You already know that the future will not be the same as the old days in this industry — the group market has changed forever. I will provide a cogent argument for changing your strategy to winning new business and help you navigate a path to winning over prospects who truly want you. We will examine the future of different employee benefits in a series of columns. First up, let us discuss health benefits, specifically for the small-group market.

The future of health benefits is insured small group and individual policies, not self-funding.

Self-funding will not be the salvation that many industry experts predicted for this segment of companies. Many insurance agencies hire big-ticket talent with self-funding expertise to go hunt elephants. Unless you are already doing so, forget that strategy and save your money. Your insured culture will eat self-funding producers alive.

Sales managers at agencies want new numbers on the board every month. Your best self-funding producer does not shoot an elephant every month. Tensions fray when sales managers do not see new business coming from self-funding producers. Other producers will begin complaining and ostracize the self-funding producer. The self-funding producer may then start selling small groups just to put numbers on the board. From there, employee morale tanks and good people leave. The self-funding experiment fails, but managers will go at it again. I witnessed this too many times to count at benefit brokerages. Does that make sense? If you are good at small group, stay there. The future bodes well for you.

How big is the small-group market?

According to the U.S. Bureau of Labor Statistics, in 2013 nearly 29% of all private sector employees worked for a company with fewer than 50 employees. That is a big block of employers. The current legislative climate makes selling small group unprofitable, but buyers still want benefits. Follow small group to the money, but think of it as a different path from just a few years ago. This new path is about profitability and it requires repentance from obsolete thinking and worn out tactics.

Learn a new philosophy — humatech. It means humans and technology combined into a single force, getting the right mix of human touch versus technology is the trick. Humatech in this context means using customer relationship management (CRM). You want a version that does all the the usual customer touch, but one that turns out some value-added services too. The humatech concept is reform your agency needs. It allows you to go after that big chunk called small group. Hire and train humatech producers only. Pair their insurance and sales skills with specialized technology so that producers sell more. Chart each salesperson’s production every month for all to see. Good humatechs, as I’ll refer to them, will rule the day. Fire the bad humatechs.

We cannot consider small group without grappling with the great profit sucker called client service.  Agencies imbue service into the ethos of producers. Sadly, service carves away at your profitability per group, if not eliminating it all together. Yesterday’s customer service will not work today so change to the humatech model. Ration producers’ client service and use technology as the primary tool for more and better service. Free up producers to get out of the office and pop small group accounts.  

We learned two things in this column. First, small group is where the easy sales are now and for the future. Sales organizations must fundamentally reform around technology so that sellers sell more. We coined humatech and I will redefine it with each benefit in the series in future columns, since the technology needed will change.

Next month: What do small business owners want from you?

Davidson, CEBS, is founder of Davidson Marketing Group. Reach him at craigd@davidsonmarketing.com.

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