Are you ready to move from opaque, largely hidden commission compensation to fully transparent fee compensation? The time is now.

The end of commission compensation for large-group medical is near. Not only are medical carriers reducing your commissions on large groups, the trend is to eliminate commission altogether and move you to a fee-for service arrangement that you negotiate with your client.

But your challenge is not simply transitioning from commission to a fee just for managing the medical renewal; shopping rates is now table stakes. Success with the fee-for service model requires both delivering massive value for which your clients gladly will pay you a fee and managing the process of consulting to get the fee you deserve.

Fortunately, there are many business areas — benefits-related and otherwise — where you can bring value. One of our agency clients in the Midwest, Group Services, Inc. (GSI) in Bettendorf, Iowa, has created a robust Affordable Care Act compliance program built around an assessment of the employer’s compliance readiness. Many benefit firms today are blithely giving away costly compliance services. We’ve shown GSI how to both use compliance services as a marketing differentiator and get paid for it. Over the past two months alone, they have closed compliance consulting contracts for $25,000; $15,000; $32,000 and $45,000. In only one case do they also have the letter of record on the medical.

Key here is an effective marketing strategy to create warm-to-hot prospects. GSI is using a public speaking strategy with a simple, free business assessment to sell a more in-depth compliance assessment for which they charge a nominal fee. This is known as a tripwire sale, a low-ticket service with the primary purpose to turn prospects into clients. From here, the new client is sold into a higher-dollar consulting contract. This model works with any consulting.

GSI’s clients are gladly stroking a five-figure check because they recognize the value GSI is delivering. How’s that for transparency?

The proposal process

Once they’re delivering massive value, however, the challenge most agency leaders have is in the pivot to a fee. Justifying and asking for the fee is a new and daunting task that is keeping many from making the move to fee-for-service.

The solution is an effective proposal process that demonstrates your value, puts your compensation in context, and makes the case for your fee.

My firm recently helped our client Becker Benefit Group in Baltimore develop a templated consulting proposal that generated a $20,000 consulting fee for Gary Becker’s work on reducing a self-funded college client’s benefit costs. This consulting, incidentally, was done without the letter of record on the medical.

By providing innovative strategies on PBM and stop-loss insurance that generated significant savings, Becker Benefit Group brought massive value to the college. But, equally important, with the consulting proposal Becker was able to frame his contribution and was rewarded with a substantial fee based on a percentage of savings. If creating your own consulting proposal, include specific objectives, measures of success, quantified value and outcomes, and solution methodology.

Even if you are not yet being forced into fee-for-service on large groups, get ahead of your competitors and start now to generate meaningful fee revenue.

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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