Monthly Archives: August 2015

Two Things Zenefits is Doing That Most Brokers Aren’t

I was working last weekend and browsing the web when I had a Zenefits Ad pop-up on the page that I was on. I know how that works, if you have searched Zenefits in the past then the system remembers you and pushes their ad onto the page. Had I not searched Zenefits the ad most likely would not have popped-up. I would imagine this would also happen to the thousands of employers getting calls and email from Zenefits. They may check out who they are on the web and then sometime in their future browsing they get the same ad. I also saw a commercial on TV the other day from Namely, another technology vendor getting into the benefits brokerage business, so Zenefits is not the only such firm advertising on TV and the web.

Recently my organization was the target of a Zenefits marketing campaign. Within a two week period of time my HR person (I don’t know where they got her name and email address) received 3 phone calls and 4 emails. She did give them the opportunity to present to her and their pitch was pretty compelling. However we are a little more educated in the technology area and have a solution much more advanced than Zenefits.

To compete with Zenefits many brokers sign up with some technology company so that they can say they  have a Zenefits-like solution. What they don’t realize is one of the reasons Zenefits is successful is because of their marketing. Most brokers don’t have the marketing system in place where they can find the right person in a company across the country and make 3 phone calls and send 4 emails in two weeks. In fact most have not even thought through what to say on a call or write in the email. What you say and how you say it matters.

When I start working with a benefits firm one of the first questions I ask is whether they have a marketing person on staff and an operations manager. It is amazing how few firms staff these type of people. Many will say they have a marketing person but that person is often not trained or skilled as a marketing person. The employee may have been the best PowerPoint person and became the head of marketing. Few majored in marketing in college. The ones that do have thriving businesses.

The same goes with operations. I rarely see benefits firms with operations managers on staff. Once again, they may have someone that may have the title of Operations Manager but that person often was someone who was promoted from some administrative role or the Office Manager position. It is amazing when you see a company that is operating with a great operations manager.

The lack of staffing and vision around these two functions may become very critical to a benefits firm in the near future. These are the areas where firms like Zenefits will shine. I believe Zenefits will eventually become the most efficient small group broker in the country. Much like Digital Insurance they will put the systems, people, and processes in place where they can become more and more efficient operationally. This efficiency will enable them to operate their business at a lower unit cost yielding higher profits than the average benefits firm. And if benefits commission changes significantly they will be able to charge fees for their services because of the systems they built to provide better service at lower costs.

Most benefits firms have no vision for operational efficiency. This is an area where I have a great deal of experience having discussed and viewed how hundreds of brokers are operating internally. Many have a database that can store information but few have thought through every process in their organization and develop automated workflows to make those process better. It is amazing how many times I hear from a business owner that “their staff won’t use it” when referring to their internal system. Since when should that be an option?

Many benefits brokerage firms are structured to be successful in what I think may be a dying business model. They are designed to protect the status quo. I have written numerous articles in this blog including one about the coming end to commissions and the rise of price competition. ( Fee for Services for Benefits Brokers – It Changes Everything and It’s Coming ) Another article I talked about the future of health care where health insurance may be all individual purchases and the future insurance companies may be the hospital systems. ( The Coming End to the Benefits Business As We Know It ) If commissions get reduced then those organizations with operational efficiency can have an advantage. With solid marketing they can grow rapidly as others struggle to adjust their business models. Also, if the health insurance purchase moves from the employer to employees then those organizations that can service individuals will also have an advantage.

Many brokers think firms like Zenefits will perpetually be bad and others hope they go away. What they are not seeing is that Zenefits is building a business to thrive in a new benefits world. By leveraging technology and building organizational efficiency they will have lower costs and higher profit margins.  And if they don’t someone else will.

Sometimes I Feel Like George Costanza

I was reading an article published on one of the online benefits magazines where the author wrote something that I almost totally disagreed with. As I read it I was thinking to myself, “that point is wrong”, and then “that point is wrong too”. Yet the comments at the bottom of the article coming from what I would imagine are mostly benefits brokers seemed to all agree with the author. I couldn’t believe it. Not one comment challenged the author. I couldn’t tell if the author truly believed what she was writing or if she was simply writing what she thought the audience wanted to hear. Regardless, there were many there to heap praise and say, “Great article. I wholeheartedly agree with you.” I started to feel like I was George Costanza of Seinfeld. Seinfeld buffs may recall the episode where George concluded that if everything he instinctively thought turned out to be wrong then the opposite of his instinctive thought must be right. Am I George Costanza here? Are all these brokers right and I am wrong? Is the way I think hurting my business or is there a lot of Groupthink going on? Should I do the opposite of what I think, like George Costanza?

The title of this blog is Challenging Everyday Thought. That doesn’t mean I like to say the opposite of what people are thinking just to be the antagonist. I think it is just my nature. As an athlete I always encountered competition. Someone was always trying to beat you. As a pitcher I was trying to fool batters. I was always thinking “what is he expecting me to throw”? And then sometimes I would do the opposite. In business one has to assume the same. However, while in sports having a losing season may be disappointing, having a losing season in business can be critical. Especially when it is a small business and the business is yours. So I am always thinking of ways to remain competitive in my business. A way to be different. If everyone is thinking the same thing then how can one possibly be different? I once saw a quote by Ben Franklin that said,

“If everyone is thinking alike, then nobody is thinking.”

So maybe it is not that everyone is thinking the same thing. It may be that technically nobody is really thinking at all. There is no great revelation when you say something everyone already knows or thinks.

I have referenced Peter Thiel and his book Zero to One in the past and in his book he says that when he interviews people he always asks following question, “What important truth do very few people agree with you on?” He asks this question because he is looking for people who think different. Those that are going to challenge the status quo and change the future. As we all know the future will be different.

I like to think outside the box but more important I think there is danger in Groupthink. As a business owner I can’t afford to fall into a pattern where I don’t anticipate change. Think Blockbuster Video, Circuit City, and Kmart here. Because the world will change, those that anticipate change may be better prepared for the future.

You can apply this thought process to the benefits business. Just ask yourself the following:

  • What if employers really don’t want to provide health insurance for their employees?
  • What if most people don’t want choice?
  • What if employers don’t value a brokers services?
  • What if Zenefits is right, and employers value what they do more than what you do?

Imagine a broker going into an employer with a new value proposition which is the total opposite of what others do. Many, many, brokers sell the value proposition of helping employers manage their risk and claims to lower health care costs. They provide wellness programs and other tools to try and reduce costs. What if you went into an employer and said, “Mr. Employer, managing your health care costs is almost impossible. Not only do you have turnover in your employee population but you are not in business to worry about managing the health of your employees. What if we developed a program to get you out of the health management business while still maintaining your competiveness for employees? Is this something you would be interested in?” This market approach is almost the exact opposite of what every broker in America is doing.

You can go through this thought process in other areas of the benefits business. Think about your business today and then think the opposite. Is the opposite a likely or unlikely event? I ask myself these questions every day. To quote Peter Thiel once again (maybe you should read his book) “What secret is out there that the world has yet to discover?” He believes there are many secrets out there and if you find one that a market will value then you can bring great success to your business. What I do know is that those secrets aren’t in any blog or in any PowerPoint Presentation. And if you are thinking just like the next guy then maybe you really aren’t thinking at all. So maybe being George Costanza for a day is not a real bad idea. It may be the key to a successful future.