“Have you strategically diversified and optimized your portfolio based on your firm’s value proposition, your market, your client’s needs, and your capacity to deliver?”
This is the first – and most important – of the 12 benchmarking questions in our “Agency Growth Readiness Self-Assessment” (www.21stCenturyAgency.com/assessment). Building a diversified post-ACA portfolio – your toolbox of product and service solutions – is serious business. How well you choose the products and services for your toolbox is fundamentally important and will determine your future success in this industry.
(Do not quit reading until the end. Not only is this very likely the most important topic for your firm’s future success, at the end I’m going to give you a tool that can change your world and guarantee your future success. How’s that for a promise?!)
Cornerstone of the reform-proof agency
In my book, DO or DIE: Reinventing Your Benefits Agency for Post-Reform Success (available at www.21stCenturyAgency.com), I call the portfolio the cornerstone of a reform-proof benefits firm, what we call the 21st Century Agency. An entire section of DO or DIE is devoted to product and service options for the 21st Century Portfolio.
Your portfolio is so critical because it determines how relevant you will be in the market; what client problems you can solve; what and how much value you can bring to your clients; in short, your firm’s value proposition in a market that is demanding more & more value. Serious business, indeed.
Far too many benefits firms continue to offer clients little more than brokerage services in managing the renewal, some basic plan design, group health plans, some ancillary benefits, and perhaps some rarely sold voluntary benefits. For over 50 years, this limited portfolio was all an agency needed to generate very lucrative commission revenue. But with both large and small group commissions going away, any agency soon will be in serious trouble if it is still dependent on medical commissions and spreadsheeting remains its primary value to the client.
But few agency owners are seriously building a 21st Century Portfolio to enhance their value and free them from commission dependence. And most of those agencies that are adding to their toolbox are doing it all wrong, without strategy or logic. How you choose the products and services in your portfolio is all important.
Channeling “The Jerk”
In the comedy film classic, “The Jerk,” Steve Martin’s character, facing ruin in his business and his marriage, defiantly tells his wife that he’s leaving her and his home. Dressed in a robe and boxer shorts and shuffling due to his pajama bottoms down around his ankles, he yells, “I don’t need you…I don’t need anything!” But picking up an item off of his desk, he adds, “…except this…this ashtray…and that’s the only thing I need…and this paddle game,” collecting it when he spies the paddle on the floor.
As he makes his way out of the house, he continues to pick up other perfectly random items – a remote control, a pack of matches, a lamp, a chair, a magazine. Finally, his hands and arms full of his odd and random acquisitions, he shuffles out the door.
Very funny stuff…when Steve Martin does it in a movie. But it’s tragic, not funny, when I see benefits agency owners basically recreating this scene from “The Jerk” as they attempt haphazardly to diversify their portfolio:
“I need this wellness program…and this self-funded captive… oh, and this private exchange…and I need this level funded self-funded plan… and I need these worksite voluntary benefits…and this telemedicine service…yeah, and I need this compliance service….”
…and on and on. No rhyme, no reason. These agency leaders usually are just grabbing products and services because they know they need to diversify. And sometimes it’s a defensive play to keep up with a competitor and sometimes it’s just to be able to check the box. But only rarely is it an intentional process.
Strategic diversification
It’s not that the above or any other product and service choices are right or wrong. The issue is that there is no strategy in selecting the solutions that will define the value a firm can bring the client. This value in turn is what justifies your agency’s fee…more value justifies a larger fee.
The agency owner or benefits practice leader who wants a well-designed, intentional and strategic portfolio must ask some hard and pointed questions of every potential addition to the portfolio. I’ve created a proprietary “Strategic Portfolio Diversification Process” so agency leaders can know for certain that any addition to their portfolio truly deserves to be there and will provide value for both a client and the firm.
Your portfolio choices will be guided largely by the new role your firm plays in the post-reform market, which should be based on which decision maker you most prefer to work with, either the HR director or the owner/C-Suite. There’s no room here to elaborate further but I go into much more detail in my “Growth Strategy Report: Strategic Portfolio Diversification Process,” which you can get below as my gift.
I want to focus here on the four filtering questions in the Strategic Portfolio Diversification Process that help you assess how well any product or service solution supports and fulfills the firm’s role and value proposition.
- Does the product or service support and enhance your firm’s key value proposition(s) and marketplace role?
- Does it meet the specific needs of your target market(s)?
- Do you have the internal capability to deploy the product or service successfully or are you willing to either hire the talent or partner?
- Does it generate sufficient revenue to justify the investment and/or effort OR does it provide sufficient value in other ways, e.g., providing a true competitive advantage, differentiating or enhancing your firm’s value proposition?
Regardless of the product or service under consideration, a “No” answer to any one of these questions should disqualify it from inclusion in your portfolio. The stakes today are too high to be wasting any time, money, or bandwidth on products and services that don’t meet these key criteria.
But remember, for these questions to be truly effective, as question one makes clear you must know your firm’s new post-reform market role and value proposition.
Get your portfolio right and your firm will be relevant and competitive in the new post-ACA economy. And you will be able to transition from reliance on commission to generating fee revenue. Additionally, get your portfolio right and your marketing and selling become so much easier and more effective. Now that’s a compelling value proposition. So, what’s in your toolbox?
Get a complimentary, no-strings-attached copy of the Growth Strategy Report with the entire Strategic Portfolio Diversification Process at https://tinyurl.com/DiversifyPortfolio.