Should I sell voluntary benefits? This question often is asked by employee benefit brokers, life insurance producers, and property/casualty firms. In my opinion, the answer is a resounding "Yes!"
Their response to me often will be, "Of course you'd say yes -- you are in the voluntary benefits business."
Let me explain the two reasons why I believe marketing voluntary benefits simply makes sense:
1. Employees buy these benefits for many reasons -- one of them is convenience.
2. There is great power in cross selling.
Convenience is becoming more and more important in our society. The Internet has accelerated convenience to warp speed. I can pay my bills, order and send flowers, take care of my travel needs, send letters instantly, and on and on it goes. I can learn about my employee benefits and make all my employee benefit elections via the Internet in the comfort of my home.
No longer does a group of carrier representatives or human resource personnel need to conduct multiple group meetings to disseminate employee benefit information.
More and more employers are using technology to provide convenience and opportunities for their employees.
I was able to go to the pharmacy at my local grocery store the other day, buy some prescription drugs, and pay for them using my health care reimbursement debit card. This was done in one swipe, with no claim forms to submit -- quite a time saver! The time I save, I can spend with my family, enjoying my hobbies, serving in the community, and such.
Employers recognize the fact that employees prefer to buy their financial products at the work site through the convenience of payroll deduction. According to the 2004 MetLife Employee Benefits Trends Study, 55% of employees surveyed preferred voluntary benefits because of the convenience of payroll deduction, and another 51% found it more convenient than buying retail. Employers who provide a menu of voluntary benefits are becoming common -- benefits such as life insurance, disability insurance, critical illness, limited medical expense, cancer, vision, dental, auto/homeowners, legal, and even pet insurance. Employees most often feel comfortable that their employer has done the necessary due diligence and has selected competitive benefits from reputable carriers.
More than two-thirds of human resource (HR) professionals believe that attracting and retaining workers is the biggest threat to bottom-line profitability, according to a survey released July 13, 2006 by Oklahoma City-based Express Personnel Services, an international staffing and human resource company that has nearly 600 offices in 47 states. The survey pointed out that as the economy continues to grow and baby boomers retire, companies are facing stiffer competition for top talent. Nearly half (47%) of the responses from HR professionals indicated that employee retention was their number one concern.
Is it any wonder that the popularity of voluntary benefits offered at the work site, among employers and employees, continues to rise? Ask yourself the question, or better yet pretend to be part of the rank and file and ask the question, "Where would I prefer to conduct the majority of my financial and insurance business -- at work or at home?"
If you are not taking advantage of marketing voluntary benefits to employees at the work site, I'll just say that the proverbial train has left the station and there is no stopping it.
Buying financial/insurance products at the work site is not the future -- it is today. Come on board!
Cross Selling Opportunities
Mark Stephens, in his book Your Marketing Sucks, reviews a typical scenario in which most businesses find themselves:
Problem: You have limited marketing dollars, yet you need a substantial boost to sales and earnings.
Solution: Pick the low-hanging fruit, such as selling more to people who already have a relationship with you.
Benefit: You should increase sales and get a whopping return on your marketing investment.
Mr. Stephens also writes, "The vast majority of businesses have a customer base composed of individuals who have purchased their products and services in the past. The disturbing paradox (proof positive that most marketing sucks) on which few businesspeople will challenge you is the fact that 'it is easier to sell something to an existing customer than to a prospect who is unfamiliar with your business.' While conceding this is true, however, few companies act on this fact. All too often, companies spend virtually all of their marketing dollars, time, and talent seeking to generate new business relationships while the low-hanging fruit dies on the vine."
I worked for a principal of an employee benefits firm who truly understood this concept. He believed that the more products he had with each customer, the stronger his position was with that customer and the harder it was for a competitor to de-throne him. He placed his confidence in a few choice carriers and did his due diligence in selecting new ones -- such as for voluntary benefits.
In a spreadsheet format, he listed the benefit plans he had with each of his clients. The name of the client occupied the left column and the kind of coverage went across the top. For each coverage the client had, there was an "X" in the column. His charge to me as a new employee, a voluntary benefit specialist, was simply to get more Xs on the spreadsheet -- a pretty simple game plan.
Before I started recommending voluntary benefits to our clients, I had to understand what benefits they currently had in place with us and what benefits they had with other brokers. I used a simple fact-finding form to identify current benefits and gaps that could be filled with voluntary benefits. The revenue formula on the form provided me an estimate of potential first-year commissions for each client.
After I understood what each client had, I then was in a position to make recommendations for voluntary benefits. Some examples are:
o If a client only offered its employees one times earnings for life insurance, then additional voluntary term life and universal life plans filled a gap for more life insurance.
o If a client had a long-term disability plan with a six-month elimination period and sick leave accrual up to 30 days, then a voluntary short-term disability plan with a 30-day wait and a six-month benefit would be an appropriate recommendation.
o If a client had a significant number of part-time employees and wanted a way to retain them, then a limited medical benefit plan could be a solution.
o If a client was changing the benefit design of its medical plan and was moving to a higher out-of-pocket plan, then an out-of-pocket supplemental plan (gap plan) or a critical illness plan could be possible solutions.
Using this method and leveraging solid relationships with our clients, I added voluntary benefits to approximately 15 clients a year, generating anywhere from $100,000 to $250,000 of first-year commissions. I added Xs to the spreadsheet! Along the way, as I asked for referrals, I obtained new clients. We became more of a "total solution provider" for our clients. This "low hanging fruit" was accessible and deliciously rewarding!
Employees love the convenience of payroll deduction and doing business at the work site. Competition today is tough and unrelenting. Cross-selling makes good business sense and it is effective. Time and commission dollars are passing you by if you find yourself still asking the question, "Should I be selling voluntary benefits?" You should already be in motion, helping your clients help their employees solve their financial needs. Best of luck, happy selling, and enjoy the taste of that low-hanging fruit as you market voluntary benefits!
Donald Peck is Transamerica Worksite Marketing's regional vice president for the states of Missouri, Iowa, Nebraska, and Kansas. Mr. Peck has more than 15 years of proven work-site sales and marketing expertise for a large national employee benefits firm, and with Transamerica.
