Businessmodel of Principal Financial Group

Customer Segments

Principal has a niche market business model, with a specialized customer segment. The company targets its offerings at individuals and small and medium-sized businesses, which it defines as firms with less than 1,000 employees.

Value Proposition

Principal offers three primary value propositions: accessibility, convenience, and brand/status.

The company creates accessibility by providing a wide variety of options. Its Principal Total Retirement Suite offers all four major categories of retirement plans and risk management options.

The company offers convenience by making life simpler for customers. Individuals can consolidate multiple accounts by moving them to their current employer’s retirement plan. They can also roll over multiple accounts and use their funds to open an Individual Retirement Account.

The company has established a powerful brand due to its success. It serves investors in over 70 countries through offices in 18 countries across Asia, Australia, Europe, Latin America and North America. It has $595.8 billion in assets under management and over 19.1 million customers. It holds many top rankings, including #1 provider of Defined Benefit retirement plans, #1 recordkeeper of Employee Stock Ownership Plans, #1 provider of Nonqualified Deferred Compensation plans, the #5 non-medical carrier, and the #4 manager of target-date lifecycle mutual funds in the U.S. Lastly, it has won many honors, including:

• Recognition as the Best Place to Work in Money Management, Best Place to Work in Information Technology, and One of America’s Best Employers by Fortune
• Recognition as one of the World’s Most Ethical Companies and #3 Greenest CRE Company
• The Adviser’s Choice Award for advisor support, post-sale
• Over 90 Best in Class designations from PLANSPONSOR magazine’s Defined Contribution Services Survey ### Channels

Principal’s main channel is its team of sales consultants. The company promotes its offerings through its website, social media pages, print and TV advertising, sponsorships, and conferences.

Customer Relationships

Principal’s customer relationship is primarily of a personal assistance nature. The company employs a staff of service and education specialists that assist customers by reviewing plan design, investment options, and plan performance, and addressing customers’ needs and feedback.

Key Activities

Principal’s business model entails designing, developing, and distributing its products and services for customers.

Key Partners

Principal’s key partners are the banks that help deliver its products and suppliers that provide various services it needs for its operations.

Key Resources

Principal’s main resources are the financial industry professionals that design, deliver, and distribute its products and services, and the customer service employees who provide necessary support.

Cost Structure

Principal has a value-driven structure, aiming to provide a premium proposition through significant personal service. Its biggest cost driver is its set of benefits, claims, and settlement expenses. Other major drivers are in the areas of sales/marketing and customer support, both fixed costs.

Revenue Streams

Principal has three main revenue streams:

• Premiums and other considerations
• Fees and other revenues
• Net investment income