One way budget-conscious marketers can gain access to fresh data and new marketing channels is through affinity marketing deals. In this first of three pieces, Nick Howse, managing director at Howse Jackson Marketing looks at how this powerful channel works and how to make it work for both brands. You can also sign up for our Affinity marketing masterclass on 19 April.
What is affinity marketing?
Affinity marketing is simply two brands joining forces for mutual commercial benefit. Often, but not always, it’s a case of a weaker or lesser-known brand leveraging another brand’s appeal within a given target market. For example, Apple Computers may allow a brand to market a computer accessory to its customer base with the computer accessory brand benefiting through Apple’s involvement and goodwill.
However, it’s worth pointing out that affinity marketing isn’t third-party marketing, rather it’s brand partnership taken to its highest level – a crucial distinction – which makes it such an attractive and effective marketing option.
The benefits of affinity marketing
Many third-party lists are over-used, which means response curves have dropped and the ROI of direct mail has sometimes fallen. In contrast, affinity marketing gives brands access to fresh, up-to-date data. Indeed, with affinity marketing, you have a well-managed, clean database so response often exceeds what you’d expect when purchasing normal third-party data.
The affinity pairing doesn’t have to be an obvious one either. Financial services providers have long struck affinity deals with charities to offer credit cards to consumers. For example, credit card provider MBNA Europe offers an RSPCA Visa Card which gives the RSPCA £20 on the first transaction and 0.25% on every subsequent purchase. Affinity deals like this give much-needed funding for charities and increased revenue for credit card companies.
These deals allow financial companies to further expand their customer base while charities receive a percentage payment from every financial transaction made on each card.
What also makes affinity marketing so appealing to brand B is that it increases the ROI potential and reduces the risk because brand A offers its list on a sales-commission basis only. Brand A’s customers are offered exclusive deals that add value to their relationship with that brand, while brand B is able to use data that’s not on general sale and is normally highly responsive for that single reason.
One famous UK high-street car repair chain, with over 570 outlets nationwide, recently partnered with a well-known insurance company to offer an affinity deal to the insurance company’s database. The car repair company sent the insurance company’s entire list a direct mail piece offering a unique benefit, in this instance 25% off an MOT and service.
The advantages of an affinity partnership like this were multi-fold. The insurance company’s customers received an unbeatable offer that was directly relevant and this, in turn, enhanced the car insurer’s relationship with its customers. The insurance company also received commission on every car service and MOT offer that was taken up. This gave it an income in excess of £20,000 simply for allowing its customers to be mailed with a relevant offer.
Likewise, for the car repair chain, the benefits were extremely attractive. The company was able to have access to hundreds of thousands of car owners who they would otherwise have not been able to mail. This made the data fresh, responsive and relevant.
It was cost-efficient too. The car repair chain only paid for sales it made, which substantially reduced its marketing risk and it received the data free of charge. This gave the campaign far more chance to achieve a credible ROI. In the final analysis, both brands benefited commercially and so did their customers.
Tip Affinity marketing gives you access to another brand’s highly-responsive customer database, as well as leveraging that brand’s appeal for minimal cost.
Data protection
Because affinity partnerships are co-branded activities, data protection concerns aren’t an issue because the data-holding brand will already have permission to contact its customer base. The partner brand is simply either piggy-backing or using a joint co-branded offer to target a brand’s customers.
If the product offerings are both relevant and are tied to the goodwill of a brand that a customer’s already loyal to, affinity marketing deals will rarely attract complaints.
Some brands may refuse to share their data out of principle. It’s worth reminding them, however, that customer data is not unique and most customers will be on other people’s lists too. Therefore, letting another brand use its customer data is not as unique a proposition as many marketers think – their customers are being mailed all the time on other lists.
Top tips for would-be affinity marketers
1. Ensure there is brand symmetry between the two companies, particularly in terms of customer profile and/or customer lifestyle.
2. Have realistic expectations. Predictive modelling can be useful but it is limited because it is normally based on only one brand’s experience. It's only by testing customer segments on an ongoing basis that any accurate predictions can be made.
3. Understand your affinity partner. It’s important that the two partners recognise and understand their different aspirations, as these will influence campaign strategy and implementation. Patience is key here!
4. Be mindful of partnering with organisations where volume is too small; because set-up costs can be higher due to co-branding, there must be significant room for roll-out. Any database needs to be in excess of 100,000 records for affinity partnerships to work.
5. Establish an honest, transparent relationship with your affinity marketing partner. Brands must trust each other fully and be in it for the long term.
Find out how to create an affinity marketing campaign