Blue Cross Blue Shield of Florida (Florida Blue) has opened several retail healt
ID: 434427 • Letter: B
Question
Blue Cross Blue Shield of Florida (Florida Blue) has opened several retail health insurance "stores" around the state. Florida Blue has historically and continues to rely on intermediaries (agents, brokers, wholesalers who are NOT employed by Florida Blue ) for their sales. In fact, 95% of their sales are through these channels. The stores are designed to be a convenient place for individuals and small business owners to buy health insurance plans, and they also provide convenient, face-to-face answers to complicated questions about health insurance benefits. People want to work with professionals, rather than struggling through these complex decisions by themselves on the internet. But that is also the value that brokers and agents add- face-to-face consultation. Did Florida Blue do the right thing opening these stores at the risk of upsetting their traditional intermediary channel partners? Why or why not? How seriously should Florida Blue consider the threat of a broker backlash due to the stores? What could Florida Blue do to reduce the backlash from their brokers who may be threatened by BCBSF opening its own store? . .Explanation / Answer
1. FloridaBlue switched from channel sales strategy to direct sales. Though initially this switch in sales strategy may be costly for the company, in the long run, this strategy will be quite cost effective. The major advantages that FloridaBlue can enjoy by indulging into direct sales are:
2. Broker backlash can happen in a way that the brokers may try to discourage the customers to opt for FloridaBlue services. I don’t think the business will be severely impacted by the broker backlash. By starting its direct sales, the company can get into a good promotional strategy to highlight this move of the company. Also to create their market base, the company can offer initial discounts to the customers. This will help in creating a customer base for the direct stores of the company and the business will have no severe impact from the broker backlash.
3. FloridaBlue can reduce the intensity of backlash by the brokers and retail partners by conducting a meeting with them and closing the relationship on amicable terms. This will get the brokers and other retail partners on the same page as the company and thus there is a probability that the intensity of broker backlash may subside.