Monthly Archives: April 2012

Are Your Differences Unique or Relevant

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?

You Can’t Win or Stop a Technology War

When I got into the Benefits Technology business in 1997 I was given some great advice from one of our company programmers and that was, “You Can’t Win or Stop a Technology War.” I found this quote to be so true that I share it with some benefits broker, technology vendor, or employer almost daily.

When it comes to technology, whether it is an automobile, a cell phone, a camera, or a benefits enrollment system, there are those that wish technology advancements would stop and others who think they are going to win. There are certainly many examples of each. Think about companies like Kodak, Polaroid, and Blockbuster, and how they may wish the world hadn’t changed. Then there are those who are trying to “win’ the war. Very few companies have the capital to compete in that world. Certainly companies like Amazon, Apple, Facebook, and Google may come to mind as companies that are winning, at least for the moment. However, these companies, like Microsoft, will have many companies shooting at them and each will spend a great deal of capital trying to maintain their lead position.

So let’s talk about the benefits business. Benefits brokers are always asking me who is the “best benefits enrollment vendor” or what do you think if this vendor or that vendor. My response is always the same. First off, best is relative. Second whoever may be “best” today may not be best 3 or 6 months from now when another vendor comes out with something better.

The vendors also participate in this game. Recently I did market research for a client looking for a benefits enrollment system. During the process I would bet I had 4-5 vendors make the claim that they were the best. None of them could quantify why but at least that is what they thought. I then asked them how much money they had in the bank to compete in this space. Few would give me the answer though the question is very relevant if “Winning the Game” was a competitive objective.

The benefits enrollment technology game is changing rapidly. Prior to 2006 ADP, Paychex, and Microsoft were not in the benefits enrollment business. Today they are and they have cash. Even has now entered the HR Technology business. How long do you think it will be before they have a benefits enrollment system?

For those brokers looking to find the best benefits enrollment vendor my advice is stop. Whoever you may choose will not be the best 6 or 12 months from now because someone will have come up with something better. The best thing to do is focus on the problem. If a client wants a benefits enrollment system there are many vendors that have solutions that will work.