A professional employer organization has a lot of moving parts that impact a client’s business. This can add to the complexity of closing a deal, or when handled appropriately, provide the PEO with increased opportunity to satisfy their client’s needs.
A quote that I’ve read which is applicable to this topic is: “If you can’t explain it simply, then you don’t know it well enough.”
Therefore, this article will focus on successful approaches within PEO sales and how to go to market in an effective way.
RESULTS NOT OFFERING
A common mistake that PEO sales professionals make is to focus the crux of their meeting on the offering and differentiation of their PEO. While it is true that the prospective client will need to understand the service offering of your PEO, this shouldn’t be the focal point of your meeting. The emphasis should be on the end result your PEO can jointly drive with its clientele. That being said, until you dialog with your prospect and uncover what their objectives are, you won’t have a clear understanding as to what results they are looking, or should be looking, to achieve.
Think of it this way: if you went to the mechanic to get your car fixed, the first thing they are going to ask you is what problems are you having with your vehicle. As the customer you will of course need to know if the scope of their offering can meet your needs as well. The mechanic will then run a diagnostic process and provide an overview of the issues that you have outlined, as well as, anything else that may potentially be problematic to your vehicle. They will review what steps may be necessary to get your car working appropriately again. While you as the end user may want to know the restoration process for your car, at the end of the day, the mechanic will be judged by 3 things:
- The end result: Is your car now working in optimum fashion?
- The experience: Was the process pleasant or a nightmare?
- The Expense: Was the cost in line with the end result?
I would argue it is the end result that is the most important factor. A person whose car was fixed but had a poor experience, or too high of a price tag, still has a working car. A person who has an excellent experience and great price, but still has a broken car, is in a worse place than the former.
Your PEO will obviously want to drive a process that aligns result, experience and price harmoniously, but for the sake of argument, I wanted to provide the above illustration to point out the importance of results.
EXPENSE: ILLUSTRATE THE ROI NOT THE SERVICE OFFERING
I am frequently asked to advise on the PEO space from the investment community. I charge an hourly rate for these calls, which I then have them send to a charity of my choice. Most conduit agencies have no issue with the rate, however I did have one that balked at the rate. This is similar to a prospective client that is looking at the PEO partner from an unjust vantage point. When I spoke with this particular agency, their argument was that the rate seemed high for an hour’s time. My rebuttal was simple. It is not the amount of time that they are paying for. It is the information shared that will allow them to make an educated decision on how to invest their clients’ money. This will help determine potential for long term gain and outline the variables to avoid loss. These investment firms are placing hundreds of thousands, if not millions of dollars, into their investment choices. To gain valuable insight that will help them navigate the unknown and make an educated decision for future gain is invaluable. All of that information comes with the price tag of only one hour’s expense. That is a steal. They didn’t require any further explanation.
Therefore, instead of discussing the price in conjunction with what services you provide, start with the return on investment that your client will receive. This approach will be most effective when you set the expectations of the relationship as discussed in the “Results Not Offering” section of this article. Here are some brief examples of how you may want to address the ROI based on the standard offering of a PEO:
- HR and OD:most PEO’s will discuss the liability reduction of adequate HR tactics and strategy. While that definitely carries weight, also look at the return on investment in the following:
- Hiring practices: every aspect of a business is directly or indirectly affected by the company’s people. Having the right people in place will drive or detract from a company’s net profit, branding, customer experience, referrals, etc.
- Organizational Development: how scalable is a company? Take a look at their revenue trending coupled with their ability to increase and replicate talent. Infrastructure that develops talent and fosters professional growth will create capacity for organizational growth and efficiency. This will also allow the company to be more nimble and drive increased profit to the bottom line through maximizing workforce yield.
- Safety and Workers’ Compensation:The easiest claim to fight is no claim at all. Workers’ compensation success or failure is a byproduct of efficient or inefficient structure. Some States are perilous with fraudulent claims which can first be addressed in the hiring practices above. Fluid lines of communication with an appropriate safety strategy will develop a culture that is lean and effective. An injured employee drives up future insurance expenses, detracts from productivity and impedes moral. A successful model will drive insurance expenses lower, keep the workforce safe and ensure continuous productivity. Lack thereof will detract from all of the above and each dollar lost in premium and reduced productivity is a dollar detracted from net profit and the ability to grow.
- Payroll/Technology and Healthcare:you may asked why these two are paired together. Simple, since the ACA came into effect, tracking a sporadic or fluctuating workforce is pivotal to the healthcare reform. The right payroll or tech suite will not only alleviate the burden of backend administration but also ensure the compliance with new rules and regulations. Avoid chaos within a system that has changed frequently will not only save the client money by avoiding penalty, but also allow them to focus on core competencies and not be detracted due to the changing market. Technological advances will also help business owners manage their organization more efficiently and provide them with increased data, variables and metrics to make more suitable decisions within their organization. After meeting with over 1,000 business owners in my career, I have noted that in general, the owners make good decisions. However, their decisions can only be based off the known variables. If your tech suite increases their visibility on pertinent metrics and information, they are better equipped to steer their company towards future prosperity.
