The Future Ain't What It Used to Be For Affinity Products
Are affinity products for associations a thing of the past? Or of a future that looks very different?
Membership organizations have always offered third-party products to their members. This usually means a discount, sometimes bearing the association brand. Affinity products have served essential roles. They provide value to members, giving them a reason to join and renew. They also serve as a critical source of non-dues revenue. Associations could count on affinity products to boost membership and income.
No longer. Across the board, the old affinity product model is no longer productive due to market forces beyond associations’ control. As a result, what worked in the past works no longer.
Yet there is a solid and clear path forward for organizations that are open to change. For example, they can shift their expectations for affinity products from revenue to favor of member value.
The Decline of Affinity Product Revenue
Sky High Consumer Expectations. Consumers expect better deals, more relevance, and seamless experiences, and they can find them everywhere they look. They want more valuable deals that they can’t get anywhere else, and they do not want to pay up-front.
Diminishing Returns for Partners. On the one hand, associations have lost members’ attention. At the same time, businesses that once profited from affinity deals found other ways to reach the same customers. Associations no longer have exclusive access to consumer data or the brand halo they used to have. As a result, partners question the ROI of their association relationships.
Government regulations. Especially in financial services and insurance, regulations have complicated affinity relationships. They have made them riskier and less attractive for marketers in these spaces. As a result, many long-term players in the affinity insurance space have exited the market entirely to search for greener pastures elsewhere.
New Insurgents. While associations and their business partners have been fretting about the affinity business, new insurgent organizations have reinvented it. For example, web tools like Honey offer discounts and rewards on nearly anything at the click of a button.
Affinity Products as a Member Value Strategy
The affinity model is unwinding. Most associations have a basket of affinity products and services that contribute to neither revenue nor member value. But the leaders have re-evaluated their portfolios and eliminated products with low member value altogether. Instead, they now offer only high-member-value products regardless of revenue potential.
Maximize member 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 uniquely aligned with your mission. Members don’t want you to have it all. They want something that only you can offer.
Marketers want a better deal. It is not that marketers aren’t interested in affinity product relationships, but they don’t want to pay for them the same way. The “products as revenue” model has given way to “products as member value,” which leads to more flexible deals to secure products members love. This means trading revenue for much better products. The new model is much more attractive to marketers. It opens up a range of 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. We see more member engagement by attracting more exciting partners and offers, translating directly into higher member renewal. Even a modest uptick in retention can more than financially justify a loss in royalty revenue.
The Future of Affinity Products
Because shifting the affinity model increased revenue for business partners, they are willing to sweeter offers for members. Better offers with stronger consumer brands also elevate the association’s brand.
Two elements are key to successfully transforming an affinity program:
• The Right B2B Value Proposition. Organizations must find new sources 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, associations must be selective about the offers they include. Explore the products, services, and perks that would appeal most to members and the partner brands that best compliment your organization.
Affinity products are alive and well in organizations that have embraced a “member value first” mentality. Successful associations have collaborated with their partners to create a new win/win/win. The organization, the partner, and the members all benefit from putting member value first.