Propel your agency beyond the
competition with an effective differentiation strategy
By setting yourself apart from competitors,
you eliminate the need to compete on price.
By Carolyn Smith, APR, TRA
Are you tired of finding yourself in a 90-day bidding war where price becomes the sole determining factor? Perhaps you’re the one consistently quoting, thinking that your only job is to sell insurance.
If you’re ready to break free from this cycle and establish yourself and your agency team as risk advisors who are greater than a commodity, it’s time to consider a stronger differentiation strategy.
So, what exactly is a differentiation strategy? Simply, it’s how you distinguish your firm from similar competitors in the market and highlight a meaningful difference that is valued by your potential clients, providing you with a competitive edge.
Renowned author and economist Michael Porter, Ph.D., Harvard Business School, teaches that two primary avenues exist to gain a sustainable advantage over your competition. The first involves competing on price and emphasizing similarities with your chief competitors. Because many agencies use this approach, it may sound appealing initially: “We offer the same coverage for a lower price.”
But this strategy is ultimately unsustainable. All it takes is one competitor willing to undercut your lowest price, leading to a race to the bottom. A low-price strategy also exposes you to the risks of commoditization and increased competition from various sources, such as direct writers, online comparison marketplaces, large brokerage firms, and even other regional agencies.
Porter’s alternative—and more effective—way is to differentiate yourself in a manner that is both significant and relevant to potential clients. This is where a robust differentiation strategy comes into play.
A point of differentiation can take various forms, such as a broad-based point that distinguishes your firm from the entire industry. For example: “By reducing risk, mitigating loss, and helping our customers prepare for life’s unknowns, Gilbert’s Risk Solutions has the expertise and knowledge to help make individuals and businesses feel prepared for their future.”
It can also be more targeted, allowing you to tailor your offerings to meet the unique needs of a particular segment of the market. For example, NCG Insurance’s differentiating statement focuses on religious institutions: “Our Mission is to Protect Your Mission®.”
Employing a differentiation strategy offers significant advantages, including:
- Diverse competitive landscape. By setting yourself apart from competitors, you eliminate the need to compete on price. Prospective clients are compelled to consider factors beyond cost when making their decisions.
- Enhanced appeal. Your unique offerings make you a more enticing option to your target audience. This increased appeal simplifies the process of attracting interest and closing the deal based on the value you deliver.
- Limited substitutes. Differentiation results in offerings that are not directly comparable to others in the market. Consequently, prospects are prompted to focus on your business’s distinctive value, enhancing your competitive edge.
- Heightened loyalty. Offering unmatched value and lacking direct substitutes fosters greater long-term loyalty with clients. With no compelling reason to switch, clients are more inclined to remain loyal to you and your agency.
Three tests for differentiation
So, how do you know if you are differentiated? Let’s look at the three tests for a successful differentiator:
- Truthfulness. A differentiator must be genuine and verifiable. Fabricating claims undermines credibility and diminishes trust. It’s imperative to uphold and deliver on any promises made. An example of an untrue statement is “XYZ Insurance Agency guarantees 100% coverage.”
- Relevance. A differentiator must align with the needs and preferences of your target audience. Irrelevant differentiators offer little value and are unlikely to influence purchasing decisions. For example, this agency uses a unique, but generally irrelevant differentiator: “Come visit us in our 75th floor office. We have the best view in the city!”
- Provability. Any claims of differentiation must be substantiated with evidence. Unsupported assertions hold little sway with consumers who have grown skeptical of empty claims. Two common unsubstantiated claims include: “We offer the lowest rates—get your quote now!” or “We promise to provide the fastest claims processing times.”
Now, you might be wondering which route is the most effective. Let’s break it down.
The key to true differentiation is showcasing what sets you apart, demonstrating why your approach, services, and values are unique and valuable to your prospects, clients, and underwriters. However, it requires effort and a dedication to unveiling and articulating these differences in a compelling manner.
On the one hand, you can choose to use the standard, common language that clients know and expect. It’s the safer, more comfortable choice. But you can easily fall into the trap of resorting to generic statements, such as:
- “Our agency is the largest.”
