What clients want: Benefit plans with a punch
A trend that started in the benefits industry about 10 years ago is now expanding and accelerating. I’m talking about the emergence of lifestyle benefits that go beyond all the traditional life, health, disability income and retirement plans.
It started with the introduction of offerings like identity theft protection and legal plans being offered through employer sponsored programs with group rates, generally as an employee-paid voluntary, benefit. Employers have been eager to enhance their benefits offerings to improve their recruitment of talent and to enhance their human capital retention for nearly 25 years now. But now offerings that positively impact an employee’s lifestyle are the hottest new trend.
With three generations active in the workforce, the benefits needs of a typical employee population are stratified and generally vary widely. Based on employee attitude surveys, for example, millennials value free time, quality of life, new experiences and lifestyle enhancements more than material possessions or career success.
Forward-thinking employers are listening to a new message about how to make their organization a desirable workplace because there are very important implications to these generational attitudes that need to be addressed when designing a comprehensive benefits program. As a prudent benefits adviser, you need to be listening to this new drum beat as well, or run the risk of being replaced by an innovative, early-adopter that is perceived to be on the leading edge of benefits plan design.
So specifically, what are we talking about? The following services are being packaged as enhancements to an employer’s existing benefits offerings:
· Financial planning, including household budget planning, on a fee-basis
· Online, cash-back shopping programs
· Discounted travel services for hotels, resorts and excursions
· Holistic wellness services
· Discounted leisure activities
· Fitness club memberships that can be used nationally
· Financial wellness planning with legal and accounting advice and counsel
· Medical tourism
· Discounted spa services
· Student loan repayment programs
And it is likely we will see even more offerings in the next two to three years. So if you have not taken the time to learn about these benefits enhancements what are you waiting for? The upcoming Workplace Benefits Renaissance conference in Nashville will have a panel discussion about several of these categories that promises to be informative and enlightening.
Now I can hear some of you saying, but I’m used to making substantial upfront commissions on the more traditional benefits offerings (both employer-paid and voluntary), so why would I bother to offer any lifestyle benefits at all since their pricing, and therefore their compensation potential, is less? The simple answer is: client retention.
Consider this: If you sell one product or service to a client, your five-year client retention will be about 50%. If you sell two products or services to a client, your five-year client retention will improve to about 70%. But if you sell three products or services to a client, your five-year client retention jumps to more than 90%. Now imagine if you added two, three or four lifestyle benefits to your standard portfolio. Your five-year client retention would be about 95%, meaning you’d retain your average client about 20 years.
Calculate the net-present value of that client relationship and you will think about some fun, sexy, engaging lifestyle benefits in a whole new light. It’s not a bad thing to introduce some fun offerings that employees want to utilize and to make more money in the process. Now that’s creative marketing.