Fast Fortune

In today’s competitive environment, the way to get ahead and gain an edge on competition is to focus on speed and niche marketing. Easier said than done? Not really. Speed can be learned, and niche marketing is easier than you think.

In this time of the “Great Market Consolidation” and a battle for market share, brokers and insurers alike have adopted the view that big beats small; in other words, big businesses will ultimately outperform smaller businesses. But before you buy into this premise and sell everything, don’t forget the lessons learned from the story of David and Goliath. In my opinion, big doesn’t beat small. Instead, fast beats slow.

FULL SPEED AHEAD

Right now, brokers and insurers should place their focus on speed and niche marketing to gain competitive advantage. By speed, I do not mean haste. Companies able to partner with like-minded companies – i.e. companies that segment their products and come up with new innovations quickly and consistently – will leave their competitors far behind.

While big market players are battling over market share and vanilla risks, it’s time to focus on the underserved risks that are more complex, less price-sensitive and ultimately more profitable. Specialty insurance should be the new focus for those looking to survive the Great Market Consolidation.

So, how to begin? Well, for starters, increase the speed of your decision-making. To do this, organizations must develop guiding principles according to which all decisions are made. By definition, guiding principles come from your leaders – your CEO and your department heads. Each must understand the need for an entrepreneurial approach to decision-making; one that supports quick decisions in the field, where the battles are being waged. This approach decentralizes decision-making and gives true authority to individuals working in the field. This template of values, ethics and beliefs act as the road map for all decision-making within the organization. This road map will ultimately enable line managers and field personnel to make real-time decisions quickly and autonomously. Such guidelines will help avoid long delays, allowing a company to take quick advantage of emerging market opportunities.

Next, reduce or eliminate unnecessary bureaucracy. “Unnecessary bureaucracy” is defined as irrelevant roadblocks that do not add value to decision-making process; they contribute nothing to the quick execution of decisions. Consider how much faster decisions would be executed if you didn’t have to wade through layers of bureaucratic red tape. Fast-thinking firms do not have unnecessary bureaucratic structures. If you have such a structure, fix it. If you’re dealing with one, demand they fix it.

RECOGNIZING OPPORTUNITY

Here are some tips to help you identify an unnecessarily bureaucratic company structure. A frustrating bureaucracy exists if answers to your questions include some of the following variations:

* “I’ll have to get back to you after I present this to a committee.”

* “Great idea! Can it wait six months?”

* “Good idea, but we can’t allocate resources at this time.”

If you repeatedly hear these responses, in addition to the word “process,” chances are you’re dealing with an unecessary bureaucracy. Run in the other direction. Find a company that has a faster response time, before your competition does.

Niche markets have long been known to provide better results, shelter premiums and offer much less competition. They are also less costly to market and more apt to remain loyal to their broker.

Let’s get started finding your next loyal niche market. If you read the newspaper, surf the Internet, or just look closely at your existing book of business, chances are you’ll be able to find your next niche market.

Notice that I didn’t say: ‘Find your next niche product.’ I said: ‘Find your niche market.’ The product will follow once you have identified your niche market. A niche market is defined as the group or segment that you are target-marketing. The product fulfills the needs of the group or segment. Simply put, find the market and you’ll find the product.

BACK TO BASICS

Why should you pursue a niche market when all around you people are clamoring for and extolling the virtues of more market share? Marketing and developing a niche offers a number of tremendous advantages. First, you’ll know exactly how and where to advertise. The competition will decrease and there will be an opportunity to learn everything there is to know about your market. Once established, your new niche will provide natural entry barriers for new competitors. Most importantly, it will set you apart from other organizations and allow you to produce a profit. Remember, if you can make yourself stand out in a crowd with a unique benefit, you are likely to make more money than all the others.

You can identify a niche market by considering a number of factors. These include an identifiable and segmented demographic with similar interests or needs, a market large enough to make your niche efforts – and the marketing required to promote them – financially viable and, most importantly, your niche market is underserved by the insurance community.

FINDING

FORGOTTEN MARKETS

So how do we go about finding that underserved market? Answer: First, look at yourself and your existing lines of business. In which fields do you personally have an interest or already have expert knowledge? What do you have fun with? Analyze your existing book of business to identify commonalities and find out if there are any problems to solve. Second, look outward to identify new trends and new opportunities. What new trends do you see?

Once you think you have a niche market selected, now it is time to surf the Internet and find out more about this segment. At this point, you should be assessing the niche market potential: read newsletters and blogs, and gather any information you can find on this niche group. Next, go speak to their leadership. Find out directly if they are being served or underserved in terms of their insurance needs. Finally, survey the competition. Find out who your potential competition is and how they are currently supporting this market niche.

Once you’ve done your homework, you will need to formulate a plan by which you can offer a better product or a new twist on an existing one. Perhaps the answer is not in the product itself, but in the delivery or distribution of that product. It may be in adding value, by offering a new service or a new combination of products and services.

MAGNIFY THE MARKET

Once you’ve figured this out, it’s time to find a market. Most markets look for a solid plan that shows you or someone in your organization has the requisite knowledge or expertise in the niche market. The plan should provide market representatives with a brief background as to why you are looking to develop your new niche market.

Other elements to include are the niche market size and your forecast for growth of the entire market. Market representatives will also want to know the geographic segments of your new market. Who are the traditional competitors?

When it comes to your new product, you must promote the advantages of your product and your distribution model. Explain how you are planning on distributing the products. Identify the product enhancements you plan to offer. Describe the segmentation process and how you plan on setting up the pricing: will your pricing be lower than, higher than or match the current market pricing?

Finally, if you can gather previous premium and loss history, this will assist in getting your proposal off the ground and send you on your way to writing your new niche specialty business.

In today’s market, remember, with hand on heart, that if you do the basics right, and partner with a market that recognizes the value of spee d and niche markets, you will be richly rewarded and will truly gain the edge.