Perspectives

Case Study

Large Group Market Segmentation
Strategy & Design

Industry & Client Situation

Our client, a large health insurance payor, asked Bridge to help develop an approach to segmenting and servicing their large commercial group market. Our primary objective was to improve the alignment of sales and account management practices with customer (both group and intermediary) needs. In addition, there were a few specific issues to be addressed, including understanding and responding to the different expectations and concerns of national consultants vs. local and regional brokers.

approach

We used a data-driven approach to understanding the history and current state of the large group market, analyzing broker/consultant share changes, mix of business by group characteristics, win rates, and retention rates. We also conducted extended interviews and facilitated sessions:

  • With group leaders to understand service perceptions and needs
  • With individual producers, to understand their needs and their firms’ segmentation approaches
  • With leadership and staff in sales and service units, to gather historical perspectives and uncover root causes of service issues and intermediary conflicts

Over six weeks, we developed a number of hypotheses and synthesized the results of our analyses, interviews and client worksessions. Key findings included:

  • Years of individual decisions and accommodations had resulted in a complex segmentation picture. This complexity led to mismatches between group service needs and delivery, as well as frustrations for a small, but important subset of brokers/consultants served out of multiple service and sales units
  • There were significant differences in retention and win rates across sales and service units
  • Despite trends towards industry segmentation, we concluded that group size and choice of intermediary were still the best proxies for predicting group service needs and expectations
  • Groups and intermediaries perceived (accurately) a higher level of service provided by one particular service unit. While this high service model was intended, the gap between this unit and another supporting unit was very large.  Coupled with overlap between brokers/consultants serviced by both units (see Exhibit 1),this service level differential helped fuel conflicts and ultimately reduced group and broker satisfaction

CS_-_HC_-_Large_Group_Market_Segmentation_and_Design_-_Figure_1.gif

results

Based on our findings and ongoing engagement with sales and service leadership at the client, we analyzed the potential impact of a few promising segmentation approaches, estimating the projected impact on new sales and retention. We subsequently developed a revised service organization design and modeled staffing and account transition plans.  Our recommendations, since implemented by the client, included the following:

  • Largely deploying an intermediary-driven approach for core commercial business, but creating ‘bright line’ contract-size floors and ceilings for consultants and brokers
  • Carving out a handful of select segments with unique buying needs and/or service requirements
  • Bridging the service level gap between different service units, essentially creating a middle service tier to eliminate the huge step function difference between existing units