EDUCATE, RETAIN, & EXPAND: 3 STEPS TO GUIDE YOUR PEO GROWTH JOURNEY

The PEO business has been good. I’ve enjoyed my career in this field, and I am energized to help all parties reap the benefits that a PEO offers. But did you know that only 17% of US companies with 10-99 employees currently use a PEO? A tremendous potential for growth exists in the marketplace, and PEO professionals should prepare themselves now to leverage the opportunities for expansion.

Eighty-three percent of the PEO target market, over a million small businesses, are virtually untapped. That doesn’t even include tiny startup organizations.

These organizations may be unaware of how PEOs can save them money, offload troublesome administrative duties, and provide their employees with benefits that rival large firms. It is up to the PEO industry to educate and inform this large group of potential customers.

Increasing the number of companies using PEO services isn’t just good for PEO providers and others in the PEO supply chain. The act of engaging with a PEO has a positive effect on many organizations. A recent study by NAPEO compared companies who do not use PEOs, to PEO clients. The PEO clients:

• Have a growth rate that is over 2 times higher
• Have an employee turnover rate that is 12 percent lower
• Are 50 percent less likely to go out of business

Partly because of their use of PEO services, NAPEO says, companies are more stable, robust businesses that are better positioned for long-term success.

STRATEGIES FOR PEO INDUSTRY EXPANSION

With such a large potential on the horizon, it makes sense to encourage people working in the PEO industry to take the steps necessary to execute the growth strategies. We can divide this preparation into three categories: education & training, client retention, and complementary services.

EDUCATION AND TRAINING

Some people on the front lines are not fully informed about how PEOs work, when they are a good fit for a company, or how to choose the right plan for a client.

Trusted advisors such as insurance brokers, CPAs, or labor lawyers may be unaware of how to recognize a PEO opportunity. There are no PEO education actions that professionals in the CPA profession or the employee benefits world are required to take. They are not talking to their clients about PEOs because they don’t know enough. With more education and consistent reinforcement from the PEO community, these professionals would naturally recommend or refer their clients to PEOs more often.

This approach works. I have educated over a thousand insurance brokers about PEO sales strategy, opportunity, and approaches. I built training modules that helped learners be confident and competent in starting business conversations about PEO service providers, their platforms, carriers, and industry target markets. These trained individuals now include PEO topics in their client meetings more often.

NAPEO offers a wide range of educational materials for its members, including PEO University courses, webinars, virtual events, and live events, such as the Annual Conference and Marketplace. Outreach programs aimed at professionals outside the NAPEO membership would expose these individuals to PEO basics and allow the advisors a chance to network with experienced PEO veterans.

CLIENT RETENTION

Growth entails more than acquiring new clients. PEOs must also be adept at retaining their existing customers. Client retention strategies may include moves to communicate better with customers about medical plan rate changes or payroll administration. This improves the customer experience throughout the term of the PEO contract.

With benefit costs rising, renewal time is a point of vulnerability for insurance brokers. Clients unhappy with large health insurance premium increases quoted at renewal may decide to shop around with another broker. If the broker is informed about PEOs and connected to PEO advisors, however, they can often propose benefit plans purchased through a PEO at substantial savings and avert the loss of a client.

Trusted advisors can achieve customer communication improvements with targeted informational content and regularly scheduled executive meetings. Keeping clients informed of events and trends as they occur is more effective than waiting to address numerous questions at renewal time. PEOs must reach out to clients in the months leading up to renewal dates, allowing them to identify any issues or head off competitors.

EXPAND WITH COMPLEMENTARY SERVICES

Additional value-added services make it easier to sell against the competition and add worth to a PEO relationship. Some additional services PEOs can offer include embedded accounting tools or expanded compliance assistance.

Accounting services can help clients manage their finances more efficiently by integrating with the PEO platform. Access to compliance assistance helps companies deal with complex employment laws or regulatory compliance.

Other complementary services PEOs could offer might include international HR assistance, outplacement services, or executive coaching.

SALES AND MARKETING APPROACHES

To sell PEO services to a plentiful market, PEOs should consider the trusted advisors as an outside sales force. Just as they do with their own captive sales team, PEOs can actively help trusted advisors be successful in selling more PEO plans. These people already have relationships with companies who would benefit from a PEO relationship. Those companies just need their advisors to show them how PEOs will benefit the company.

PEOs have a financial interest in helping individuals like insurance brokers and CPAs sell more PEOs. They may need to consider offering incentives like higher commissions or bonuses to convince these professionals to talk with their clients about PEOs more often.

PEO education for advisors should be proactively pushed to those individuals. Everyone is busy. Waiting for insurance brokers to seek education on their own seems unreasonable. Treating independent advisors more like a sales force will prompt PEOs to roll out a strategy with resources, targets, deadlines, and result tracking.

A major hurdle to overcome is a perceived complexity surrounding underwriting and plan onboarding. PEO experts can expose the advisors to human helpers and platforms designed to make the PEO sales process easier.

TRUSTED ADVISORS: A CRITICAL KEY TO PEO EXPANSION

Advisors, such as accountants or insurance brokers, have earned a position of trust with companies that may benefit from PEO services. Given the size of the potential market among small businesses, these professionals are poised to reap the benefits of leveraging those relationships to inform and educate their clients about PEOs.

Organizations such as NAPEO, and support by PEO professionals and outside influencers, can help trusted advisors learn about PEOs. They can become familiar with the education resources, tools, and support it takes to increase their sales and grow the PEO market.