Spring 2008 / No. 75
Incremental vs. Exponential Growth
Every company plans for growth in their voluntary business and for most, the more the better. Strategies for growing the business range all over the board, but most can be boiled down into eight categories: four that promise incremental growth and four that promise exponential growth. Which categories are you pursuing?
Incremental Growth
The vast majority of companies pursue incremental strategies, those that promise less but also risk less. The major categories are:
Product Changes: growing by adding a compatible product or updating an existing product line (e.g.: adding a STD product to a traditional worksite portfolio or upgrading a UL policy)
Distributor Recruitment: growing by finding new brokers like the ones we serve today (e.g.: adding field reps or providing extra compensation for new distributors)
Services Build Out: growing by adding a service that current distributors and clients might need (e.g.: adding free POP support)
Administration Upgrade: growing by improving general billing, underwriting, and claims capabilities; experience shows that this strategy can help companies with systems markedly inferior to the market standard, but beyond that standard, improvements seem to have only a modest impact
Exponential Growth
Far fewer companies pursue exponential growth strategies. These efforts require greater resources (and therefore risk) but hold out the prospect of far greater growth.
Change/Add Markets: growing by shifting or expanding markets, bringing in new types of distributors and customers (e.g.: adding a new focus on credit union or educator business)
Add a New Channel: growing by appealing to a new type of distributor (e.g.: building a business to appeal to traditional employee benefit brokers in addition to traditional worksite brokers)
Change the Value Proposition: growing by expanding the basic business offering (e.g.: adding a free enrollment or call center service)
Portfolio Conversion: growing by overhauling the entire portfolio or adding a new slate of products aimed at a different audience (e.g.: adding a group or hybrid platform line of products to a traditional individual worksite portfolio)
Most companies opt for the incremental strategies, and most of the slow growth companies are in this group. Our discussions with companies are not disappointing because so many choose the slower growth path. They are disappointing because so many do not realize that slow growth is the most their chosen strategies can deliver.
To evaluate your growth strategy, contact Eastbridge at 860-676-9633 or info@eastbridge.com.
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