Insurance, Credit Cards: The Litmus Test
By Jodie Slaughter, President
Originally Published in Association Trends
Two of the most well established, successful, and widely offered association affinity programs are insurance products and credit cards. By providing tangible benefits to all three participating parties -- the providers, the members, and the sponsoring associations these programs fulfill the necessary "value triangle" of any successful program.
Many early associations were founded specifically to create life insurance funds for members’ surviving widows and orphans. These programs have evolved to span a variety of personal lines of coverage–including updated versions of the original, life insurance -- to protecting against the complex risks of running a business in today’s litigious environment. Insurance companies find value in associations' marketing efficiencies, dependable lists and well-read publications, as well as more predictable risk profiles in many product lines. These benefits are passed through to members and associations in the form of reduced premiums, unique coverages, and royalties or marketing fees. By offering these specialized lines of insurance, associations also help members solve problems and meet real needs by protecting their assets, businesses and lifestyles.
Association affinity credit cards changed the landscape of personal credit and propelled at least one regional bank into one of the country’s top card issuers almost 20 years ago. Since then organizations of all types and sizes have learned that members are often proud to present a credit card that identifies the holder with his or her association – even when the pricing or interest rates aren’t the lowest in the marketplace. Associations have also realized the significant income potential of credit card programs. Again, credit card companies receive marketing benefits, better conversion rates, and in many cases, better customers by working with associations. One study showed association members’ bad debt ratio to be one-third of that seen in a non-endorsed customer base.
Why do these two program areas enjoy such a rich history and promising future in today’s increasingly competitive market? They share three important traits:
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They meet an established need.
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They capitalize on the commonality of group memberships in product design, pricing, and marketing, which results in real benefits to members.
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Their benefits are effectively and repeatedly marketed to members.
Association execs with stacks of proposals on their desks would be well served to apply a similar litmus test to any new program.