The Future Is Not What It Used to Be
Are affinity programs a thing of the past? Or of a future that looks very different? One thing is for sure: Things have changed.
For as long as any of us can remember, membership organizations have offered third-party products to their members. Usually at a discount and often bearing the association brand. This has served two important roles for the organization: (1) To provide value to members and a reason to join and renew and (2) as an important source of non-dues revenue. And for as long as we all can remember, organizations could count on their affinity products to bolster both their membership and their finances.
This is no longer true. In most organizations, affinity programs have been in a sharp decline, due to market forces beyond their control. What worked in the past now works no more.
Yet there is a strong and clear path forward for organizations that are willing to think differently about the affinity model and to get creative in their partner relationships.
The Old Model Eroding
Escalating consumer expectations. Consumers expect better deals, more relevance, and seamless experiences, because they can find them easily 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. While members have grown ever-less responsive to associations, business partners who used to prosper from the affinity model have found other ways to reach the same individuals. Associations no longer have exclusive access to the consumer data and business partners question the ROI of the royalties they pay to get it.
Government regulations, especially in financial services and insurance, have made affinity relationships more complex, riskier, and hence less attractive for marketers in these spaces. Many long-term players in the affinity insurance space have exited the market entirely, in search of greener pastures elsewhere.
New Insurgents. While membership organizations and their business partners have been fretting about the affinity business, new insurgent organizations have been reinventing it without them. Think of web tools like Honey, which offers discounts and rewards on nearly anything you can buy, effortlessly and at the click of a button.
As the affinity model unwinds, most organizations have been left holding a bag of products and services which do not contribute very much revenue and which their members do not value. The leaders have re-evaluated their product portfolios, eliminating products with low member value and engagement, in favor of core products that are high value, highly unique, and hence high revenue.
Go where you add the most value. Revitalization often takes the form of drastic pruning, focusing instead on a small number of “signature” offerings that are uniquely aligned with the mission and 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 are uninterested in affinity relationships. They just 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,” which leads to new, more flexible, commercial arrangements to secure products members love, perhaps with minimal revenue expectations. This model is far more attractive to modern marketers, which opens up a whole 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, and, in turn higher member renewal. Even a modest uptick in renewal can more than financially justify any loss of royalty revenue.
The Path Forward
Shifting the model in these ways allows commercial partners’ financial contributions to be funneled into better offers and better marketing to drive awareness. New offers can be carefully selected to reinforce the association 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, organizations must be highly 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 that can be adapted to the needs of different commercial partners. Building member awareness is a win-win-win for everyone and the organization must be invested in success.
Affinity programs are alive and well in organizations that have embraced a “member value first” mentality and collaborated with their partners to create a new win/win/win for them, the organization, and the members.
To learn more about these market trends and how leading associations are responding, we invite you to download our full white paper analysis, Tacking into the Headwinds of Association Growth.