The Future Is Not What It Used to Be
Are affinity programs for nonprofit associations a thing of the past? Or of a future that looks very different?
Membership organizations have almost always offered third-party products to their members. This usually happens at a discount and often bearing the association brand. Affinity programs have served important roles for the organizations that provide them. They provide value to members, giving them a reason to join and renew. They also serve as an important source of non-dues revenue. Nonprofit organizations could count on their affinity products to boost membership and profits.
This is no longer true. In most organizations, the old model of affinity programs is no longer profitable. Due to market forces beyond their control, what worked in the past no longer does.
Yet there is a strong and clear path forward for organizations that are open to change. They can get creative with the affinity model in favor of member value.
The Old Model Eroding
Escalating consumer expectations. Consumers expect better deals, more relevance, and seamless experiences. They can find them everywhere they look. They expect better, more unique, more valuable deals, and do not want to pay up-front to get them.
Diminishing Partner Returns. Members have grown less responsive to associations. At the same time, businesses that once profited from the affinity model have found other ways to reach the same individuals. Associations no longer have exclusive access to consumer data. Business partners question the ROI of the royalties they pay to get it.
Government regulations. Especially in financial services and insurance, regulations have complicated affinity relationships. They have made them riskier, and hence less attractive for marketers in these spaces. Many long-term players in the affinity insurance space have exited the market entirely. They would rather search for greener pastures elsewhere.
New Insurgents. Nonprofit organizations and their business partners have been fretting about the affinity business. Meanwhile, new insurgent organizations have been reinventing it without them. Think of web tools like Honey. It offers discounts and rewards on nearly anything you can buy at the click of a button.
Transforming Affinity Strategy With Member Value
The affinity model is unwinding. Most nonprofit organizations hold a bag of products and services that do not contribute to revenue or member value. Leaders in nonprofit growth have re-evaluated their product portfolios. They have eliminated products with low member value and engagement. Their new strategy includes core products that are high value, and hence high revenue.
Go where you add the most value. Revitalization often takes the form of drastic pruning. A successful affinity program focuses instead on a small number of “signature” offerings. These are products and services that are uniquely aligned with your mission. Additionally, they have commercially competitive advantages. Members don’t want you to have it all. They want something only you can offer.
Marketers want a new deal. It is not that marketers aren’t interested in affinity relationships. They don’t want to pay for them the same old way. The model of “products as revenue” has given way to “products as member value.” This leads to new, more flexible commercial arrangements to secure products members love. This means adjusting revenue expectations. The new model is far more attractive to modern marketers. It opens up a new range of potential offerings that would have been out of reach in the old-world royalty model.
Better offers pay for themselves. Discounts are often one of the very top reasons members join and renew. By attracting more exciting partners and offers, we see far more member engagement. In turn, we see higher member renewal. Even a modest uptick in renewal can more than financially justify any loss of royalty revenue.
The Future of Nonprofit Growth with Affinity Programs
Because shifting the affinity model lets the commercial partners increase revenue, they will be more willing to create better offers for members in the future. This begets better marketing, which drives brand awareness. An association can select new offers to reinforce its brand and cater to member preferences.
In our experience successfully transforming affinity programs, three elements are key:
• The Right B2B Value Proposition. Organizations must find new currencies of value for their commercial partners. Cooperative marketing programs, messaging to members in non-advertising channels, and exclusive access to data are all valuable in bringing new partners to the table.
• Meeting Unmet Member Needs. For the new model to work, nonprofit organizations must be selective about the offers they include. Explore the types of products, services, and perks that would appeal to different members at each life or career stage. Then identify the brand attributes that would best compliment your organization.
• Smart Member Marketing. To build drive traffic and generate leads, you need ongoing multi-channel marketing. It must be adaptable to the needs of different commercial partners. Building member awareness is a win-win-win. The organization must invest in success.
Affinity programs are alive and well in organizations that have embraced a “member value first” mentality. Successful programs have collaborated with their partners to create a new win/win/win. The organization, the business partner, and the members all benefit from putting member value first.
To learn more about these market trends and how leading associations are responding, download our full white paper analysis, (link to Headwinds)