount, collect their reward, and then put their credit card in the drawer. So then what happens is when you have these really rich offers like Chase put out 100,000 points, they front loaded a lot of the expense for this product. So in order for that investment to pay back, you need customers to stay longer than the time required in order to earn the reward.

That's the tricky balance in trying to determine how we make this portfolio profitable in the long run, which is one of the primary questions that's on the table for the protagonists in the case.

Kenny: The other question that surfaces in the case is how do you follow that up?

Santana: One of the things that is a defining characteristic of the Reserve card was this 100,000 point offer. It just took the entire industry by storm, like I said. But it was an introductory offer. Then the offer would drop down to 50,000 points, which was planned. The second thing was once you earned those points, that was a one-time opportunity. So a year later, those 100,000 points could easily cover the annual fee for their credit card, which was $450. A year later, that annual fee is going to start popping up on their credit card statements going forward.

Kenny: That's not a small fee.

Santana: That's not a small fee. So now one of the other questions on the table for Pam and Eileen is, does this product stand up on its own in the absence of this mind blowing new customer acquisition offer? The truth is that it really does. Even when you take that away or you strip that down to 50,000 points, it actually gave them the room to talk about all the other features and benefits on this card that are really great and truly targeted at their design target, the millennial traveling consumer.

Kenny: You hear about Harley Davidson people tattooing the brand on their arm and that kind of thing. I was amazed at some of the case exhibits of things people were doing with their credit card.

Santana: One of my favorite stories was the woman who was initially declined as a customer for Chase and she dressed up as a Chase Sapphire card for Halloween in this social media-fueled attempt to get their attention so that they would approve her for the card.

Kenny: Did she get one?

Santana: I don't know. That's a great question.

Kenny: You've discussed this in class with MBA students. Have you also done it with executives? I'm curious to see if the millennials come at it differently than the older folks.

"One of the big lessons from this case is Chase really took the time to understand the lifestyle of their target audience, which is millennials"

Santana: Not yet, it's a brand new case. We did discuss it with the MBAs and they loved it. There was so much energy and enthusiasm in the class and we had the good fortune of having Pam and Eileen in the classroom with us. They did a terrific job talking through really honestly, here are the challenges, here are the pros and cons, the economics of this business are such that we're in this for the long run and we book this acquisition cost in the short run and then we need to recover in the long run. So we need to make sure that we have a compelling offer, a compelling reason for you take your card out and use this card over any other card in your wallet each and every time you have the opportunity to purchase something.

The vast, vast, vast majority of our students have the card, so that was really fun.

Kenny: Really?

Santana: Yes. We all took a picture with their Chase Sapphire cards and with Pam and Eileen at the end of the case. I think the core lesson here is not just about new product development in how you use traditional retention tools as an acquisition tool, as an example, but also really understanding your customer. At the end of the day, all of marketing is rooted in the customer and understanding who your customer is. One of the big lessons, I think, from this case is Chase really took the time to understand the lifestyle of their target audience, which is millennials, what mattered to them, why weren't they using competitive products or what did they like about competitive products, and built this product from the ground up. They didn't say "You know what? Millennials are younger versions of our existing customers." They said "This is a completely different customer and we need to design something completely different that's just for them." I think that is a lesson that is generalizable.

Kenny: I think it is a great lesson for any marketer who might be listening who's targeting this millennial audience, because they are different.

Santana: They really are. Their value systems are different, their lifestyle is different, their needs and wants, are different, and there's still wisdom. People always ask, "Is traditional marketing dead? Everything's going digital, the old rules of marketing are dead." I always tell my students the core principals of marketing are the core principals of marketing, and understanding your customer is a notion that is not dead.

Kenny: It's a great lesson, Shelle. Thank you for joining us.

Santana: Thanks for having me. It was a lot of fun.

Kenny: If you enjoyed this episode of Cold Call, please subscribe on iTunes for more cases like this one. And, while you’re there, please write a review. I'm your host Brian Kenny, and you've been listening to Cold Call.

Interview recorded January 17, 2018. Transcript edited for length and clarity.

