Introduction

One powerful, cost-effective method of gaining access to fresh data and new marketing channels is through affinity marketing.

In its purest form affinity marketing occurs when two brands join forces for mutual commercial benefit. Often, but not exclusively, it involves a lesser-known brand leveraging another brand’s appeal to enhance its marketing proposition.

Sometimes called partnership marketing, affinity marketing must not be confused with third-party marketing or affiliate marketing which are two completely different disciplines. By contrast, affinity marketing is brand partnership taken to its highest level.

This whitepaper has been written to provide a complete overview of the affinity marketing discipline, including an outline of its benefits, an insight into data protection issues as well as a comprehensive ‘how to’ guide so you can implement your own affinity marketing campaigns.

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Why affinity marketing?

Over the past decade it has become clear to direct marketing professionals that third-party lists are over-used and their response rates have been falling. This has made marketing campaigns less effective, riskier and has created poorer returns-on-investment (ROI).

Affinity marketing is a key solution to this problem.It offers brands access to fresh, up-to-date data that is often sourced from well managed, clean databases. As a result, response rates for marketing campaigns are significantly higher and generate a much better ROI.

DM response rates have been falling

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How does it work?

Take Brand A and Brand B in an affinity partnership.

The risk to Brand B is reduced because Brand A offers its list on a sales-commission only.

Brand B is able to use data from Brand A that’s not generally available to rent and is normally highly responsive for that single reason alone.

Brand A’s customers are offered exclusive deals from Brand B that add value to Brand A’s customers.

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Likewise, for the car repair chain, the benefits of this affinity partnership were extremely attractive. The company had access to hundreds of thousands of car owners who they would otherwise not been able to mail. The data was therefore fresh, responsive and relevant.

In the final analysis, both brands benefited commercially and so did their customers.

In conclusion, affinity marketing gives a marketer access to another brand’s highly-responsive customer database, as well as leveraging that brand’s appeal for minimal cost.

Here’s a typical example: One well-known UK high-street car repair chain, with over 570 outlets nationwide, recently partnered with an established insurance company to offer an affinity deal to the insurance company’s database.

The car repair company sent the insurance company’s entire database a direct mail piece offering a unique benefit, in this instance 25% off an MOT and service.

The insurance company’s customers received an unbeatable offer that was directly relevant to them as car owners and this, in turn, improved 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.

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Planning

Here the help of an affinity marketing specialist or partnership marketing expert is vital - they will have the professional experience, contacts and expertise in finding the right partners.

Just as importantly, they will have in-depth knowledge about structuring the best affinity marketing deal for both parties. In fact the legal structure of the deal is vital, as this avoids complications further down the road. The affinity marketing specialist will put in place a binding legal contract that specifically lays out the responsibilities affecting both parties.

Get the advice and expertise of an affinity marketing specialist to help navigate the planning process.

Brokering the deal

An affinity marketing specialist will help select and approach a relevant, potential partner.

Once an affinity partner has been found, the fine detail of the partnership and legal agreement will be drawn up covering all aspects of the campaign. Of particular importance will be the need to quantify the commission per sale as well as the responsibilities allocated to both parties.

At this stage it will also be necessary to ensure that all marketing collateral conforms to both parties’ brand values and meets brand guidelines.

Select a relevant partner brand that adds value and draw up a watertight legal agreement between both affinity partners.

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How to create an affinity partnership

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3. Choosing the marketing channel There are two main affinity marketing strategies:

STRATEGY ONE

Brand A promotes its affinity partner’s marketing campaign using its own existing business collateral - for example customer magazines, newsletters, ezines, bill statements, invoices and other marketing material.

Take, as a purely hypothetical example, Thomson Holidays (Brand A) and the insurance arm of AXA (Brand B) who agree on an affinity deal to promote a specialist AXA personal accident insurance policy. In Strategy One, Thomson Holidays would include a leaflet or brochure about the AXA insurance policy within its own marketing material.

