AFFINITY CARDS: Partners in plastic

Relationships can reap great rewards but they need constant effort to

keep them going strong, writes Alex Thomas

The dictionary definition of the word ‘affinity’ is ‘natural liking,

taste or inclination for a person or thing’. Defining the term ‘affinity

card’ is more difficult.

Is it an advertisement on a credit card or a loyalty device? Depending

on how it is used, it can be both.

Since the Royal Bank of Scotland and NSPCC launched them onto the UK

market in 1990, affinity cards have grown at an exponential rate. There

are now 1.5 million in issue, which is 5% of all credit cards, according

to the Credit Card Research Group.

There is no reliable data on the number of affinity card types or

brands, but CCRG head of research Peter Welsh says there are ‘literally

hundreds’ - figures as high as 700 are regularly quoted. There are cards

for sailors, football fans, civil servants, the police, doctors, lawyers

and teachers, newspapers, TV stations, car owner clubs, charities and

universities.

If the American experience is anything to go by, there is plenty of

scope for further expansion over here. Affinity cards represent 30% of

all US credit cards in issue.

Worthy of credit?

According to their promoters, affinity cards are packed with benefits:

revenue, enhanced customer loyalty, a higher profile and a constant

brand reminder - all for free. Not to mention opportunities for data-

driven marketing.

The problem is that there are now so many affinity cards their power as

marketing devices is in danger of being diluted.

Hamish Pringle, chairman of K Advertising, the agency that spawned the

daddy of all affinity cards, the GM Card, says: ‘There is only so much

room in someone’s wallet and only so many cards that people are willing

to carry. Once we have got the card into someone’s wallet, we have got

to make sure that it is used.’

This explains GM’s spectacular pounds 15m launch of the card in 1994.

‘One of the main reasons we took this approach was that we feared that

as soon as we had demonstrated the power of the concept, everyone else

would be jumping in the market,’ explains Pringle.

Vauxhall claims the card now has almost 700,000 members. It is even

credited with helping to rejuvenate demand for credit cards and helping

to increase the amount spent on them. Spending grew by over 9% in 1994,

up from under 7% in the year before its launch.

The GM card may have found a niche and exploited it, but the plethora of

cards launched in its wake have to offer something radically different

in order to have any impact. Marcus Evans, managing director of the

Ogilvy Loyalty Centre, says: ‘At the moment companies are lacking the

big idea. Things have got to the stage where the consumer sees an

affinity card and says so what?’

Companies have to build real benefits for the consumer into the card,

says Evans. They derive revenue from a joining fee for each new customer

and get a percentage of the amount subsequently spent on the card. In

return, holders are often offered better deals than high street banks

and traditional credit cards can give.

This is great, says Evans, but companies must continue to innovate if a

card is going to build real loyalty. ‘The card is just the start. You

have to give good emotional reasons to continue using it,’ he says.

The appeal of affinity cards for charitable organisations is obvious:

they are an effort-free means of generating donations as the charity’s

cut is automatically deducted. It is similar for universities, societies

and associations. But again, charities should not think that

contributing to a good cause is the only motive behind a card.

Evans argues that they should try and build in added benefits:

‘Charities are not working hard enough. They should be saying this is

good for you and for us - that would be a breakthrough.’

Affinity cards may be a way of getting your brand name into a consumer’s

hip pocket, but their real value is as an on-going communication

channel. Monthly statements provide a means of communicating with

customers through statement message and promotional inserts.

‘Affinity cards are a long-term relationship, not a one-night stand,’

says Beneficial Bank group vice- president Jan Stefanowicz. The cards,

he says, are more than loyalty vehicles: ‘If I want just loyalty, I’d

get a dog.’

Great expectations

However, International Customer Loyalty Programmes managing director

Tony Clarke says affinity does not translate into loyalty: ‘Affinity

cards can’t and won’t stand alone as the basis for loyalty programmes.’

Unless companies are careful, affinity cards can end up diminishing, not

enhancing loyalty. One anonymous marketer signed up for the Royal Bank

of Scotland’s Fine Wine card, looking forward to receiving special

offers on wine and a free subscription to Decanter magazine. Fourteen

months later, none of the offers had been fulfilled, turning the

cardholder off the bank and affinity cards in general.

Caroline Kimber, director of direct marketing for CACI, warns: ‘People’s

expectations are higher with affinity cards than credit cards, so if

they fail to deliver, the net effect can be very damaging.’

This article was first published on Marketing