Most of my career has been involved with affinity marketing. Often the focus has been between affinity - what consumers care about, non-profits / universities and financial institutions such as banks, student lenders and insurance companies.
As a result, it is interesting for me to read, the annual CFPB report to Congress on college credit card agreements. The world of alumni collegiate marketing has changed and there may be implications for other affinity markets as well.
- The number of higher education institutions, alumni groups, and other affiliated groups that sponsored credit cards declined in 2013.
- Continuing a trend that began in 2009, compensation paid to the institutions and affiliates for these programs also dropped.
- Not surprising, the total accounts from alumni associations are also declining.
For 2013, 26 credit card issuers had 448 agreements, and the issuers paid $42.9 million to the higher education institutions and affiliated groups. Bank of America which acquired the pioneer in the field, MBNA, accounted for more than half of the credit card agreements.
For most of the last two decades one of the largest source of funding for alumni associations has been its affinity credit card programs. In addition to greater oversight of these agreements by CFPB, consumer behavior with credit cards has changed. It is unclear if alumni programs have become less valuable or just been disrupted. In fact, during the same period of declining credit card programs, affinity insurance programs have continued to grow. These programs are clearly relevant and addressing the needs of their members.
The Value of Alumni Remain Strong: Indeed the market of alumni of colleges and universities is valuable. In fact, only approximately 30% of adults in the U.S. have earned a bachelors degree and the value is shown in both earnings and higher employment rates.
Value is Shifting to Other Channels: Reaching college graduates is clearly a viable marketing strategy, but affinity marketers can now easily reach this audience through other channels. Credit card companies and other product providers can now easily identify college graduates through many other online "affinity" communities such as LinkedIn and Facebook.
The Affinity Challenge: Affinity groups and particularly alumni associations need to clearly identify the unique contribution they provide to product providers. Affinity marketing is more than just licensing marks, affinity marketing is about the value of the endorsement, the relationship the affinity group has with its members and the knowledge the affinity group maintains on its members.
Even with deep relationships and knowledge, however, affinity endorsements may not be sufficient to overcome consumer preferences such as rewards. For instance, today with credit card programs rewards often trump affinity. In 1997, I was fortunate to work with colleagues at First USA (now part of JP Morgan Chase) who responded to a request of Eustace Theodore, the Executive Director of Yale University's Alumni Association to offer an affinity card for its alumni that was best in class - that featured both rewards (miles) and affinity. Yale knew that its alumni would respond to a unique offer that combined both rewards and multiple card images. It worked so well that the program was renewed by Chase in 2007 and continues now with First BankCard of First National Bank of Omaha.
Lessons for the Future of Affinity Marketing: It is vital to recognize that affinity begins with a real and relevant relationship. It is no surprise that the internet age requires affinity group marketers - both sponsoring organizations and product providers - to recognize that their members can easily identify a bad deal. It is just as easy for their members to be offended when irrelevant offers reach them (think of the alumni travel cruise that a new graduate may receive). Affinity group members have more choices than ever and will be able to find the truth and will likely ignore offers that are irrelevant to either their organization or life-stage.
Please let me know what you think Affinity 2.0 will become?
What is working for your organization? What products or services matter most to your members?
In : Affinity Marketing
Tags: affinity marketing credit cards alumni marketing