Chase Sapphire: Creating a

Millennial Cult Brand

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Montrina (1138) | Raghav (1148) | Irfan (1169)
Do you think CS Reserve is good for (i) JPMC (ii)The Sapphire Brand
Why or Why not?
For JPMC
We look at two KPIs namely
revenue and customer acquisition.

1. As you can see the net margin is at a

negative of 460 dollars.
2. It created a lot of buzz in the market.
Created a cult following among
Millenials who are predicted to be an
affluent or high-value customer in the
future.
3. Miles ahead of their competitors in
this category.
 continued...
For Sapphire brand
Chase sapphire reserve contains all the values of sapphire
brand. It had premium service and travel benefits for high
end consumers who want to get more of what matters
most.
But it is not good for the sapphire brand as it cannibalizes
the other products under the umbrella.
Barring few differentiations, a consumer finds very less
reason to use the other two cards and people who would
otherwise use the prefered cardopted for reserve on the
bawsis of hype it created.
Other brands have come up with new cards at lucrative
offers, it is possible after the first year there would be high
attrition rates for the reserve card.
Why has Chase been so successful in acquiring customers?
Chase took a number of initiatives to bring about their success in acquiring customers.

Chase made initiatives to understand different Started leveraging the Sapphire brand equity
market segments, features attractive to those and expanded the portfolio, by introducing
segments, and products they wanted to build for Chase Sapphire Preferred and Chase Sapphire
the segments. Reserve Cards.
Consolidated Chase proprietary card portfolio The card's minimalistic design with the added
into five sub-brands to address distinct market weight gave it an intangible value.
segments.
Started focusing on the affluent/high net worth Managed to create a hype with their
segment, with Chase Sapphire sub-brand, unconventional marketing strategy of marketing
proprietary issue cards. in media platforms and influencers that reached
out to millennial customers.
It combined premium service and travel benefits
Low APR and High bonus reward points also
that high-end consumers expect with practical
helped
features.
Launched ultimate Rewards program, an online They tried to differentiate the Sapphire portfolio.
portal where customers could manage their
rewards, offers and redemptions.
continued...
What changes would you make to their customer acquisition strategy
going forward?
Now since Chase has sort of created a cult following, and have already demonstrated a launch
demand with the launch of Chase Reserve, that is similar to that of an I-phone, it’s already
proven that they won’t have an issue acquiring new customers. But the issue is attracting the
right sort of customers.

Since there is huge demand Referral system can be implemented, it kind of gives a premium feel, and also time for card
manufacturing.

Existing Chase users should be allowed to upgrade to the new version only after verifying previous card usages, and subject
upgradation criteria’s being met.

Chase Reserve customers who are going dormant or choosing to not pay the annual fee should be given offers to switch to
Chase Sapphire Preferred, or Chase Sapphire

Increase joining bonus to 60000 on spending $4500 to match Amex

Response from Competition
Through the lens of American Express
(They can choose a single strategy or a mix of strategies)

Approach 1 Approach 2 Approach 3

Lower the interest rates and As a "closed-loop" system, Amex has Better the existing reward system
market it as a benefit; would not greater access to both customers as to increase points earned for
impact the profits heavily as well as merchants. Use the data aspects other than airfare. For eg:
interest payments count for only available to roll out a targeted
21% of the revenue, but would marketing strategy that matches
help get more customers on clients with particular merchants that
board suit their lifestyle and spending habits
How to handle competitive moves?

