Affinity marketing

Affinity Marketing (or Partnership Marketing) is a targeted way of marketing products and services. By linking complementary brands, it can develop them into lasting partnerships and strategic alliances.

Development of Affinity Marketing

Modern affinity marketing traces its roots to the late 1970s when credit card interest rates were skyrocketing. America's largest consumer association at the time, the not-for-profit American Automobile Association (AAA), partnered with MasterCard to offer AAA members a branded credit card with lower rates and special privileges. AAA boosted its members' loyalty (affinity) and received revenue shares from MasterCard. The AAA program expanded to include other card issuers and remains one of the associations membership offerings today.

The concept boomed in the 1990s when credit card companies partnered with charities and sports teams to provide consumers with a branded credit cards. The organizations benefit from increased brand loyalty and brand awareness and a boost to revenues; typically through a combination of fixed commission for each new card and a share of transaction volume on the cards. The credit card company meanwhile benefits from increased revenue, generated by more customer accounts and card usage.

Affinity marketing has since been evolving far beyond its original remit; most commonly in direct marketing, in what is termed as a second affinity boom through the use of data and customer contact lists. Within this context for example, a famous car repair chain recently partnered with a well-known insurance company and was able to mail the insurance company’s database to offer a unique benefit, in this instance 25% off a car service. This gave the insurance company’s customers access to a competitive deal unavailable to the mass market, whilst the car repair chain benefited from access to hundreds of thousands of car owners they would otherwise not have been able to mail.

Parties within an Affinity Partnership

Affinity Partnerships consist of two parties. The first party known as the ‘affinity group’; seeks to add value to its existing customers, members or donors by promoting products and services they don’t currently sell, for example financial services. The second party known as the ‘product supplier’; seeks to acquire new customers by using the strength of another organization’s relationship with its customers, through which to distribute its product or service.

The aim of a brand wishing to add value is to generate new income and build upon existing customer relationships.

Meanwhile, the aim of the product or service supplier is to build and develop new customer relationships through the existing distribution channels of a third party affinity partner.

Pros and Cons of Affinity Marketing

Pros:

• These campaigns are win-win scenarios for both parties.
• You can enter new and untapped market segments.
• Increases your overall customer base.
• An affinity marketing campaign is highly customizable.
• It Increases the amount of people likely to buy product.
• Easier to target your desired consumer base

Cons:

• Choosing the right organization to partner with is not easy
• The profits from small niche campaigns are smaller
• The campaigns reach fewer people
• Your campaigns are not made to reach a large market segment.
• The relationships may not always turn out to be fair for both parties involved based on consumer reactions.

Example of a typical Affinity Partnership

The supermarket adds value to its existing customers by offering bank accounts or insurance policies bearing the supermarket brand. This is also known as ‘white labelling’. For the supermarket, this would build on existing relationships between the customer and supermarket while developing a sustainable income stream. For the organisation(s) providing bank accounts and insurance policies, this would develop new relationships and income streams with previously unknown customers.

Advent of Partnership Marketing Platforms to Support Affinity Marketing

Most recently, we have seen the emergence of partnership marketing platforms that satisfy program management requirements within Affinity Marketing organizations. In the same way that Marketing Automation software was adopted to automate the tracking and measurement of marketing lead generation programs, new classes of cloud-based platforms are emerging to support partner collaboration across brands. An example is a partnership marketing platform that supports multiple customer acquisition and loyalty objectives. These platforms typically include several capabilities: a partner matching engine to connect companies with the most relevant, complementary brands, products, and services; oftentimes, an auction bidding engine to support an open marketplace for exposure to customers; analytics to measure marketing programs and optimize outcomes; and integration with customer demographic data to optimize relevancy and value for the consumer. Need and availability for this class of partnership marketing platform is expected to track the rapid adoption of Affinity Marketing strategies.

References

1. What is affinity marketing? http://www.affinitysolutions.co.uk/what_is_affinity_marketing.php 2. Affinity Marketing Case Studies, http://www.affinitysolutions.co.uk/blog/?cat=3