How to Increase Your Number of Competitors
Value propositions (VPs) are the reflection of your business model through the eyes of your customers. The construction and utility of VPs will be discussed elsewhere in this issue. However, for the purpose of this article, VPs are the statements of customer value for those aspects of the business model that form your enterprise’s core business. They are not the reflection of every aspect of that business model.
While my core business may consist of gathering premium through the sale of voluntary products, my business model may include a variety of related services, tools, and functions that facilitate sales, but may not be part of my customer VP.
Let’s take a common example. I may be in the business of gathering premium, but because I deal with unsophisticated brokers, I may decide to offer complete enrollment services as a part of my business model. That enrollment service may facilitate sales for these brokers and help me achieve my overall business goal.
I can offer the enrollment services as: (A) a standalone, take-it-or-leav- it capability, or (B) a state-of-the-art offering by investing and trying to build it and then positioning it as a part of my broker VP on its own merits. In this latter case, enrollment becomes a competitive weapon and an integral part of my bundled offering to brokers.
For Option A, I may seek to partner with enrollment specialists or vendors. I probably define my competitors as those carriers who offer similar products in my broker markets. But for Option B, the success of my bundle may ride on the strength of my enrollment service.
As a result, carriers choosing Option B have increased the number of competitors in the market. Not only are other product manufacturers competitors, but so are enrollment suppliers. More players in the marketplace have a vested interest in beating me if I choose Option B.
The worst scenario is where the carrier in Option B has to sacrifice on benefits or commissions on the product side because of the cost and competitive pressure on the enrollment side. Now I run the risk of having a bundle that is less competitive in a market that has (for me) more competitors.
The hidden danger is that I start as an Option A carrier (with a standalone, take-it-or-leave-it capability) and, through normal market pressure, I morph into an Option B carrier (with state-of-the-art enrollment services). Most of us are very good at crafting a rational business model. But the marketing aspects, and the VPs that flow from it, can decide how broad and how strong the competition will be.
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