How Do Affinity Programs Work?
At their core, affinity groups are made up of people who have something in common. They've been around a long time — since the 1700s — but they're more than associations of like-minded folks.
Affinity groups include credit unions; labor unions; colleges and universities; military and veterans groups; professional organizations; travel clubs (including airlines, hotels, and cruise lines); and even places to shop like warehouse clubs and super centers. Products offered through affinity groups protect millions of Americans in all 50 states. But what is an affinity group, really, and how do they help consumers and benefit companies?
What Is an Affinity Group?
Companies often refer to "affinity groups" by different terms. Some say affinity distribution, others call it B2B2C, and some refer to it as group-sponsored distribution. Regardless of your preferred term, "affinity" refers to companies using intermediary organizations to access consumer groups.
The consumer group has an affiliation and affinity to the organization (be it an employer, trade association, credit union, bank, university, etc.) that is desirable. That affinity can help the company better reach the consumers it's targeting, who are often more receptive to the company's message in conjunction with the affinity or intermediary organization.
How Do Affinity Groups Work, and What Are the Benefits?
When using affinity groups to reach an ideal audience, a company develops targeted products, pricing, and marketing programs that provide value to consumers. These consumers are often more responsive to the company's products and services because the intermediary organization (i.e., the affinity partner) endorses and promotes them.
In insurance and financial services, the affinity market consists of a “group” relationship or a “group contract” that exists between a company and an intermediary organization the company is partnering with. For insurance products, the definition of a bona fide “group” is set by each state's insurance department.
When leveraging affinity groups, companies rely on the "affinity" that consumers have for an intermediary organization to help with marketing and distributing. For instance, if Company ABC were to offer employees something through their employer, those employees might be more likely to buy because they have a strong "affinity" for their employer. Likewise, if your alma mater offers you a product or service through a third party, you might jump at the chance to buy because of the relationship you have with your alma mater. However, if the exact same third-party organization were to send you an email for the exact same product, you might delete it because your affinity begins and ends with the associated brand.
Using the affinity group model is useful for everyone involved for several reasons. It builds business relationships between affinity partners, leverages existing relationships with consumers, and gives consumers access to more economical solutions. Affinity groups provide benefits that protect and service consumers for a variety of purposes. One benefit is that products sold through affinity groups are often more affordable due to economies of acquisition or administration.
The affinity model also provides scalable benefits for the companies that choose it. They can be customized to fit your company's (and your customers') specific needs with a variety of partners, products, and marketing methods to leverage. While customization is often the driving force behind affinity programs, other elements also play a role, such as:
• Access to coverage that is not available in the individual marketplace, similar to what can be found with employer groups.
• Product options that are not always covered by people's employers.
• Portable coverage if members should leave or change jobs.
• Consumer trust in the intermediary partner.
Everyone likes to feel like they belong. When companies use affinity groups, they leverage that feeling to build relationships with consumers and enhance the chances that their messages will be received positively.
If you’d like to learn more about affinity programs or the benefits of becoming a PIMA member, contact us today. PIMA offers more than networking, peer-to-peer learning, and continuing education. It can also help your company meet customers’ expectations and generate business growth through collaboration and innovation with industry leaders.
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