Summer 2010, No. 84
What Differentiates Us?
By Gil Lowerre
One critical aspect of strategy creation is the identification
and development of meaningful differentiation. What makes us different?
What compelling reasons do brokers have for switching carriers
and bringing their voluntary/worksite business to us?
Our clients know that our research efforts were founded at their
request, designed to support our strategy and operational consulting
efforts. And as you’d expect, differentiation has been a
recurring topic of our studies. At a high level, here’s
the scorecard.
What doesn’t differentiate us?
Basic administration. Basic functions, like
underwriting, issue, billing and claims, all qualify as hygiene
factors. They are expected by producers. No one will switch to
your company because you’re good at them; brokers will leave
you if you aren’t.
Commissions. Leadership in this area is only
differentiating to a minority of producers. Other issues trump
commissions. And for those who look at compensation first, you’re
either a “high” commission company or you are not.
If you are, you’re in the running, but brokers will still
weigh other issues before selecting the high commission company
they’ll use. In other words, if you pay high commissions
in order to compete for the minority of producers for whom that
is a key in their decision-making, it still is the other things
that will drive their final decision.
What does differentiate us?
Services. Service to employers, employees, and
especially to brokers is key. This includes job aids, personalized
support, responsiveness, resources (like web access to tools and
data), etc.
People. Higher quality staff builds higher quality
relationships. And relationships build business. We all know about
a major carrier who went through a wrenching two-year downgrade
but barely lost momentum. And they lost few staff—and fewer
brokers—and have since picked up right where they left off.
Relationships rule.
What about products?
Products. These can have differentiating power,
but only for a few carriers and only for a limited period of time.
If you want to be an industry leader in a product line, you can
attract production, but consistent product leadership is expensive.
One goal of strategy creation is to design a services platform
that is exceptional in ways that are meaningful to producers,
while building the highest quality staff possible. And if there
are real product design or compensation opportunities, that’s
a bonus. The creative part is defining what these mean in operational
terms.
Postscript
The quality of a carrier’s
administration is a delicate issue. Competence at performing the
basic functions is expected, and therefore, not differentiating.
And yet, adding exceptional functions: broker business data, re-enrollment
processes, payroll and HRIS capabilities, can be. The key issue
is straightforward: do not spend more on basic administration
than required. It won’t get you anything. The challenge
is more subtle: which enhancements are worth investment because
they are truly differentiating?
For more information on Eastbridge’s strategy creation process,
email us at info@eastbridge.com.
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