Thought Leadership | November 6, 2024
This post is part of Lavvi’s Partnership Distribution Guide, a comprehensive resource for life insurance carriers looking to expand their distribution reach through strategic partnerships. Get the full guide here.
For carriers, success in today’s evolving market depends heavily on forming the right life insurance distribution partnerships.
These partnerships can help carriers extend their reach, tap into new markets, and accelerate growth. However, to truly benefit from these collaborations, it’s essential to start with well-defined goals, clear objectives, and measurable success metrics.
In this article, we explore how life insurance carriers can build a robust distribution strategy by aligning partnerships with broader business goals and tracking success through the right key performance indicators.
What is a Distribution Partner in Insurance?
Seems like a basic question, we know.
But a holistic distribution strategy can involve a variety of life insurance distribution channels and a wide array of partners, from distributors, to modern digital distribution platforms, to back office vendors and beyond. These partnerships not only broaden market reach but also provide new ways to deliver products faster and meet evolving customer needs.
Life Insurance Distribution Partnership Examples
- Distributors: These are often the first partners that come to mind, acting as intermediaries between carriers and brokers or advisors. They play a critical role in expanding market reach and driving policy sales.
- Digital Distribution Partners: Companies like Lavvi offer carriers a way to accelerate digital distribution, reaching new customers through digital platforms, improving operational efficiency, and enabling true omnichannel sales capabilities.
- Third-Party Administrators: These partners manage various operational aspects, such as claims processing or customer support, allowing carriers to focus on growth while maintaining operational excellence.
- Back-Office Vendors: These vendors help carriers manage back-office systems, ensuring that distribution operations run smoothly and efficiently.
By considering a broad range of partnership types, carriers can create a more comprehensive and flexible distribution strategy that adapts to market changes and leverages new opportunities.
Defining Objectives and Setting Measurable Goals
Laying the foundation for a successful distribution strategy starts with identifying clear objectives and goals.
Before setting specific, measurable goals, life insurance carriers need to establish high-level objectives for their distribution partnerships. These objectives can be overarching and strategic, guiding your partnerships to meet the broader goals of your organization.
High-Level Objectives May Include:
- Expanding Geographical Reach: Identify new markets or regions to enter.
- Diversifying Product Portfolio: Introduce new products or enhance existing offerings.
- Increasing Market Share: Grow your customer base by leveraging the networks of distribution partners.
- Strengthening Existing Partnerships: Deepen collaborations to maximize value.
- Improving Speed to Market: Reduce the time it takes to launch new products or update existing products.
With these objectives in mind, carriers can then translate them into measurable goals. These goals should be quantifiable, allowing you to track progress and adjust as necessary.
Examples of Measurable Goals Include:
- Revenue Growth: Set a specific target for revenue increases tied to the partnership.
- Market Expansion: Define how many new customers or regions you aim to penetrate.
- Time to Market: Establish a target to reduce the time it takes to bring new products to market by a certain percentage.
- Faster Policy Issuance: Establish a benchmark to reduce the time to issue policies.
- Customer Acquisition: Set goals for the number of new customers gained through each partnership.
- Policy Sales: Aim for a specific number of new policies sold through each partner over a given period.
Keep in mind, while it’s important to have detailed, specific goals, distribution strategies can and should evolve over time. Aim to refine objectives and goals as you learn from your partnerships and the market.
By setting clear financial and operational targets that directly support your objectives, carriers can be well-prepared to successfully navigate the journey of building an effective partner distribution strategy.
Measuring Success: KPIs for Distribution Partnerships
Once objectives and goals are established, tracking the success of your distribution partnerships requires clear Key Performance Indicators (KPIs). These metrics provide quantitative insight into how well your partnerships are performing relative to your goals.
For life insurance carriers, some key KPIs to track to understand the success of their distributions partnerships may include:
- Number of Policies Sold
- Revenue Generated
- Cost per Sale
- Customer Acquisition & Retention Rates
- Net Promoter Score (NPS)
Each of these KPIs should be directly linked to the goals you’ve set.
For example, if your goal is to improve operational efficiency, you may focus more on metrics like time to market for new products, cost per sale, or time to issue a policy.
Achieving long-term success in distribution partnerships requires continuously monitoring and adapting based on what the data tells you. As market conditions evolve or new insights emerge, you should reassess your KPIs and adjust your strategy accordingly.
By keeping a close eye on performance and being willing to make adjustments, carriers can stay agile and ensure that their distribution partnerships continue to drive value over time. Continuous improvement should be a central component of your overall strategy, ensuring that you’re not only meeting your current goals but also positioning your business for future growth.
Conclusion
Establishing successful life insurance distribution partnerships requires more than simply choosing the right partners—it involves aligning partnerships with your broader business objectives, setting measurable goals, and continuously tracking success through key performance indicators. By considering a diverse range of partners, from traditional distributors to InsurTechs, life insurance carriers can expand their reach, improve operational efficiency, and stay competitive in an evolving market. For more insights and a step-by-step roadmap to building a robust distribution partner strategy, check out Lavvi’s Guide to Building a Partnership Distribution Strategy.