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Brian Kenny: According to marketing firm HubSpot, millennials, that's the generation of people born between 1980 and 2000, are excessively brand aware. In fact, 62 percent of them tend to stick with one brand compared to 54 percent of the population at large. These brand loyalists feel a sense of belonging and even a shared consciousness with others loyal to the brand. If it sounds cult-like, all the better from the brands' perspective. Harley Davidson, Trader Joe's, Apple, they've all achieved cult status with legions of devoted, some might even say fanatical, followers. There are lesser-known brands. Dollar Shave Club, La Croix, Moleskin, that have tapped the same fervor. Customers of cult brands want others to know of their association because it makes them look smart or hip or healthy. Achieving cult brand status is the “holy grail” for consumer marketers. So should a credit card brand even dare to dream? Today, we'll hear from Professor Shelle Santana about her case entitled, “Chase Sapphire: Creating a Millennial Cult Brand.” I'm your host, Brian Kenny, and you're listening to Cold Call.

Shelle Santana is an expert in consumer behavior, particularly in relation to spending and credit. Before embarking on her academic career, she was a marketing executive at American Express. Thanks for joining us today.

Santana: It's nice to be here. Thanks for having me.

Kenny: Full disclosure, for our listeners, I am holding up my very own Chase Sapphire credit card. You're my witness.

Santana: Yes, you are. It's beautiful.

Kenny: Thank you. And that's part of what we're going to talk about today is the appeal of the physical card itself. I think about it both as a consumer and as a user of the product, but also it gave me a much more interesting look inside the development of a credit card brand, which I had never really given a lot of thought to. Tell us who is the protagonist, or in this case the protagonists, and what's on their mind?

"It was unprecedented in the market and the entire market froze when this offer came out"

Santana: There are two protagonists in the case. Pam Codispoti, who is actually an HBS alum, is president of Chase branded cards, and Eileen Serra, who is the senior advisor to Jamie Dimon, the CEO of JP Morgan Chase. She is also the former CEO of Chase Card Services. The case begins in July 2017 and they are reflecting back on the prior year after the launch of the Chase Sapphire Reserve card. In August of 2016, they launched this card. It was targeted at millennials. It had an astonishing 100,000-points offer in terms of new cardholders...

Kenny: That's a lot of points.

Santana: It was unprecedented in the market and the entire market froze when this offer came out. They actually reached their full year acquisition target within the first two weeks of the card being available. They ran out of the special metal alloy that makes the card feel so special. It's got a piece of metal between the two pieces of molded plastic so it's got a little bit of heft to it. They ran out of that.

Millennials were posting YouTube videos of themselves unboxing this credit card that they received in the mail. It really just created such a frenzy in the marketplace that is unheard of with credit cards in general, but credit cards amongst millennials was something that was truly, truly unprecedented.

Kenny: Yes, and we're going to talk more about millennials. They come up all the time in this podcast. I have three of my own at home, so I can relate to millennials somewhat. I would assume that maybe part of what drove you to write this case is your experience in this industry, but how did you hear about it and what made you pursue it?

Santana: As you noted, I used to work for American Express. So credit cards and the credit card industry is just inherently interesting to me. To see this new product take the market by storm was just fascinating. The second thing was that it truly was across all products. It was one of the hottest product launches in 2016, and again, it's a boring credit card [but] it's one of the hottest products of the year. There was a cover story on Bloomberg BusinessWeek about how this card was the must have product for millennials who were not big credit card users historically. So to even bring millennials into the franchise and to bring them in with such passion and devotion was an amazing, amazing accomplishment to me. I really wanted to really get into how this all came about and how these women really built this franchise.

Kenny: JP Morgan's a huge financial services company. How important is the credit card piece of that portfolio?

Santana: The credit card business, historically, was pretty small at Chase. What they're probably best known for is their investment banking business. The credit card is part of the community and consumer banking business, which includes their 5,200 retail branches that you see when you're walking down the street. Historically, their credit cards had been very fragmented. There were a lot of co-brands in the portfolio. What Jamie Dimon and Gordon Smith and Pam and Eileen came up with is a strategy to have a proprietary branded presence in this marketplace. They wanted something that said Chase that lived up to the overall JP Morgan Chase brand and really resonates with consumers in a consumer way. So this was part of a much larger strategy. This is part of what I love about the story. It's not just about a credit card, it's not just about a product launch, but it's about creating a brand and what is the strategy behind creating a brand and really making a branded presence in the marketplace.

Kenny: Who else sits in this landscape of major credit cards?

Santana: In terms of the issuers, there are six major issuers in the credit card space. They include American Express, JP Morgan Chase, Bank of America, Citi Group, Capital One, and Discover. These six issuers account for about 80 percent of all credit card sales. The luxury credit card market, was historically dominated by American Express. That was a domain, a segment that AMEX had really fenced off for itself. They were the only ones who were offering a credit card specifically targeted for the traveler, affluent, high credit score, high earning, high spending type of customer. The rest of the issuers were really playing in the much larger space of mass credit cards.

