How many customers do you have? Warning: Trick question. What I'm really asking for is the total number of employees in your groups. Why? Because there is a huge paradigm shift underway in the delivery of employee benefits. Thanks to the Affordable Care Act, the benefits industry is moving away from the old employer-centric model to a consumer-centric model. With many companies, your customer - the benefits decision maker - soon will be the employee, not the employer. That's a real paradigm shift.
Evidence? Exhibit one is the public health insurance exchanges, which will turn millions of Americans into benefits decision makers for the first time. For additional proof, consider that industry leaders Mercer, Gallagher and Aon Hewitt and carriers such as Wellpoint/Anthem all are offering private exchanges. Remember that a private exchange is merely a means to present and sell benefits directly to employees. These major players are betting heavily on the employee being the new benefits decision maker.
Wholesale to retail
Selling to employees represents a major shift for benefits brokers and advisers from a wholesale to a retail mentality. You used to make one sale to the employer and were done. In the consumer-centric model, with every employee a consumer, you will need to make many sales to remain profitable. Your success no longer will be measured by revenue per account but by the more telling metric of revenue per employee. Your success will depend on your ability to sell a broad portfolio of benefits to individual employees. In other words, your success requires a substantial shift in mindset.
How best to adapt to the consumer-centric model? Since few benefits brokers and advisers ever speak to employees except, perhaps, in an open-enrollment group meeting, you need a retail strategy to reach and engage employees in a benefits discussion to sell them the benefits that meet their specific needs.
You have at least three retail strategy options:
1) Defined contribution and a private exchange
2) Worksite voluntary benefits
3) Retail benefits stores
Veteran broker Jon Rauser of The Rauser Agency, one of our Agency Growth Mastermind Partners, has made a bold and radical move by trading his executive office space for two retail store locations. While continuing to better service his group business, Jon believes that not just employees of his group clients but people in the neighborhood will seek advice and benefits at his retail stores.
While Jon's play is visionary and audacious, he's in good company. Bernard Health, a new benefits brokerage formed for the express purpose of selling insurance to individuals and small businesses through retail outlets, now has stores in three states. And UnitedHealthcare, Highmark and Blues in California, New Jersey and Florida are operating stores to engage individual benefits consumers. Selling benefits through retail storefronts is a legitimate strategy. Soon, I'll explore how worksite voluntary and the defined contribution/private exchange approach also can put you profitably into the retail benefits business. It's becoming a consumer-centric benefits world and the number of customers you will have to sell to remain profitable is about to explode. Will you be ready?
Griswold is an agency growth consultant and author of DO or DIE: Reinventing Your Benefits Agency for Post-Reform Success. His Agency Growth Mastermind Network helps agency leaders reform-proof their firm. Reach him at (615) 656-5974, nelson@InsuranceBottomLine.com, or through 21stCenturyAgency.com.
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