Category Archives: Uncategorized

Recently, I found out that I am just like Tom Brady. Tom Brady is a quarterback. I was a quarterback in high school. We are/were both quarterbacks. Therefore we must be equal. Well, that was the logic used on me a few months back when I spoke to the owner of a benefit brokerage firm about using an HR/Benefits technology consultant.

He said he just hired a person, so he was all set. I know the person he hired. I am not going to say I am the Tom Brady of technology consultants, but relative to the experience of this person it is a fairly close comparison.

I know what it feels like to have your service or even yourself become commoditized.

As a technology consultant, I get calls all the time from brokers asking what I think about this or that vendor. I follow it up by asking what they are looking for and the answer almost always comes back as “a competitive advantage.”

Brokers too are complaining that their business has become commoditized. It is hard to differentiate yourself when you provide advice or some service. Just recently I was at my dentist getting a crown and before the dentist started she asked if I had any questions. I only had one and that was, “Are you any good at this?” I hoped she was.

While websites like Yelp or Angie’s List are resources for people to share their opinion on some product or service, there aren’t many people out there sharing their opinions on such sites about their benefit broker. And we aren’t Tom Brady, who has a many more opportunities in front of a few more people than you and I to demonstrate our differences or skills. Creating a differentiator to open new doors when you are an adviser without a big venue to display your talents can be a challenge.

I think this explains why many brokers are looking for some technology as the differentiator. It is much more tangible. You can put videos and pictures on your website. You can go to meetings and do demos. And after you get the client you can set up some system and hope that client is tied to you. But, from my perspective, this provides a false sense of security. As we all know, technology gets old. Today’s market leader will be outdated in six months. So then you are stuck with yesterday’s technology. And most brokers don’t know how their technology really compares to that of competitors. They move from being a good or great benefit consultant to a bad technology salesperson. Their shortcut to differentiation becomes a liability, not an asset. I have seen this way too many times.

Shiny new toys

Getting new business is tough. Having something new and shiny to open doors can be tempting. But the apple was shiny, too. From my perspective as a technology consultant there are opportunities everywhere to be different and solve real problems. As employers adopt new technologies they will need help implementing, integrating, optimizing, extending, communicating and training.
There are companies around the world whose businesses are all based around servicing some other product or technology. BASF didn’t make the product, “they made the product better.” That opportunity exists in the benefits business. However, developing the service model and then marketing it takes a real lot of hard work and is not as easy a selling the shiny new toy. But as the old saying goes, if it were easy then everyone would do it. And everyone has the shiny new toy.

Tom Brady and I are/were both quarterbacks, but that is where the comparison ends. I guess if I put on a Patriots uniform and ran out on the field with the team some may think I was a professional football player, until of course, I had to perform. So, I, like many of you, need to find better ways to differentiate or even ways to simply display my skills. The opportunities are out there. Don’t let the shiny new toys distract you from finding the real solution.

There is the belief out in the benefits world that the small to mid-sized benefits brokers will either struggle to survive or not survive at all. With Obamacare, Private Exchanges, ACO’s, new competitive threats, it simply will be too difficult to change one’s business to succeed, or so some believe. I disagree. Not only do I disagree but sometimes the market changes in a way where small to mid-sized businesses may be better positioned for success.

Let’s start with the idea in general that small to mid-sized firms won’t survive. Why would this be the case in the benefits business but not in any other industry? There are small law firms, accountants, restaurants, hardware stores, and breweries. Heck, I am managing my in-laws independent pharmacy that continues to be profitable year in and year out. And my business bank is a local bank that has only one location. Sure, there are some industries like large manufacturing where the barrier to entry is real high such as the automobile business, energy, or aircraft manufacturing. But that is not the case with the benefits business. It is primarily a service industry and I have a hard time thinking of a many service type industries where all the small firms were displaced by the larger ones. I have seen both larger and smaller firms displaced by firms with newer technology, but let’s leave that for another article.

According to the census bureau there were 6, 634,155 businesses in the U.S. in 2010. Of those 3.8 million were firms with less than 10 employees, 10 – 99 had 1.3 million, 100-500 had 1.65 million, and for companies with 500+ employees there were 1.1 million firms. What these stats are saying is that the majority of employers are small to mid-sized businesses (less than 500 employees) therefore the majority of a benefits brokers customers and prospects are also small to mid-sized employers.

Small to mid-sized employers are proud of what they do. In fact, many believe they do whatever it is they do better than their larger competitors. If you were to ask the average small to mid-sized business owner how they are better they would say things like “we provide more personalized service”, or “we can adapt faster to client’s needs or market changes”, or “we are more vested because we own the business”. You see most businesses in general are more like the small to mid-sized broker than they are like the larger broker. Think of this for a second. If everyone did business with only the largest companies in any industry both you and your prospects or clients would be out of business. A small business owner may appreciate that perspective.

In some situations small to mid-sized firms have an advantage. A good example of this is how quickly firms have responded to the competitive threat of Zenefits. It is my experience that the mid-sized independent brokers have been able to respond faster than the larger ones. When Zenefits says we will “help you with payroll” many larger brokers say “we aren’t touching payroll”. While independent mid-sized brokers are making changes quickly to meet the demand larger firms are asking permission of their attorneys and compliance people. It doesn’t matter whether you are big or small we don’t get to make the rules of the game and sometimes the market will go in a direction that may make certain firms feel uncomfortable.

This article is not taking sides. Small and large businesses can be displaced. Whether you are big or small you need to provide something that is valued in the market. But, you don’t get to make all the rules. Big brokers can’t say, “We don’t want to do that”. Well they can but they won’t get the business. Smaller firms have to find ways to deliver what larger firms do or find other ways to differentiate themselves. And when you are talking to a small to mid-sized prospect ask them how they are different from their bigger competitors. When they say that they provide more personalized service, adapt faster to market changes, aren’t afraid to take chances, etc… just say, “well I’m just like you”.