Third-party history

by Chris Heagerty, crb, crp, gri   The popularity of affinity marketing in real estate transactions has been fueled by several factors. First, the age of consumerism heightened awareness that consumers do not have to pay full fare for goods and services. Today's consumers demand quality products and services and understand that they can command lower pricing.

Second, corporations under competitive mandates are empowered to offer greater employee benefits and services without significantly increasing the cost of those benefits to the corporate bottom line. Third, corporations began to use referral fees rebated to the corporation to fund employee benefit packages. Fourth, third-party companies, competing among themselves for corporate clients, saw the opportunity to open up new markets or retain old markets under attack by competitors by offering their corporate clients discounted services for the corporation's transferring employee. Fifth, escalation of moving costs per transferee mandated that the transferee's employer look for funding assistance from non-traditional sources.

Affinity marketing has been on the horizon for many years, with programs offered by companies such as Amway. However, in the late 1980s, the concept was harnessed very effectively by PHH Relocation in handling affinity services for USAA, a three-million-member affinity group. USAA wanted to provide consistent, high-quality service to relocating armed services personnel on all aspects of the real estate move, such as home finding, mortgage, moving, home sale, etc.

The success of the USAA program has been significant, boasting closed ratios on sales approaching 48%, an unprecedented conversion ratio industrywide among any referral entity. PHH (now Cendant Mobility) has been able to deliver significant numbers of USAA home buyers to specially trained and committed real estate brokers and other service providers in exchange for referral fees. Their results rest on the rigorous service criteria demanded by the third-party service provider of the strategic partners.

The success of the USAA endeavor encouraged other corporations to follow suit. American Airlines, long a master of affinity marketing, expanded their offering of frequent flyer miles to their AAdvantage members who purchased a home through one of their strategic partner/brokers. The frequent flyer miles were financed by referral fees from the broker. The program was also extended to their members for mortgage services. Similar programs have been implemented by Delta, United, First Bankcard, First USA, and others.

Chris Heagerty, crb, crp, gri, is vice president of Henry S. Miller, REALTORS® in Austin.

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