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By Matthew Mitchell, PhD, Managing Partner, Bâton Global; and Eric Madcharo, MBA, Consultant, Bâton Global

Developing, expanding, penetrating, or diversifying within the various markets in today’s environment can be challenging. Does an organization look to sell more to the same buyers, find new sources of buyers, develop new products for existing buyers, or try selling new products to new customers? Each approach presents its own set of risks as one develops strategies to market through traditional B2B2C affinity models.

The evolving loyalty of buyers, declining membership growth in traditional associations, and the rise of new or alternative purchasing platforms present challenges within affinity relationships. Connecting with the right audience, at the right time, with the right product continues to be laden with complex challenges not seen in prior years.

To better understand these dynamics, PIMA teamed up with Bâton Global for an in-depth research initiative. We explored over 20 affinity market segments, categorizing them into:

1. Membership-based organizations where the focus is on member growth and support 
   
2. Customer-based organizations where the relationship is focused on financial relationships with customers 
   
3. Other diverse sectors 
   

The primary objective of our study was to equip affinity insurance providers with actionable insights, setting the stage for effective strategy formulation. Here are a few of the key learnings we uncovered:

Membership-Based Organizations

Membership-based organizations are experiencing significant transformations in member participation rates and changes in contribution levels. However, there are still pockets of growth within some of the segments.

Traditional entities such as associations, social clubs, and labor unions are facing declining or stagnant participation rates. For instance, union membership today stands at a rate of 10.1%, down from 20.1% in the mid-1980s. Causes & advocacy groups are navigating the “donors down, dollars up” trend, underscoring their reliance on major donors who contribute a significant portion of philanthropic funds. Meanwhile, ever since the pandemic, warehouse clubs & superstores have seen a sustained increase in memberships, skyrocketing to over 122 million.

Customer-Based Organizations

Customer-based organizations are a different animal. In some industries, concentration and consolidation define the landscape. For instance, three banking organizations serve over 220 million customers. In the aviation industry, four airlines control 65% of the market. Similarly, three leading cruise companies capture an impressive 89% of the market, while eight major hotel groups, representing 168 brands, dominate the hospitality landscape. Meanwhile, credit unions are expanding, with 4,900 institutions currently serving 135 million members. The consumer lending sector has recently recorded a 12.9% year-over-year increase in unsecured personal loans, now reaching 22.5 million consumers, while auto originations are expected to reach 28.8 million in 2023.

Other Segments (e.g., including various uniquely defined segments)

Within the “Other” segment, auto manufacturers experienced recent production declines resulting in 14 million cars produced in 2022. While 17 million students are currently pursuing degrees, colleges and universities are grappling with financial challenges and declining enrollments. The U.S. Military stands strong with 1.3 million active service members and boasts a veteran community of 19 million. During the COVID-19 pandemic, there was a discernible pivot in hobbies and special interests with activities like cooking, baking, reading, and pet ownership surging in popularity. On the economic front, the gig economy, estimated at a staggering $450 billion, is flourishing at a robust rate of 17%. This growth is spurred by the substantial 39% segment of the American workforce that’s embracing varied gig roles to augment their earnings.

Dynamic Capabilities and Bâton Global

The insights compiled across the three categories highlight the intricacies of the current affinity market landscape. Generating success in this environment demands agility and a diverse strategy. Affinity insurance providers must be able to pivot strategically in real time, adapting their resources and strategies to meet new challenges and seize new opportunities. That’s where an organization’s dynamic capabilities come into play. And that’s where Bâton Global excels.

Dynamic capabilities are defined as “the firm’s ability to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments.” Put more simply, they are the structures, processes, and routines that enable an organization to recognize new opportunities and build new core capabilities.

In the past, companies could rely on stable markets, predictable consumer behavior, and long product life cycles. Those days are gone. At Bâton, we firmly believe the ability to change in response to emerging opportunities is the only remaining competitive advantage. Our specialty lies in visionary strategizing, seamless integration, and empowering organizations to cultivate fresh capabilities. We don’t just offer solutions; we partner with you to reinvent the trajectory of your growth story ensuring buy-in and alignment at every step.

So, how can Bâton Global assist in navigating the insights from our study to create a competitive edge? Consider these initial questions:

• Market-Revaluation: What is the long-term viability of the industry segments you’re currently aligned with? 
• Targeted Messaging: Are you addressing the changing social alignment trends and tools with updated marketing messages? 
• Building Trust: Are there alternative ways to build trust and loyalty with audiences? 
• Tech Adaption: Are you capitalizing on new data sources, processes, and technology solutions? 
• Purchasing Platforms: Can you position yourself to support new technology such as customer purchasing platforms to seamlessly integrate your products into these buying channels? 
• Adapting to Evolving Economies: How can you position products, relationships, and services for the gig economy and shift in new hobbies? 
• Elevated Customer Experience: When customers expect to experience a seamless transaction and access to great products at the right time, will you be able to capitalize on these opportunities?

To address these questions and guide your journey, we use our B|G Framework, designed to guide teams to realize the strategic vision.

1. Insight: Gain a profound understanding of your world 
2. Innovation: What got you here won’t get you there 
3. Integration: Building capabilities for effective and lasting change 
4. Impact: Achieving your financial, social, and growth goals 

Bâton Global is driven by a desire to bring together the best of academic research with cutting-edge technologies and leading global business experience. We serve the world through offering future-oriented clarity; knowledge from research and experience; meaningful partnerships; and strategic agility that allows us to meet the evolving needs of our clients.

Navigating today’s affinity market landscape requires more than just understanding data—it demands foresight, agility, and the ability to adapt swiftly to ever-shifting environments. As the market continues to evolve, so too should your strategies. Bâton is driven to help clients create a culture of innovation and strategic ambidexterity to compete for the present and prepare for the future simultaneously. We offer a collection of services to help your organization navigate its evolving environment, ensuring continued financial, organizational, and social impact.

To learn more visit: https://www.batonglobal.com/

Published in the Fall 2023 issue of Insights Magazine.

PIMA® (Professional Insurance Marketing Association®) is a member-driven trade association focused exclusively on the affinity market.

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