Around the mid-2000s, Citi and JP Morgan Chase in particular made a concerted effort to move up-market into the more premium space. That's when really this competition at the high end of the market began to intensify.

Kenny: One of the things I thought about as I read this case was are credit cards passé already? Is mobile wallet going to take over this space? But the statistics that you provide in the case would seem to indicate otherwise.

Santana: I also have a case on Apple Pay. Mobile wallets, although they're large and growing, they're still a very small part of the overall market here in the US, which is interesting in and of itself. But it is growing exponentially. It's something that credit card issuers really do worry about. But there are two types of digital payments that concern credit card issuers and for slightly different reasons.

One is if you think about your desktop ... where you put your credit card [number] in, and they refer to it as set it and forget it. The importance of being the top of wallet in that particular environment is so vital because people don't tend to revisit it. Then there's the other [environment] that's more of the mobile wallet: the digital pay, the Apple Pay, et cetera, where the image of the card comes up when you're making your payment. So that branded experience is still really important, but credit card companies spend an enormous amount of money on just the physical look and feel of the card. The color of the card and the weight of the card, et cetera. That's very difficult to have that transfer into a digital environment. So it is something that they definitely have an eye on.

Kenny: In this case, they clearly spent a lot of time and attention on both aspects of the Chase Sapphire card.

How to get that kind of multi-sensory experience into a digital environment, I think is a real challenge.

Kenny: Let's talk a little bit about how they segmented the market as they thought about who they were going to go after. They landed on millennials, I guess thinking if we target millennials we're not competing head-to-head with American Express, because they're not using that card.

Santana: Chase would say that it's not just for millennials, it's also for the millennial-minded.

Kenny: Ah, there we go. I like that. I've been a member of American Express, too, for many, many years. I do remember when I got that card, thinking, "This is kind of cool. I feel like I've arrived." You allude to that in the case.

Santana: They really are targeting somewhat different audiences. There's certainly some overlap, but one of the things that Chase will say is we're not trying to replicate or displace American Express. The things that American Express is good at, they're very, very good at, and it would take a long time and a lot of money for us to try and replicate that. But there are certain things that we're very, very good at, and that we can pivot and really put our stake in the ground with respect to the credit card market and these really attractive customers.

So while they're both targeting high spending, good credit score type people and heavy travelers, the type of travelers, the type of benefits, the type of perks, are very different across the two cards. You can really see how that plays out. One of the classic examples is there's what they call point accelerators where you get more than one point per dollar spent in certain categories of spending. That's very common in credit cards. In American Express, one of the big categories is groceries. You get double points for groceries. Millennials do not shop at grocery stores the way people in my age bracket shop at grocery stores.

Kenny: Or mine.

Santana: It's much more about GrubHub, et cetera. So being able to define dining in a more flexible way, to be able to define travel in a more flexible way, travel is not just an airline ticket or a train ticket. It could be an Uber. It could be a Lyft. It could be anything that you want it to be. So trying to really be flexible and open minded and design a card that really is from the bottom up about this millennial lifestyle, I think was central to the success of the reserve credit card.

Kenny: You mentioned earlier that millennials aren't that comfortable with the notion of credit. Can you talk a little bit more about that?

"The person who's attracted to a cashback card is a very different profile of consumer than a person who's going to go for more of proprietary points reward card."

Santana: This is a segment of consumers who really grew up in the shadow of the great recession and when credit was really crippling a lot of people in the United States. So in the wake of that, a lot of millennials grew up using debit cards as opposed to credit cards in order to avoid getting in over their heads. There really wasn't a compelling product out there specifically for them. Chase, to their credit, recognized that there is this segment of consumers that's high spending. They travel, they're adventurous, and we think we can put a product together that's a credit product, not a debit product, [for which] they would be willing to take a chance on us...

Kenny: And they were right. Apparently rewards programs really do work.

Santana: Imagine that.

Kenny: I mean, in the industry, I don't even know how long rewards programs have been around. I never really thought that much about it, but they give an awful lot of thought to not just the program, but how they're going to break it out and how they're going to target people based on the rewards that they offer.

Santana: Rewards are incredibly, incredibly important in the credit card industry. If you think about rewards broadly, that could be something like cash-back products or it could be what the industry would call proprietary currency products, whether it's points or miles or something like that. So when you take those two broad groups together, that is one of the primary factors that consumers look at when they're trying to select a credit card. That said, the person who's attracted to a cashback card is a very different profile of consumer than a person who's going to go for more of proprietary points reward card.

