The American Express Company (NYSE: AXP) is fundamentally shifting their strategy when it comes to enterprise level business internationally. During the March 15, 2019 conference call, Chairman and CEO Steve Squeri discussed his country by country approach to driving share, scale and relevance throughout the globe. According to Squeri, “we’ve set an overall goal of increasing our international coverage by 20% over the next three years.”

“[W]e’ve set an overall goal of increasing our international coverage by 20% over the next three years.”

Squeri placed international countries into three tiers based on AXP’s position and potential within that Country. Tier 1 countries represent the largest percentage of American Express’s international business outside the U.S. (66%) and include countries such as the UK. The company sees a large potential for expansion considering their modest presence at the moment.

Squeri stated during the conference call:

“In Tier 1 countries, we’re making investments in all of our lines of business. For example, in the UK, we’re focusing on expanding coverage in several vertical categories nationally and with smaller merchants locally in London. We’ve reoriented our merchant sales force, added a new telesales team and we’re testing new merchant pricing. In commercial, we’re launching new and enhanced card products to grow our SME business, and we’re partnering with local fintechs to meet our small business customers’ financing needs. And in consumer, we’re working on strengthening our premium cards portfolio and creating new partnerships.”

Tier 2 countries are utilized for mostly experimentation of concepts, while Tier 3 countries represent the vast majority of where AXP intends to expand coverage. According to Squeri, “Tier 3 is a broad array of countries where we’re focusing primarily on increasing coverage. Tier 3 countries deliver approximately 25% of our international billings, but include 90% of the countries in which we have a presence.”

AXP intends to take a page from their U.S. playbook where essentially the market leading spending ability of their customers cannot be effectively utilized without merchant coverage available. Given the size and scope of coverage still outstanding, AXP intends to focus on the travel destinations of their customer base to intelligently expand the network. Management gives the example of the Caribbean as a Tier 3 international area positioned to benefit from this new strategic approach.

Squeri goes into detail by saying, “Let’s take a look at the Caribbean and Puerto Rico, which are in Tier 3, as an example of our new more focused approach works. We issue no cards in these countries. And in the past, we ran the Caribbean without looking at it from an enterprise perspective. What we realized, however, was that the Caribbean plays a crucial role in satisfying our U.S. and international customers’ payment needs when they travel there. So we’re now strongly focused on coverage across the region. Because of this focus, we signed 5 times as many merchants last year than we did in 2016 and increased locations in force by 46%. As a result of this initiative, card member satisfaction went up and we increased overall profitability as well.”

Last year, American Express delivered 17% FX adjusted growth in international consumer spending and 23% FX adjusted growth in small to medium enterprise international spending. Management also saw a double digit percent increase in new locations in force globally in 2018.