Zenefits CEO Parker Conrad famously promised to drink the insurance brokers milkshake. Read on if you want to protect your milkshake from Zenefits.
Zenefits has been fulfilling Conrads promise, picking up letters of record at an unheard of pace in the last couple of years. Zenefits clearly is scratching an itch for employers: 100,000 total clients as of April 2015 and adding 20,000 new clients every month; $20 million in annual recurring revenue as of January 2015 and on pace to reach $100 million by next January.
Brokers are understandably nervous. Thats a lot of milkshakes and a lot of brokers who have lost clients.
Now, with more than half a billion investment dollars available to expand sales and marketing efforts, many industry observers including many brokers view Zenefits as an unstoppable juggernaut. A half billion dollars buys a lot of straws, so you can bet Zenefits is coming for your milkshake.
Brokers across the country have horror stories of Zenefits stealing their clients. So what can a broker or adviser do to defend his book from Zenefits?
Theres a lot of noise right now from broker-friendly vendors that propose to offer a Zenefits alternative so that you can scratch your clients itches. Were recommending certain sustainable HR technology solutions to our own agency clients, so you can make like Zenefits and offer HR technology to keep the letter of record. Nothing wrong with that.
But as my friend and brilliant agency strategist Kevin Trokey has pointed out, if thats your only meaningful value to the client, the first broker with a better HR platform can take your letter of record.
The real price of Zenefits
Recently, I met with a dynamic young California adviser, Adam Rochon of Sequoia Employee Benefits Solutions, who had clients in San Francisco, the home of Zenefits.
When asked if he had encountered Zenefits, Rochon told me the company had called on 10 of his San Francisco clients. I was afraid to ask what happened, but I did. He answered, 10 out of 10.
Wow. But, no, Zenefits didnt steal all 10; all 10 stayed with Rochon. Why? Simple. Zenefits isnt really free; the price for employers is giving up their broker or adviser. And that was too high a price for Rochons clients. His clients value his advice and expertise they value him too much to fire him, even though many were very impressed with the Zenefits HR system.
Adam Rochons experience proves that Zenefits can take your letter of record only in a void.
What do I mean? If a broker is doing just the minimum and bringing little or no value beyond spreadsheeting and some client service, theres a value void. Zenefits takes the letter of record by filling the void with the value of their HR software.
Something almost always beats nothing. Zenefits is just helping thin the herd by putting low-value brokers out of business, which is why were teaching our clients how to become high-value agencies.
So heres your antidote to Zenefits: Bring meaningful value to your clients e.g., benefits strategy, compliance help, business or HR insights, employee education and make sure your clients know it. Stop being just a broker and become an adviser to bring more value. If your clients value you, Zenefits cant touch your milkshake.
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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