3 areas that determine ben admin ROI for a brokerage
When selecting a benefits platform for your agency, the most looming question will always be return on investment. Whether you will see a return and how you will get there should certainly be top of mind when making the game-changing decision of bringing your brokerage online.
Of course, every software vendor will assure you the return on investment is imminent. But how can you tell for sure? There are three areas that will determine your overall ROI with a benefits administration system, and comparing platforms based on these criteria will help you develop a sense of which vendor will bring the most value to your agency.
The three criteria are the platform’s licensing model, system support and opportunity for revenue growth. Let’s look at each area individually.
1) Platform licensing model
There are a few different ways brokers can license a benefits administration platform, and some will lead to better ROI than others. The most effective cost model for most brokers is one where the agency can get all of its clients online for a flat monthly or annual fee.
Another option is a per employee, per month format based on a minimum number of employees. The risk here is seeing costs grow faster than value.
Be sure to take the long view of your expected costs with a new platform. Ideally, you want to have all your clients online, as well as add new ones every year. With that in mind, which licensing model will provide the most value?
2) System support
Is your agency tech-savvy, or do you anticipate needing assistance from your vendor when it comes to getting your system up and running and managing it over time? If it’s the latter, you will likely find a dedicated support structure beneficial to your investment return.
The alternative is allocating significant time away from existing clients to handle the system’s build-outs, or hiring a team member to specifically handle tech support. This can ultimately cost your agency more, through payroll and opportunity cost, than going with a vendor that provides more robust support as part of its value proposition.
Also see: “Clients need to upgrade their ben admin.”
Evaluating the vendor’s ongoing support processes as well as your anticipated needs can help you determine the value of more support versus less. Likely, you will find more to be beneficial.
3) Revenue growth
Many brokers see the move online as an opportunity to win brand new business. This is absolutely true. An even more lucrative opportunity can come from helping your current clients expand their benefits package to compete more effectively in the war for talent with larger employers in their markets. They will do this as a natural consequence of moving online.
Why? Because the biggest barrier most small employers face to expanding their benefit package is the administrative burden. Moving online can dramatically reduce that burden. As that burden shrinks, they begin to seek out ways to expand their benefits package.
When you are evaluating different platforms, make sure to understand both how they will help you land new clients and also how they will help you help your clients expand their benefit packages.
And don’t forget to ask for references, and to ask the references with whom you speak what they think about these three criteria. Through recommendations from agencies actually using the systems, you will be able to get a good sense of which software system will provide the most ROI.