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What’s Your Competitive Edge?

When you compete, do you play to win? If so, how do you gain a competitive edge? For most of us, gaining a competitive edge is earned by working harder, practicing more, etc. Let’s contrast your options for gaining a competitive edge with how many businesses gain their competitive edge. In particular, how do big companies with large advertising budgets gain a competitive edge?

For most of us, gaining a competitive edge is based on doing a better job. The following are some everyday examples of when we must perform to the best of their abilities:

  • School kids with a desire to get into their first choice for colleges
  • Anyone playing sports
  • Workers that desire to earn a promotion
  • Small businesses with an aim to become self-sustaining

For most of us, the items above describe our every day life. For large companies there is another option for gaining a competitive edge. That option is to spend more money on advertising.

Historically, the advertising option was unique to companies that enjoyed great wealth. That’s changing. Now, any company that performs well for consumers has a competitive advantage. Smaller companies need to be more financially prudent. The smaller companies don’t have a massive budget to fund the purchase of a competitive edge. However, there is a more cost effective way to get the word out to consumers. That cost effective way is by embracing trasnparency.

Gaining Competitive Edge by Embracing Transparency

We hear a lot about transparency these days. Transparency is an unpolished display of how things work, or don’t work. Transparency includes putting all the information out for others to judge. When both positive and negative information is available, anyone interested can make more informed decisions.

A good way to think of transparency is that it’s the opposite of advertising. Advertising is the paid placement of highly polished messaging. The highly polished messages often include music and images that make them more interesting and appealing. Not only does advertising only communicate positive messages, advertising messages are also honed, tuned and perfected to portray exactly the right image and to create the right perception.

The Cost of Advertising

The economics of advertising is important to understand. Like any business, insurance includes tradeoffs. Here are examples of the tradeoffs made by insurance companies when it comes to how much to spend on advertising:

  • Companies that advertise are using money collected from existing customers to attract new customers.
  • This money is no longer available to satisfy the needs of existing customers when the time comes that they need to rely on the protection of their insurance.

Therefore, by definition, every dollar an insurance company spends on advertising is one dollar less they can spend to satisfy customers when claims are filed. Some may call this an over simplification, but it isn’t. In the limit, a dollar spent somewhere else, anywhere else, is no longer available to be used to provide the protection customers are purchasing.

The Cost of Transparency

There is a better alternative to advertising. The better alternative is transparency.

Think about what advertisers are trying to achieve with their big budgets. They’re working to become memorable. However, if you’re good, you don’t need a big budget to be memorable. Let’s use some sports analogies. In track, people don’t forget Usain Bolt. With swimming, no one forgets Michael Phelps. In football, who can forget Brett Favre or Joe Montana?

The point of this is that big budget advertising isn’t necessary when you’re the best. All that’s necessary is showing you’re the best. People will remember. No cute jingles, no massive media buys are necessary. Expensive production costs and advertising agencies can all be minimized. We’re not advocating for eliminating these costs. We are advocating for significantly minimizing these unnecessary costs. Instead, we want to see this money consumers paid for protection used to protect consumers.

Disruption as a Way of Gaining a Competitive Edge

The cost of embracing transparency is a fraction of the cost of advertising. Best of all, it’s more effective than most advertising. Therefore, any company can afford to take this action. Interestingly, companies that have elected not to spend money on advertising often have better performance for their customers than companies that do advertise heavily. This should come as no surprise since it all boils down to decisions on how to spend the money. This is a competitive edge in it’s purest form.

Now is the time that the best companies can stand up and be recognized. In fact, they’re already starting to do this. Grange Insurance Association is letting people know they are the best value in home insurance in Washington, Oregon and Idaho. Co-operative insurance is letting consumers know they are the best value for auto insurance in Vermont and New Hampshire.

Many more carriers are joining this trend. Why wouldn’t they? For a tiny fraction of the price of advertising, these companies are now more memorable.

Back to the sports analogy. Before February 1, 2015, hardly anyone knew the name Malcolm Butler. That changed when he intercepted a pass thrown by Russell Wilson in the Super Bowl. This interception won the game for the Patriots. Suddenly, the nation knew Malcolm Butler. Brilliant performance for his team put Mr. Butler squarely in the eye of people that cared, and some that didn’t.

Which Insurance Company is Best for You?

Grange Insurance Association and Co-operative Insurance Companies are like Malcolm Butler. They’re notable for their exceptional performance, when exceptional performance is most needed. Companies like this exist in every state. In many states they’re small to medium sized companies. In some states they’re huge companies that can afford the advertising. Either way, they now have a story they can tell without incurring great costs. Best of all, you benefit by getting your insurance from a company proven to be a great performer.

What You Need to do Next

Click the buttons below and order reports comparing your insurance company to the best in the industry. We measure the best based on their claims handling, service and overall value they provide. Finally, you will know exactly how your insurance company ranks compared to the best. If your company scores well, tell a friend. We also provide contact information so you can easily get quotes from the three companies we name as being some of the best in your state.

If you’re both an auto and home owner, be sure to get both reports. Insurance companies often vary significantly based on the type of insurance they sell. The only way to find out how they perform in each line of business is to get reports for both.

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Note: ValChoice does not receive any form of compensation from insurance companies for presenting them as a good option in our car and home insurance reports.

Summary
What's Your Competitive Edge?
Article Name
What’s Your Competitive Edge?
Description
How do you get your competitive edge? For most of us a competitive edge comes from hard work and preparation. By contrast, advertising is an effort to gain a competitive edge without hard work and preparation. We plan to change that. Find out how – ValChoice
Author
Dan Karr
Publisher Name
ValChoice, LLC
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