While coming back on a plane from a West Coast trip I was reading an article in the Harvard Business Review whose main premise was “how to create a unique and repeatable business model” to more effectively compete in today’s business environment. The article made three main points that I thought applied directly to the benefits business. The points were:
“Differentiation is the essence of strategy, the prime source of competitive advantage.”
“Are your differences measurable against your competitors?”
“Are your differences relevant to your competitors?”
For the past 10 years or so one of the ways brokers have been trying to differentiate themselves was through technology. In the early 2000’s it was giving away benefit websites. In fact, the vendors themselves all sold the idea of “being different” and bringing more value added services to get business. Their sale pitch was, “If you don’t do this the broker down the street will and you will lose.” For a short time this did make a difference for some though it really wasn’t’ sustainable. Websites eventually stopped becoming a differentiator when everyone could do it. And I would argue there was not huge demand so there was more sizzle than steak.
While we can acknowledge that having a unique value proposition is a competitive advantage it only is so if it passes the test of numbers 2 or 3 above. This reminds me of the time I was speaking at a broker conference in Atlanta and I asked the room, “How are you different?” A broker on the left raised his hand and said, “I provide great service”. One on the right raised his hand and said he too provided great service. My question to them was how this is measurable to a prospect. Great service is an expectation, not a differentiator in most industries.
The third point above probably is the one I talk about the most with brokers. “Are your differences relevant?” Is what you bring to the market significant enough or in enough demand by the buyer to help you stand out from the crowd. You can be different but if nobody is demanding what you have then it is not relevant.
I was speaking with a broker in Florida late last year when one of the brokers asked me, “Do you have compliance newsletters?” I replied by asking if he wanted compliance newsletters or did he want to be different. He said he wanted to have a unique value proposition for his clients. Somewhere along the way he drew the conclusion that compliance newsletters would make him different. I would contend that compliance newsletters aren’t very relevant to the buyer. Getting access to information on the web is too easy. While an employer may appreciate a newsletter they don’t make buying decisions because of them.
Many of the vendors pitching their products to brokers are telling brokers, “use my technology and you will be different”. Most of their products aren’t relevant differentiators and many are easily duplicated. In fact, for many of these vendors you are the actual customer, not the client, because they want you to pay for it with your commissions.
Creating and maintaining a unique value proposition that will make a real difference to the end customer takes a lot of thought and work. Many firms go in search of vendors with products. I think you need to go offsite for a few days with your team and do an honest assessment of what the market is demanding and stop buying into the broad promises made by the vendors. Ask yourself the questions above. Are your differences measurable and are they relevant?