With the unrelenting competitive pressure of today’s insurance marketplace, even the largest multiline carriers no longer go it alone. At Columbus, Ohio-based Nationwide, strategic alliances—formalized partnerships with other insurers, with complementary service providers, with affinity groups, and with critical vendors—are now critically important components of the mutual insurer’s product, marketing and customer retention strategies.
“Partnering is definitely becoming commonplace, and not just at Nationwide,” said Vicente Rivera, associate vice president of strategic alliance management, Nationwide Direct and Affinity Solutions. “Auto insurers such as Geico and Progressive collaborate with other property and homeowners insurance providers to round out their products. They even extend multiproduct discounts to their customers.”
The need to differentiate and offer more to the customer is the driving force behind today’s wave of insurance partnering, said Rivera, whom I met last week in Scottsdale, Ariz., at the annual conference of the Association of Strategic Alliance Professionals.
“The marketplace is very competitive and we have to partner to provide customers with all the products they need,” Rivera explained. It’s also becoming crucial for customer acquisition in a very noisy marketplace. “You see all the money insurers invest in mass marketing. You need partnering to break through the clutter and reach the ultimate customer. That’s true for uniline insurers and for multiline insurers like Nationwide too.”
Insurers are following the example of the high-tech and biopharmaceutical industries—which for decades have utilized sophisticated partnering capabilities to develop new products and to deliver more complete solutions to their customers. Within the past few years, many insurers like Nationwide have developed and institutionalized the practice of alliance management as a functional department within their organizations. A formalized alliance management function improves a company’s ability to find the right partners and to manage these strategic relationships effectively, efficiently, and sustainably.
“We’re a customer-centric brand and seek that in our partners,” Rivera said. “We want to make sure our corporate philosophy matches, that there’s a cultural fit. We are very particular. Our values have to align. In our case, we have a strategic alliance management function to manage the most strategic relationships—and even with more tactical partnerships, we hold our partners accountable to our approach.”
Alliance management focuses heavily on maintaining alignment between and among partners, which is a very complex challenge when two or more organizations are coming together for a common purpose. “Alignment is very important and we are very disciplined when looking at partners. We want to make sure not only that they are long-term relationships, and that they bring value to our customers, but also that they are able to bring value to their constituents as well. We are very relationship based.”
Given the complexity of partnering relationships—and the fact that partnerships create many forms of reciprocal value for the partners and the customer, including but not limited to financial value—alliance managers across every industry are challenged to identify, measure, and communicate the value created by their strategic alliances.
“With most of our partnerships, we measure the ROI [return on investment], but as important as that is, we want to make sure our partner is getting benefits too,” Rivera said. This is especially true for affinity partnerships. “When we partner with membership organizations to serve their member bases, we measure not just the number of policies in force, but also what products their members are buying, and we use a variety of quantitative and qualitative measures to show that we are providing the right products.”
For many if not most sizeable organizations, in insurance and in other industries, the mindset of reciprocity that is essential for successful alliances can come in direct conflict with the culture and values of a competitive corporate culture.
“We always have to get alignment so that we have the support needed to drive success, so that involves collaborative meetings, engaging leadership in steering committees, and always making sure people understand the value. That helps bring folks along,” Rivera said.
Strategic alliances require a strong, structured management framework anchored by memoranda of understanding that lead to contracts that help govern the relationship. Also key, Rivera said, is establishing a single point of contact at each partner who is responsible for managing the relationship. He insists on the single contact point, even when Nationwide’s partner does not have a formal alliance management function.
“This is about the relationship. It helps keep us focused on the overall partnership so that we don’t lose sight of that relationship as we conduct the day-to-day tasks at hand,” he said. The alliance manager then is responsible for managing internal as well as external relationships that are critical to the success of the alliance—so alliance managers spend a lot of time in communication. “This way leaders in each company know the goals, what is happening, and there’s a clear path for dispute resolution.”
Going forward, partnering is going to even be more important, according to Rivera.
“Partnering is one very effective tool to break through marketplace clutter, and to help our agents become the agents of tomorrow. With the customer at the center, our agents’ role is paramount in building and maintaining the customer relationship. Any partner or association we work with must bring value to our distribution chain, and to the customer,” he said.