Are you still using just a hammer in your benefits practice? Too many benefit brokers have been showing up at the jobsite equipped only with the hammer of health insurance, limiting their ability both to add new revenue and to be consultative and solve other HR problems.
As the psychologist Abraham Maslow observed, "If you only have a hammer, you tend to see every problem as a nail."
A fully equipped toolbox
To survive the coming industry shakeout, benefits agencies will need a fully stocked toolbox of products and services. Swinging your health insurance hammer - tweaking the plan design and carrying quotes - is no longer sufficient to either get or keep the account.
Almost 60% of brokers and consultants report that consultative selling and cross-selling are their two primary strategies for meeting the challenges of the post-reform marketplace. However, you can't solve many client problems or cross-sell without a broad portfolio of valuable products and services.
One broker's true story demonstrates the importance of having a well-stocked toolbox.
A winning edge
Several years ago, a 400-life construction firm in the Washington D.C. area was facing a 22% renewal on the medical. Looking for relief, they invited the broker on their construction bonds to quote the medical. He took a consultative approach and interviewed the HR director to identify pain points besides the high renewal.
He discovered that the firm had a severe turnover problem due to a competitor that paid an additional dollar per hour, but provided no benefits. Despite a full and generous benefit plan, this company continued to lose employees to the higher hourly rate. HR was unable to communicate the value of their benefit plan because more than 95% of their employees only spoke Spanish.
Now understanding the firm's needs, the broker brought in a new carrier that saved the firm $150,000 on the current year's medical premium. Plus, he introduced a benefit communication and enrollment firm that could provide a full Spanish-language enrollment including one-on-one meetings with every employee to explain the value of the benefit plan. Finally, he showed how commissions from a new voluntary benefit offering would pay for the roughly $17,000 cost of the benefit communication, meaning zero impact on the company's budget.
Not surprisingly, after learning of the threat to his account, the broker of record brought the same new carrier and medical plan. But having only a health insurance hammer, he never recognized the client's turnover problem. The employer awarded the BOR letter to the new broker.
The voluntary toolbox
This article is about much more than voluntary benefits, but I'm starting here because selling voluntary benefits provides an entire toolbox by itself. The voluntary toolbox is stocked with not just a broad range of desirable products, but also the valuable ancillary services that can be offered as part of a voluntary benefit enrollment.
In addition to the more common worksite voluntary products (i.e., permanent life, critical illness, accident, hospital indemnity, and short-term disability insurance), there is a wide selection of more specialized, non-traditional voluntary products (see chart below). These others can be useful additions to a benefit plan, providing valuable benefits to employees and revenue to the broker.
Most brokers overlook the substantial value to their clients of the benefit communication and ancillary services that the voluntary enrollment can provide to solve serious HR problems. These services include communication of both core and voluntary benefits, dependant eligibility audits, employee surveys and total compensation benefit statements. Any of these could be a solution that gets HR to open the door to a voluntary offering.
C-suite in E major
Since the benefit broker's relationship usually is with HR, discussing employee benefits generally does not afford even an introduction to the ultimate decision makers in the executive suite. Viewed by the C-suite as a mere HR vendor, most brokers can only dream of access to the CFO or CEO.
Executive benefits, however, have provided innovative benefit brokers and agencies a direct path into the C-suite. While executive benefits are certainly a specialized area of our business, to get their agency into the C-suite determined brokers do the work to get themselves up to speed or the agency hires producers with an executive benefits background. Once in, it's just a matter of leveraging the executive relationships to get a shot at the BOR on the benefits.
A strategic service
However, benefits strategic planning is a guaranteed route into the C-suite. Benefit strategic planning puts you on the same side of the table with both HR and the CFO, at least. This is perhaps the most advantageous - and strategic - service you can offer your clients. Not only can you engage the C-suite in a strong advisory role, but with benefit strategic planning you can both lay the groundwork for future product offerings such as voluntary and, most important, build yourself into the client's benefits plan for the next three to five years. And you can charge a handsome fee for the privilege!
A troubling trend in employee benefits is the move by national payroll providers such as ADP and Paychex into the benefits space with their own brokerage services. These companies seek to leverage their key role as payroll vendor into a much more lucrative role as broker of record on the employee benefits.
To go on the offensive and preempt the payroll giants, brokers can license a payroll service that both generates a steady revenue stream and keeps the payroll companies out of your accounts. Moreover, some payroll services also offer an extensive range of HR outsourcing solutions, providing you with a particularly strong value prop and differentiating you from the competition.
Payroll services are a prime example of ongoing services you can provide the client that create what is known as "pain of disconnect" if the service is ended. These services are difficult and troublesome to replace and are usually available only to your current clients. These services are of particular value because the client's desire to avoid the disruption and hassle of replacing the service can increase your retention substantially.
Other examples are benefit administration/HRIS systems, online perpetual enrollment systems, online benefit communication programs, Work Opportunity Tax Credits (WOTC) services, and employee onboarding systems.
Revenue and retention
Some services can generate a lucrative fee or a meaningful revenue stream. Other services are value-adds that produce little or no revenue but can strengthen the broker/client relationship and boost retention. Some - like benefit strategic planning and ben admin systems - do both. Along with a range of products, your agency toolbox must have a strong mix of services that boost your bottom line and/or lock in your client. It's do or die. Those agencies that boast a loaded toolbox, their hammer joined by a broad range of products and services that give them both a competitive edge and a healthy bottom line, will be left standing.
Griswold is an authority on consultative and cross-selling through his firm, Bottom Line Solutions. Reach him at (615) 656-5974
Non-traditional voluntary benefits
* Limited medical plans
* Long-term care insurance
* Personal lines coverage (home/auto)
* Legal plans
* Identity theft plans
* Pet insurance
* Payroll deduction loans
* Vacation and travel programs
* Employee purchasing plans
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