Instead of using short-term strategies to tackle Amex on every approach given, Chase
should focus on solidifying the brand image as a "new generation rewards card that made
you 'interesting'". As the target group of millennials spent in places not traditionally
included in reward programmes, we would identify those locations (like bed&breakfeast,
high priced farm-to-table foods, etc) and give proprietary rewards on the same. This
would also save on the costs associated with the high level of customisation to be taken
up by Amex in Approach 2, and also solidify our own existing reward system.
How successful do you think Chase will be in retaining Chase Sapphire
Reserve customers in the 2nd year?
Factors in favour Challenges

Targeted niche audience - New affluent segment Over increasing customer expectations beyond current

25-44 age group, Income $ 150,000 benefits

Brand's DNA aligning with Millenials attitude Competitors' next move to level our current offerings

(interesting vs Rich game) The tendency of people to go with the newest shiny

Differentiated Positioning - A card for object - can be a potential threat if competitors get their

accumulating experiences hands on this

Unparalleled customer Service - 85% calls Preventing churners from getting dormant

answered in 20 sec Challenge of conveying how the brand resonates with

Demand - Product launch surpassed expectation the target audience

leading to Word of Mouth Retaining the customers who have registered but have

Strong Brand Strength - Differentiation & Relevance not yet received the card by being prepared with the
demand & material requirement
 continued...
Target audience - Travellers & savvy about rewards
Product offering Comparison
Travel credits are higher as compared to others
The rewards are balanced across categories for Reserve

as compared to Amex & Citi

The redemption to point ratio is excellent among all
Offering stay at resorts resonates with the adventurous
audience more

As Chase has reduced the sign-up bonus, there's a

tendency of the customers to switch to other brands. If

we observe, though Amex gives a higher signup bonus, it

has higher annual fees & requirements, and also the
rewards are only prominent in the airline & hotels
category. Hence Reserve has the edge over Amex here.
Compared to Citi, Reserve is way ahead. Hence Reserve
Note - Hansen was optimistic about rewards engendering loyalty
will be quite successful in customer retention.
Strategies for Customer Retention

01 02 03 04
Communicating the Milestone based Creating a Customization of
value rewards/offerings cult/community product
Spending on advertising If a customer achieves a Creating a community of Conducting a survey to know
communicating yearly milestone of staying like-minded people that the preferences of millennials
extraordinary customer loyal to the brand, they get resonate with the image of for merchandising the card
service provided as it has rewards in form of points the brand can be a very ( exclusive signs/football clubs/
a direct relation to that needs to be used significant way of adventure) leading to
customer retention. Along within a specific period of strengthening the customer increased customer retention
with this, other ads* time. This would increase base. For this, Chase can & acquisition.
related to comparative the lifetime of card usage conduct events like
analysis of offerings to and the threat of churners interest-driven programs or
communicating the will also be reduced as it music fests that are
enhanced value gives them the opportunity exclusively for Chase card
to reuse the card users. This would create a
sense of prestige and
*Note - Amex's marketing & promotional efforts worked
increase customer loyalty.
 Managing Product Portfolio
Sapphire Sapphire Preferred Sapphire Reserve

Target 1: Recovering Credit with Target 1: Financially Stressed with Target 1: Prosperous and Content
annual household income of $45000 annual household income of $45000 with annual household income of
Rarely swayed by promotional offers, Carry high level debt $85000
hence sapphire would work Need to pay for essentials and have 23% of credit card users that spend
Looking for tools for helping in control poor FICO scores liberally, seek rewards for spending,
spending Value simplicity and transparency and
opposed to revolving debt (hence
wish they needn't rely on credit cards
APR isnt crucial)
Target 2: Self-Aware Avoiders with Higher risk incurred by the issuer
Twice as likely to carry a premium
annual household income of $55000 hence high APR and annual fees of $95
from 2nd year card
Apprehensive about use of credit
cards, rather prefer cash hence
Target 2: Deal Chasers with annual
sapphire would be a great start with
household annual income of $65000
no annual fee and low APR
See themselves in friendly
competition with issuers
Dont mind annual fee as they will
amortize cost through rewards
 Product Recommendations

As Reserve's rewards have been halved, buzz around Reserve has calmed. Now

Steps should be taken to make Preferred more attractive among people who find $400 annual fee as

resistance

Give option to migrate Reserve user to Preferred

Tweak Preferred rewards with reserve rewards for different segments like travellers, middle level

executives, etc.

Reduce the APR for Sapphire by 1-2% to make it industry leading product by compensating with little

to no rewards targeting financially stressed and recovering credit users