With the unrelenting competitive pressure of today's insurancemarketplace, even the largest multiline carriers no longer go italone. At Columbus, Ohio-based Nationwide, strategicalliances—formalized partnerships with other insurers, withcomplementary service providers, with affinity groups, and withcritical vendors—are now critically important components of themutual insurer's product, marketing and customer retentionstrategies.

“Partnering is definitely becoming commonplace, and not just atNationwide,” said Vicente Rivera, associate vice president ofstrategic alliance management, Nationwide Direct and AffinitySolutions. “Auto insurers such as Geico and Progressive collaboratewith other property and homeowners insurance providers to round outtheir products. They even extend multiproduct discounts to theircustomers.”

The need to differentiate and offer more to the customer is thedriving force behind today's wave of insurance partnering, saidRivera, whom I met last week in Scottsdale, Ariz., at the annualconference of the Association of Strategic Alliance Professionals.

“The marketplace is very competitive and we have to partner toprovide customers with all the products they need,” Riveraexplained. It's also becoming crucial for customer acquisition in avery noisy marketplace. “You see all the money insurers invest inmass marketing. You need partnering to break through the clutterand reach the ultimate customer. That's true for uniline insurersand for multiline insurers like Nationwide too.”

Insurers are following the example of the high-tech andbiopharmaceutical industries—which for decades have utilizedsophisticated partnering capabilities to develop new products andto deliver more complete solutions to their customers. Within thepast few years, many insurers like Nationwide have developed andinstitutionalized the practice of alliance management as afunctional department within their organizations. A formalizedalliance management function improves a company's ability to findthe right partners and to manage these strategic relationshipseffectively, efficiently, and sustainably.

“We're a customer-centric brand and seek that in our partners,”Rivera said. “We want to make sure our corporate philosophymatches, that there's a cultural fit. We are very particular. Ourvalues have to align. In our case, we have a strategic alliancemanagement function to manage the most strategic relationships—andeven with more tactical partnerships, we hold our partnersaccountable to our approach.”

Alliance management focuses heavily on maintaining alignmentbetween and among partners, which is a very complex challenge whentwo or more organizations are coming together for a common purpose.“Alignment is very important and we are very disciplined whenlooking at partners. We want to make sure not only that they arelong-term relationships, and that they bring value to ourcustomers, but also that they are able to bring value to theirconstituents as well. We are very relationship based.”

Given the complexity of partnering relationships—and the factthat partnerships create many forms of reciprocal value for thepartners and the customer, including but not limited to financialvalue—alliance managers across every industry are challenged toidentify, measure, and communicate the value created by theirstrategic alliances.

“With most of our partnerships, we measure the ROI [return oninvestment], but as important as that is, we want to make sure ourpartner is getting benefits too,” Rivera said. This is especiallytrue for affinity partnerships. “When we partner with membershiporganizations to serve their member bases, we measure not just thenumber of policies in force, but also what products their membersare buying, and we use a variety of quantitative and qualitativemeasures to show that we are providing the right products.”

For many if not most sizeable organizations, in insurance and inother industries, the mindset of reciprocity that is essential forsuccessful alliances can come in direct conflict with the cultureand values of a competitive corporate culture.

“We always have to get alignment so that we have the supportneeded to drive success, so that involves collaborative meetings,engaging leadership in steering committees, and always making surepeople understand the value. That helps bring folks along,” Riverasaid.

Strategic alliances require a strong, structured managementframework anchored by memoranda of understanding that lead tocontracts that help govern the relationship. Also key, Rivera said,is establishing a single point of contact at each partner who isresponsible for managing the relationship. He insists on the singlecontact point, even when Nationwide's partner does not have aformal alliance management function.

“This is about the relationship. It helps keep us focused on theoverall partnership so that we don't lose sight of thatrelationship as we conduct the day-to-day tasks at hand,” he said.The alliance manager then is responsible for managing internal aswell as external relationships that are critical to the success ofthe alliance—so alliance managers spend a lot of time incommunication. “This way leaders in each company know the goals,what is happening, and there's a clear path for disputeresolution.”

Going forward, partnering is going to even be more important,according to Rivera.

“Partnering is one very effective tool to break throughmarketplace clutter, and to help our agents become the agents oftomorrow. With the customer at the center, our agents' role isparamount in building and maintaining the customer relationship.Any partner or association we work with must bring value to ourdistribution chain, and to the customer,” he said.