- “We’ve got you covered.”
- “Insurance made easy.”
- “Our people are the best.”
- “We care about our clients.”
- “We offer the lowest price.”
But let’s face it—do these claims hold weight? Are they truthful and provable? Can you provide evidence to support them? And most important, are they relevant? Do your clients or prospects even care?
The truth is that consumers are tired of clichés. While these claims may convey a sense of security and reliability, they may not always effectively differentiate one agency from another. Consumers want authenticity, innovation, and relevance. They want to know why you’re different, not just why you think you’re better.
So how do you go about uncovering your differentiator?
Compare your big claim to your competitors’. Try this exercise to gain insight into your competitors’ claims and where you stand in comparison:
Visit your top four-to-five competitors’ websites or LinkedIn pages. Look at their big claim—usually a generic statement—on their home page or About Us page.
Find and copy their big claim into a word document. Then do the same for your big claim.
Go through each entry and delete any mentions of their organization’s name.
Ask a few colleagues from work and friends who understand your business if they can correctly identify which description belongs to your agency.
After you complete the exercise, ask yourself if your agency sounded the same as the others. Or did your firm differentiate itself from the competition? By dissecting your competitors’ messaging and comparing it to your own, you can identify areas of overlap and pinpoint opportunities.
Discern your differentiation factors. Andy Neary, founder of Complete Game Consulting, says that the tightening of insurance markets and proliferation of transactional agents and brokers underscore the imperative for agencies to differentiate themselves. It is no longer enough to blend into the crowd; you must find your big claim or differentiator to set yourself apart.
Neary recommends asking the following questions to discern your differentiating factors:
- When people Google you, what are they going to find?
- What do you want the market to say about you and your agency?
- What is the one thing that you do better than anyone else in your market?
- What sets you apart from the competition?
Neary also emphasizes the importance of cultivating a credible digital footprint with a strong differentiating statement. An insufficient online presence and lack of a differentiating statement may lead prospects to question your credibility, potentially resulting in lost opportunities. In a competitive landscape, credibility is a currency that cannot be overlooked.
Survey your clients. After you complete these two exercises, ask a few long-term clients these questions:
- Why did you choose us in the first place?
- Why do you stay with us?
- What do we do that others don’t?
- What could we be doing for you that we currently aren’t?
These four simple questions can provide invaluable insights into your strengths and areas for improvement.
Your big claim or differentiator serves as a powerful tool in bolstering credibility and demonstrating expertise. By showcasing past successes and tangible results, you can substantiate your claim and instill confidence in prospective clients; and tangible evidence of past achievements can be the differentiating factor that tips the scales in favor of success.
Let’s look at some examples of specific, differentiated claims on LinkedIn:
- “We can help you reduce your Total Cost of Risk, not just your insurance premiums!” —Pitcher Insurance Agency
- “Relationships, Response, Transparency. We believe you should feel seen and heard by us.” —Three Arbor Insurance
These statements go beyond empty promises—each speaks to expertise, innovation, and tangible benefits for the client.
Avoid commoditization through differentiation. Differentiation is about carving out a distinct identity in a crowded marketplace. It’s about showcasing what sets you and your agency apart and why clients should choose you over your competitors. By developing a clear and compelling differentiation statement, you position yourself as the preferred choice for clients who prioritize value and quality over price alone.
Remember, using common, clichéd statements takes you down a competitive, slippery slope that often leads to price wars and commoditization. Instead, try embracing the challenge of being different. Dare to defy conventions, innovate relentlessly, and carve out your unique place in the market.
In the end, being different isn’t about standing out—it’s about standing the test of time and securing your place as a differentiated, valued risk consultant to clients rather than a transactional quote-and-bid agent. And that is where the real value lies.
The author
Carolyn Smith, APR, TRA, chief training officer for Beyond Insurance, creates and delivers transformative programs, including the Trusted Risk Advisor certification, BIGN Producer Boot Camp, and Quest for Success, that have positively impacted the lives and careers of countless professionals. These programs help industry professionals build a career that they love and achieve the success they deserve.