In the above example, AXA would simply piggy-back on an existing Thomson Holidays’ mailing to its customer base, be that within a newsletter, statement or even an invoice.

Strategy One is therefore the simplest form of affinity marketing and easiest to implement. It certainly requires less work for both brands.

STRATEGY TWO

In the second strategy available to affinity marketers, Brand A will offer its customer database to Brand B for its own use, but under strict criteria.

Again, taken as a purely hypothetical example, Thomson Holidays will allow AXA a one-off usage of its existing or lapsed customer database. AXA will then mail Thomson Holidays’ database with a co-branded offer aimed exclusively at Thomson Holidays’ customers.

Unlike Strategy One, the costs of the creative, print and postage are met by AXA Insurance (Brand B), along with back-end commission to Thomson Holidays for every insurance policy it sells.

Strategy Two is both more complicated and expensive as an affinity strategy. The advantage, however, is that because it is a dedicated solus mailing, the response rates are often higher.

Whether a brand opts for Strategy One, Strategy Two or both will depend on its commercial objectives and the terms of the affinity marketing agreement.

4. Other key affinity marketing tips

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Ensure there is brand symmetry between both brands, either in terms of customer profile and/or customer lifestyle.

Keep expectations realistic. Predictive modelling is limited because it is normally based on only one brand’s experience. It is only by testing customer segments on an ongoing basis that any really accurate predictions can be made.

Make sure you understand your affinity partner. Both partners must recognise and understand their different aspirations, as these will influence campaign strategy and implementation.

Be careful of partnering with brands where data volumes are small. Set-up costs can be higher due to co-branding so there must be room for roll-out. Any database needs to be in excess of 100,000 records for an affinity partnership to work.

Make certain you establish an honest, transparent relationship with an affinity marketing partner. Both brands must trust each other fully.

Data Protection Issues

In any affinity partnership, the data-holding brand will already have permission to contact its customer base. Because of this, data protection and ‘opt-in’ issues are not directly applicable - the partner brand is simply either piggy-backing or using a joint co-branded offer to target another brand’s customers.

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Some brands may refuse to share their data out of principle. However, it must be remembered that customer data is not unique and most customers will be on many other lists too. Therefore, letting one brand use another’s customer data is not as unique a proposition as many marketers like to think it is - their customers are already being mailed on other lists!

Affinity deals rarely generate customer complaints because the product offerings are normally relevant and tied to the goodwill of a brand.

Evaluation and measurement

Because affinity marketing involves the close co-operation of two brands it is vital that both brands are involved in evaluation and measurement.

Step-by-step guide:

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It is essential that marketers understand the biggest advantage of affinity direct mail over traditional direct mail - the goodwill of a partner brand.

This is a key driver in the success of affinity marketing.

Look back over each brand’s past five direct mail campaigns and calculate the average response for each brand.

Compare these two average responses with the single response for the affinity direct mail campaign.

Typically, because one brand is subtly ‘recommending’ another brand’s offer to its customer base, the response for an affinity campaign should be higher than a standard cold direct mail campaign.

For evaluation purposes, therefore, do not just consider the list, creative or offer of the direct mail campaign - factor in partner brand uplift as a key consideration as well.

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Conclusion

The success of affinity marketing lies in its ability to target customers that would otherwise be difficult to reach, and for minimal outlay. This is enhanced further by the goodwill of the partner brand which gives a tacit endorsement of its affinity partner’s offer.

Combined, affinity marketing provides improved response, better ROI and increased brand loyalty by providing a brand’s customers with added value offers and promotions.

Given that marketing budgets are under pressure as never before it is therefore a surprise that affinity marketing still remains one of the most under-used marketing channels available. This is set to change as brands increasingly realise the cost-effectiveness and marketing power of joining forces for little added cost.

The most important factor, however, is to make sure that you have an affinity marketing specialist to find the relevant brand partner, structure the right deal and help measure the campaign for roll-out potential.

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