Kenny: And you mention, I think the term that you use in the case is churners. That's an industry term, for people who are really good at flipping from one card to the next?

Santana: There's this inherent risk in that you put out a really rich offer, like 100,000 points, and a lot of these acquisition offers are fairly standard. You get X amount of points if you spend Y amount of dollars in a particular period of time. The intention is to get people to use their card quickly. Then that becomes habitual and then it just becomes part of your daily routine. The risk is that people will recognize that they can spend up to the exact amount, collect their reward, and then put their credit card in the drawer. So then what happens is when you have these really rich offers like Chase put out 100,000 points, they front loaded a lot of the expense for this product. So in order for that investment to pay back, you need customers to stay longer than the time required in order to earn the reward.

That's the tricky balance in trying to determine how we make this portfolio profitable in the long run, which is one of the primary questions that's on the table for the protagonists in the case.

Kenny: The other question that surfaces in the case is how do you follow that up?

Santana: One of the things that is a defining characteristic of the Reserve card was this 100,000 point offer. It just took the entire industry by storm, like I said. But it was an introductory offer. Then the offer would drop down to 50,000 points, which was planned. The second thing was once you earned those points, that was a one-time opportunity. So a year later, those 100,000 points could easily cover the annual fee for their credit card, which was $450. A year later, that annual fee is going to start popping up on their credit card statements going forward.

Kenny: That's not a small fee.

Santana: That's not a small fee. So now one of the other questions on the table for Pam and Eileen is, does this product stand up on its own in the absence of this mind blowing new customer acquisition offer? The truth is that it really does. Even when you take that away or you strip that down to 50,000 points, it actually gave them the room to talk about all the other features and benefits on this card that are really great and truly targeted at their design target, the millennial traveling consumer.

Kenny: You hear about Harley Davidson people tattooing the brand on their arm and that kind of thing. I was amazed at some of the case exhibits of things people were doing with their credit card.

Santana: One of my favorite stories was the woman who was initially declined as a customer for Chase and she dressed up as a Chase Sapphire card for Halloween in this social media-fueled attempt to get their attention so that they would approve her for the card.

Kenny: Did she get one?

Santana: I don't know. That's a great question.

Kenny: You've discussed this in class with MBA students. Have you also done it with executives? I'm curious to see if the millennials come at it differently than the older folks.

"One of the big lessons from this case is Chase really took the time to understand the lifestyle of their target audience, which is millennials"

Santana: Not yet, it's a brand new case. We did discuss it with the MBAs and they loved it. There was so much energy and enthusiasm in the class and we had the good fortune of having Pam and Eileen in the classroom with us. They did a terrific job talking through really honestly, here are the challenges, here are the pros and cons, the economics of this business are such that we're in this for the long run and we book this acquisition cost in the short run and then we need to recover in the long run. So we need to make sure that we have a compelling offer, a compelling reason for you take your card out and use this card over any other card in your wallet each and every time you have the opportunity to purchase something.

The vast, vast, vast majority of our students have the card, so that was really fun.

Kenny: Really?

Santana: Yes. We all took a picture with their Chase Sapphire cards and with Pam and Eileen at the end of the case. I think the core lesson here is not just about new product development in how you use traditional retention tools as an acquisition tool, as an example, but also really understanding your customer. At the end of the day, all of marketing is rooted in the customer and understanding who your customer is. One of the big lessons, I think, from this case is Chase really took the time to understand the lifestyle of their target audience, which is millennials, what mattered to them, why weren't they using competitive products or what did they like about competitive products, and built this product from the ground up. They didn't say "You know what? Millennials are younger versions of our existing customers." They said "This is a completely different customer and we need to design something completely different that's just for them." I think that is a lesson that is generalizable.

Kenny: I think it is a great lesson for any marketer who might be listening who's targeting this millennial audience, because they are different.

Santana: They really are. Their value systems are different, their lifestyle is different, their needs and wants, are different, and there's still wisdom. People always ask, "Is traditional marketing dead? Everything's going digital, the old rules of marketing are dead." I always tell my students the core principals of marketing are the core principals of marketing, and understanding your customer is a notion that is not dead.

Kenny: It's a great lesson, Shelle. Thank you for joining us.

Santana: Thanks for having me. It was a lot of fun.

Kenny: If you enjoyed this episode of Cold Call, please subscribe on iTunes for more cases like this one. And, while you’re there, please write a review. I'm your host Brian Kenny, and you've been listening to Cold Call.

Interview recorded January 17, 2018. Transcript edited for length and clarity.

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