DELIVER IT OR DON’T SELL IT
If you bought a Mercedes and the dealership delivered a Pinto to your house, there would be issues. Likewise, whatever you illustrate in the sales process will set the foundation and expectations for the relationship. Tenured business owners know that there are things companies can do and things they don’t do as well. Don’t be a yes man/woman. Illustrate clearly your company strengths and be comfortable with saying “no” and/or “we are not the best solution for that particular request.” Your credibility on what you have stated your company excels at will be that much greater when you are honest about what you don’t do well. Business owners don’t need a perfect partner. They need an honest and effective partner. The reasoning is that they already understand the backend work and time it will take when a partner states they can execute in an area, only to then fall flat on their face. Be honest in everything you do, it will pay dividends in retention and branding.
GO TO MARKET STRATEGY
Channel sales or direct sales? That is the question. While I personally lean towards the channel approach, either can be successful if applied correctly. Your company may afford you the ability for both. While that may be the case, let’s take a look at both individually.
- Channel Sales:referral partners can be an excellent source to tap into for many reasons. I have outlined some of the top reasons below:
- Command an external sales army: by utilizing referral partners, you are able to tap into their relationships and networks without utilizing any capital. Since they are only paid when a deal is written and there are no retainer fees, this external sales force is gold. Imagine hiring 500 sales professionals for your PEO and only having to pay them when they close a deal. PEO’s will utilize a number of referral channels, such as Insurance Brokers, CPA’s, Attorneys, etc. I prefer Insurance Brokers and I’ll explain why. When I started my management consulting company, my business plan made the assumption that I would be able to tap into my existing Insurance Brokers and utilize them as my primary go to market strategy. What I didn’t consider is that while these Brokers, whom I had an existing business relationship with, had the existing business clients I wanted to service, there was no sense of urgency. When a PEO’s deliverable is consultative in nature, they bring a lot to the table. However, without the PEO model as a vehicle, and more importantly the insurance factor, there is no end date to which an owner must make a decision. What this means is that without the workers’ compensation or benefits renewal date driving the decision, the sales cycle will generally be much longer. The PEO vehicle affords the ability to capture new business more quickly by putting a finite date attached to the decision making process. This allows the PEO to scale more quickly than a consulting firm. Since it is the x-date that drives the timing of partnering, Brokers are the most closely aligned with that market strategy. Attorneys and CPA’s as referral partners will generally have longer sales cycles without the x-date. Also, since the referral isn’t their primary source of income, they will not drive the same amount of opportunity as a Broker. A Broker will have some level of a preexisting relationship with the business owner which will help shorten the curve and they will also gather all initial documentation and thus reduce the legwork for pre-qualifying an account.
- Direct Sales:This go to market strategy leans heavily on hiring hunters within your organization. In a direct sales approach, if the choice was to be made between a good hunter and a good closer, you will most likely need to take the hunter. To be clear, in no way am I implying that there aren’t professionals that are both hunters and closers out there. However, it is more difficult to identify and find professionals that are exceptional at both. The model will also require developing a successful networking and branding strategy. You can use this approach and still leverage your time, without using paid referral partners, by tapping into conduits of business. For instance, aligning with business associations and/or becoming an endorsed solution is a solid way of expanding your opportunity within a vertical of interest. Referrals are key in this approach as well. When your PEO delivers superior results, utilize those case studies and testimonials to tap into business opportunities through client referrals. Advertising and marketing will most likely be more of a focal point within a direct sales PEO to create brand awareness.
Here are a few important takeaways from this article. I hope that you find them useful in developing your approach and go to market strategy.
- Understand your prospects needs and illustrate the results your PEO delivers. Make sure to discuss what the client’s role in the relationship will be. This will maximize the results and benefits for both parties.
- Discuss the return on investment when negotiating pricing, not solely your service offering.
- Only illustrate what your PEO is proven capable of. Set the appropriate expectations. This will create a clear understanding of the relationship and set your service team up for success.
- Leveraging the appropriate go to market strategy will create the ability for opportunity. Choose what works best for your PEO and invest into that model. A poor or inconsistent go to market strategy will equate to inferior results.
Hopefully this article provided you with some information to discuss at your next management strategy session. If you have any questions or comments, please feel free to contact us utilizing the below forum.
Business Resource Center, Inc. offers PEO Sales training, marketing strategy & design and talent acquisition programs. For more information, please visit us on the web at www.biz-rc.com or contact us at email@example.com
Rob Comeau is the owner of Business Resource Center, Inc., a management consulting company that helps companies achieve increased sustainable net profit. Prior to founding Business Resource Center, Comeau was the top Business Development Professional in the history of a large, publicly traded and tenured PEO. At which time he had built up a book of business with a $315MM run rate, $156MM of which he wrote in his final year. He accomplished this volume within 7 years by building a vast referral channel network which consisted primarily of insurance brokers ranging from national, super-regional, regional and retail agencies. Prior to this, he was the top producer at a large, publicly traded outsourcing company for just over 5 years.