Also in this issue:
Strategic Advantage, Part I
A Rose by Any Other Name
Strategic Advantage, Part II
The Small Case Market
Are You Tweeting Yet?
Let’s Buy a Voluntary Insurance Company
Don’t Go Through 2010 Blind
Enrollment Practices
Is the Worksite Business “Recession Proof”?
A Moving Target
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Winter 2010, No. 82
Strategic Advantage, Part I
Voluntary strategy, at its most fundamental level, is about achieving sustainable competitive advantage within targeted producer segments. To the degree a carrier can achieve this goal, it can drive its performance at will, or at least until the segment is fully captured.
Sustainable competitive advantage is about building walls around the target population to, first, take business from competitors and, ultimately, preclude competitors from choosing to do battle within that producer population.
Competitive advantage is the incorporation of differentiating features that are highly valued by your targets, within the value proposition offered to your producers. Whether that feature is product range, product design, enrollment tools, or sales support depends on three characteristics of the feature.
First, it needs to offer the targeted producers a meaningful business advantage in their world. In other words, the more competitive you can make them, the more competitive you will be. Carriers need to understand the customers their targets are pursuing and ask, “What do these customers need and want that we can supply?”
Second, the feature needs to be relatively scarce. Copying a service or product already common in the market may eliminate barriers to selling your products, but it does not offer competitive advantage. “What do our target producers need to more effectively meet their customers’ needs?”
Third, the feature should be sustainable. It should possess qualities that are hard to copy due to specialized expertise, cost, or time to develop. Most sustainable advantages involve some combination of brand, technology, and people. “Why are we uniquely positioned to offer this feature?”
Of the three, “people” is probably the hardest for competitors to replicate, whether it is comprehensive sales support, enrollment support, or customer service. Superior field and home office staff create high barriers for competitors.
As a part of annual planning, carriers should review their value proposition in detail and answer these fundamental strategy questions:
- What are all of the elements that are offered to targets?
- Which ones offer us sustainable competitive advantage?
- How do we improve on the ability of those features to preclude competitors?
- How do we add new ones?
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