Chase Sapphire –

In 2016, JPMorgan Chase launched Chase Sapphire Reserve Card which became an instant hit
and reached its annual sales target only in the first two weeks. The card quickly became a cult
among millennials and proved the people who strongly claimed that the millennials won’t pay
any high fees wrong. However, this premium card had its own challenges. Competitive
differentiation was one of the main challenges since both AMEX and Citi responded by
launching new cards or redesigning its current premium cards in a similar way to Chase
Sapphire in terms of target market and rewards system. Therefore, Chase Sapphire should have
developed a strategy that will enable a higher customer acquisition and retention metric
compared with its rivals while keeping the business profitable. Moreover, Chase had 3 cards
within this product line: Sapphire, Sapphire Reserve, and Sapphire Preferred. The team also
should make a strategic differentiation between these 3 products which will prevent a mismatch
between the customer and the product and therefore strengthen the loyalty and value for the
bank.

1) Why has Chase Sapphire Reserve been so successful in acquiring customers? Will
this success continue over time? Why? Why not? What changes would you make to
their customer acquisition strategy?

The reasons for Chase Sapphire Reserve’s success are; mainly understanding the customer and
using marketing to their target market accordingly such as; social media / influencers, creating
YouTube shows (ex. James Corden) and using word of mouth’s power. They have never
applied mass advertising and kept their strategies niche. From a product innovation point of
view, they have used metal cards instead of plastic which made users more special with a
minimalistic style, value adding strategy. In terms of bonus, they have given unprecedented
sign on $100k bonus and eventually even they have decreased bonus to $50k, they were
successful in users' eyes by their transparency. This brought them customer satisfaction. They
have created 7/24 customer services which answer the phone in 20 seconds and try to solve the
issue in a single call, no need to push any buttons, boutique customer service understanding. It
was costly of course but they will get the return in the long run. They have created a new vision
and perception that this card belongs to visionaries, interesting, startup kind of people who also
have significantly medium-high income. Sapphire Reserve is not like an “old money” Amex
card, like it’s your father’s card. Chase has a strong association with younger, emerging,
affluent consumers. Consumers have the perception that they are authentic, interesting,
exclusive but not showy or braggy. The other thing that they have succeeded was their user
friendly / simple UX point redeeming process. To conclude, Sapphire Reserve was made as a
card for collecting experiences and Chase really created this image.
We think that the success will continue over time if the Chase manage the risks smartly.
Because the strategy which is setting for the brand is successful. The trend shows that the
company understood the consumer insight and won their hearts of the target group. . If they
provide sustainability on that, an important cornerstone will be reached. Because a powerful
insight is the key point of all growing businesses. One of the main contributors in their strategy
is reward to acquire new customer. They offer a very user-friendly and transparent approach.
It brings emotional link between customer and Chase Sapphire Reserve Card. For instance,
they did not lose customer although they decreased sign on bonus from 100k points to 50k
points. Their communication method and transparency effected the customer. In addition to
this, the identity of card is another significant contributor for the success of the Chase Sapphire
Reserve Card. Their perception on the millennials is the model that is hard to copy by their

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competitors. They created a new need and took the flag first. That’s why, they have loyalty of
the consumer. They focus correct target market with organic methods and strong perception. It
brings right product, right positioning. From risk perspective, they have strong competitors
such as Citibank, Amex. They should define the boundaries their competitors and manage it
effectively. The perception is important in this manner. Amex should continue to be dad’s card.
Another risk is churners. They should organize campaigns for churners to provide loyalty. They
should manage their product segmentation smartly as well. It is possible to that overlap of
target group issue can be occurred for Reserved and Preferred. Differences between Reserved
and Preferred should be clear for consumer. The factors we should pay attention to when
determining customer acquisition strategies should be sustainable, flexible, and targeted. In
this context, it is the most important point to think about the issue that adds value to the
customer. Making them loyal card users should be the main goal, while providing new
experiences for card users that are compatible with their "lifestyles". These new experiences
should give privilege to the customers while adapting to the current digital transformation
process. At the point where the customers feel privileged, they will begin to become a loyal
customer. What are these digital transformations? Contactless, mobile payment, digital wallet.
When customer habits are examined from another point of view, the customers desire more for
the product he or she makes effort for. The recommendation system can be a solution
alternative in this context. On the other hand, reaching the customer should not be the only
goal. In today's data age, the problem is not to reach the customers, but to reach the customers
with the right message and the right need. It is important to understand the customer's need
before the customer, more precisely to bring a new need to the customer.

2) How successful will Chase be at retaining Chase Sapphire Reserve customers into
their second year? What would you suggest they do to improve the odds of retaining
their customers?
The "Chase Sapphire Reserve" brand is connected emotionally with its community and
promises a “great” customer experience. Also, people like the brand's "interesting" perception,
rather than "rich". In order to retain customers, they should invest in protecting and improving
their competitive advantage, the brand itself. Moreover, according to the market data (Exhibit
3), the most loyal customers are the users of the cards which have no annual fee. Reducing
annual fee seems to be an alternative for improving loyalty of the current customers. But the
annual fee of the “Reserve” is an entrance barrier for the “community”, which supports
“exclusivity” of it. So, protecting it at the competition level, seniority bonuses & rewards can
be given to the customers. Proceeding to reach customers through social media rather than
conventional media is a good strategy. Providing transparency about actions to be taken has
always been appreciated by customers, this must be continued. Customer segmentation
between Preferred and Reserved should be clear and be promoted accordingly. Positioning
customers with wrong product can cause loss of market share. To eliminate this risk
distinguishing reward program of both two products and their marketing is important. To
increase emotional connection, provide personalized gestures for special days. For example,
offering donation options to certain societies on behalf of the customer for her/his birthday.

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