Brokers: Establish Yourself As A Brand That Stands Out From The Crowd
Whether you are selling soft drinks, software or employee benefit products, the same general rules of marketing apply. You are fighting for market share and profit against a crowded field of tough competitors. You need to establish a brand that enables you to stand out from the crowd.
There are two general strategic paths you can follow in establishing your brand: low-cost or differentiation. Deciding which is the proper strategy for you and your business is one of the most important decisions you will make, so it should not be made haphazardly. It is well worth your time to apply a structured, systematic discipline to the process.
The first step is to understand the fundamental difference between operational effectiveness and real strategy. Operational effectiveness is about attention to detail–providing prompt, effective and courteous customer service, for example, and investing time and effort into maintaining solid relationships with customers and suppliers.
Thats vitally important, but it is not a strategy. All of your competitors can, should and probably are doing the same thing. You cant set yourself apart from the crowd that way.
While operational effectiveness is about “doing things right,” real strategy is about “doing the right things.” It requires making choices and accepting tradeoffs, and most importantly, it requires discipline. Once you decide on a strategy, you must apply it consistently across all of your business functions at all times.
Now, how do you decide on the right strategy for you? There is no need to reinvent the wheel. There are systems that have stood the test of time, and one of the best is Michael Porters Five Forces Model, first introduced in his book “Competitive Strategy.”
In the classic Porter approach, you start with an analysis of the industry and your place within it. The analysis always should be done at the local level and at the national level when appropriate. The following questions indicate how the Porter method can be applied specifically to the situation of employee benefit brokers:
What is the existing degree of rivalry/competitiveness among the brokers currently involved in the market?
What is the potential for new brokers to enter the existing market, considering prevailing ease of entry and profit potential factors?
What is the relative bargaining power of your buyers, considering the importance of the purchase decision to their business and the level of information they have available?
What is the potential threat posed by suppliers of substitute services to change the dynamic of the market? Can customers use less of your service or do without it?
What is the relative bargaining power of your insurance carriers?
The next step is an honest internal analysis: What are the strengths and weaknesses of your organization? Look at your organizational structure and alignment. Do you have the right structure, capabilities and incentives in place to execute either the low-cost or the differentiation strategies?
Finally, conduct an analysis of your existing competitors who offer similar products and services, as well as possible new entrants who have the ability to change the playing field. Some questions to think about are: