As president of a regional insurance agency, I was fortunate to lead our wholesale employee benefits division, which served a network of employee benefits sales professionals. These partners used our team to access products and services, such as group and individual health insurance, spending accounts, Medicare products, as well as ancillary group products (dental, vision, life, disability). The scope of these partners included individual salespeople, other regional insurance brokers, as well as national consultancies, such as Fleet Insurance Services and Bank of America Corporate Insurance Agency.
I have always been interested in the decisions our partner firms made to position themselves with clients; Some focus on smaller businesses where attributes of “being locally owned and operated,” “being expert,” “providing superior customer service,” and “having a one-stop-shop” seemingly determined who competed, won, and retained business. Other agencies focused on larger businesses and emphasized attributes of “employing superior, internal resources,” “offering national scope,” and “bringing sophisticated solutions,” as these attributes were thought to determine success.
Irrespective of the size of an agency or its target market, organizations are compelled to, within their business model, consider how to both position their messages and align resources to deliver to customers value based upon the organization’s value proposition. In some cases, decisions may be made to “own” these resources within the agency (e.g. by employment) or “accessed” through a referral relationship (e.g. referral to a law firm) or third-party contract (e.g. software license).
I am helping an agency on the strategy for its employee benefits operation. Prior to having a meaningful discussion about prioritized capabilities and the best options by which to align resources, it is important to identify the target market in which the agency is intending to focus; Once this target market has been identified, the discussion of capabilities and resources becomes vital.
Attributes I have identified as worthy of discussion include the following:
| Attribute | Question |
| Independence | Does your target market expect you to have access to all products or is there less conviction about the ability of your firm to bring all products in an unbiased manner? |
| Vertical emphasis | Does your target market expect you to be an expert in their industry vertical or is there a willingness to sacrifice industry expertise for other attributes? |
| Breadth of solutions beyond EB | Does your target market expect your firm to be part of a larger organization that has other solutions (such as commercial property-casualty, surety, financial advisory, life insurance) or is there willingness to view these solutions as more silo’d? |
| Compliance and communciations solutions | Does your target market expect you to support their decision making about plan structure and communications such that access to resources for advice and/or collateral are expected or does your target market view these as ancillary to the relationship, and they have limited expectations in these areas? If the value is expected to be derived from your agency, is there preference or indifference as to whether the service is “owned” by the firm or addressed through referral and/or third-party service? |
| Benchmarking solutions | Is benchmarking other employers’ benefits decision making important to your target market? If so, which employers? In other words, are the groups generally competing with other local employers (i.e. “mom and pops”) or national firms (e.g. Walmart and Amazon)? What mix of details across different categories of employers, plan designs, and contribution details are helpful in the decision-making in your target market? |
| Underwriting solutions | Is there an expectation for functional expertise dedicated to underwriting an important attribute to your target market? To what level is the education and training of these personnel important (i.e. actuarial vs underwriter vs early-career) and to what extent is building a relationship with these staff important or not in this target market? |
| Pharmacy solutions | Is there an expectation for independent staff and/or product solutions to address pharmacy cost management matters or is this not a clear priority? |
| Technology and leave management solutions | Does your target market expect you to bring solutions for technology, such as benefits administration and enrollment, as well as leave management capabilities? If so, is there a preference for a “bundled” solution that is under the control and supervision of your agency, or is the target market agnostic? |
| Local connection | Does your target market care about whether the firm, its ownership, and its employees are engaged in the local community, such as Chamber’s of Commerce, non-profits, and other civic organizations, or is this not important to your target market? |
| Service model | Does your target market value frequent touch points? Does your target market value “in person” vs “virtual” meetings or is there indifference? Does your target market have an expectation of certain staff being involved at various stages of the decision-making and implementation timeframes? Finally, is there an expectation of “in person” involvement in employee meetings at enrollment and throughout the year? If so, to what extent and with what frequency? |
In each of these areas, there are likely different responses in different markets; I would be surprised to learn that a target market of heterogenous employers with <50 employees within 50 miles of Frederick, Maryland particularly care about internalized PBM expertise from their benefits broker; I would also be unsurprised to learn that Virginia banks with 500+ employees valued expertise in PBM alternatives within their benefits consultancy. As a former professor of mine once shared, “remember, business models only exist within specific target markets!”
Thank you for reading my blog. If you read this have immediate reactions, and think I am missing an important attribute for consideration, please reach out to me! (For example, I did not include the capability to provide compensation studies or employee surveys…) I would love to hear from you!
ThorCo Solutions, LLC 