WORKSITE MARKETING: A STEP-BY-STEP GUIDE

’ e’ve all heard that worksite marketing is a good way for banks to sell insurance products. But what’s the best way to do it? What are the

mechanics of successfully selling insurance at the worksite? And what problems must you guard against?

Brian Cooper, of Eastbridge Consulting, Avon, Connecticut, has helped shepherd insurance companies and banks through the worksite marketing process many times. He revealed some valuable insights at a recent convention of the Association of Banks in Insurance (Washington, DC).

Standing out in a crowd Cooper said the process starts with planning how your

bank can stand out in a crowded marketplace. “Let’s walk through the whole sales process of worksite

marketing,” Cooper suggested. “This is where we help companies think through the issues. And one of the things we try to do, while we’re going through that process, is to make our client ask, ‘How do we look different? What are the unique strengths, what are the unique things we bring to the marketplace? Why should somebody do business with me, or our bank, or our insurance company, versus all the other choices they have out there?”’

For successful worksite marketing, a bank needs some- one who specializes in opening those accounts.

“In terms of how the products tend to get sold,” Cooper explained, “first we have somebody who we call an account opener. And that’s someone who goes out and calls on businesses. That could be somebody who calls on small businesses, or somebody that calls on Fortune 500 compa- nies. But there is a process that person must go through in order to open the account. He’s first got to get permission to do worksite marketing-which we like to define as including payroll deduction of financial services products. And that’s whether they are bank or insurance products.”

Cooper says banks need to look at the market more broadly.

“On the bank side-from what we’ve seen in the press, and from when we talk to banks-usually they’re thinking about, ‘How do we sell insurance to our current bank clients in order to tie that client a little closer to us? Also, how do we get a little more revenue out of that client or customer?’ And our sense is that banks could look at the insurance

market a little differently, and say, ‘Gee, how do we get even more bank customers and insurance customers in the same mix?”’

But who should be the account opener? “An account opener could be somebody at your bank,”

Cooper noted. “It could be an insurance company repre- sentative. Or it could be a marketing organization that does nothing but set up programs, and goes out and calls on folks.”

Be patient But Cooper warned that the initial opening process

may take some time. You need to be patient. “That process,” Cooper advised, “in a larger company,

can take several months to a couple of years to go through the whole process in getting decisions made, and so on. So if you’re looking at the larger end of the market-say, 1,000 employees and up-the startup time might be a little bit slow on that. Although, sometimes, people get lucky- when there’s a need, and so on.”

And the account opener will have tojump some hurdles.

The bank needs someone who specializes in opening worksite accounts.

“If I take that market of 1,000 employees and up,” said Cooper, “or a 50,000-employee company, often times if I am the account opener and going to call on those folks, chances are there’s also somebody called the gatekeeper. It’s likely that the human resources area is using a benefits consultant, or maybe a broker-or sometimes a combina- tion of those folks. I have to get into the mix there. Normally, I would call on the human resources folks. And they say, ‘That sounds terrific. Why don’t you go and talk to my benefits consultant?”’

So the account opener then goes to the benefits consultant or broker.

“Things get more complicated,” Cooper noted, “as we bring some other people into the sales process. And nor- mally, do you know the first question a broker usually has? Right! He asks, ‘How much do I get?’ So his hand is out. And that brings up some compensation issues. How do you

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pay people? Is there enough money in it for the gatekeeper, or that broker? Is there enough money for the account opener?”

But if the account opener negotiates those hurdles, and the company agrees to allow worksite marketing, the bank needs some new tools.

“Once the account is opened,” Cooper explained, “and we’ve got permission, then we need a communications program-one that needs to be built within each account.

“By communications program,” he continued, “I mean that the employees have to know about the products that are available, and the benefits to them. All our research, and industry research, shows that people do value one thing: that’s the ability to take things out of the paycheck, that payroll deduction. So we found in our work that the product doesn’t have to be the most competitive, state-of-the-art product. People will pay a little more. And the question is to test how much ‘a little more’ means.”

So the bank has to learn just how much room it has in price.

“But people will pay more for the convenience of payroll deduction, and being able to buy these products at the workplace, than they would through direct mail and other methods,” Cooper assured us. “And one of the rea- sons for that is that people almost need somebody to ask them, to give a little push there. But they also just appreciate it. They say, ‘I can do it at work, take the money out of my paycheck. I don’t miss it, and it’s very simple. It’s very easy.”’

Setting up enrollment Frequently, the bank needs to set up a formal enroll-

ment process for worksite employees. And it’s usually best if the enroller is a different person than the one who opened the account.

“Often times,” Cooper advised, “what we recommend is an enrollment process-meaning that a person sits down with each employee. There may be a 15-minute meeting with each employee. And a person sits down and talks to that employee. Usually, that person is a different person than the one who is the account opener. So we separate it into account openers and enrollers because there are differ- ent skill levels, different needs in terms of the person. Also, in the enrollment function, you’re saying the same thing about 10 or 15 times a day-day in and day out. So it’s kind of a routine, almost a factory kind of task. These are some of the issues the enroller must be able to handle.”

Remember, though, that your bank is a guest at the worksite. So you’ve got to get clearance every step of the way.

“Once we do enrollments and we see employees,” Cooper told us, “we have to negotiate with the employer to

make sure we can do that on company time, and do payroll deduction, and so on. We also have a billing issue. Now we’ve got that deduction, we’ve got an administration. Some companies that we work with will insert an adminis- tration person in there somewhere, to interface with the corporate customer administration person, to make sure things go smoothly.”

Worksite’s Achilles’ heel But like everything else, there are pitfalls to avoid in

worksite marketing. The bank has to be very careful in one area, particularly.

Frequently, the bank must set up a formal enrollment process for worksite employees.

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“If there’s an Achilles’ heel to worksite marketing,” Cooper revealed, “it is the whole payroll business. It’s the whole deduction piece of that. As soon as you mess up somebody’s paycheck, there’s hell to pay! We do custom- ized research for different companies, including projects for employee benefits people. I’ve sat in focus groups and watched these things go on. And every time we do some- thing with people who are managing employee benefits at the client level, the one thing they almost always say is: ‘I don’t want the phone to ring! I don’t want an employee calling me, saying there’s a problem!’

“And that’s where the Achilles’ heel is, because it is easy to mess up the billing. You have employees entering, leaving-all of that stuff. We almost always advise carriers that are getting into the business, ‘Don’t do your own billing-at least not at first. Hire a good TPA [Third Party Administrator] ,’ because it’s the Achilles’ heel. Usually, companies don’t have the systems together to handle that. So the thing to overcome there is that you’ve got to have smooth billing. Because if that doesn’t work, you’ve got a problem.”

Cooper briefly mentioned two other important things banks must consider: offering the right combination of products, and a process called reenrollment.

“If you really want to penetrate that account,” Cooper explained, “you have to have the right mix of products. But we also want to go back, year after year, and do something called a reenrollment. And we see a lot of companies fall down there, because you’ve got to think that through.

“With a large-scale company-if I’m dealing with a 10,000-person group-it pays for me to go back and reenroll, as a producer, as an enrollment firm. However, what if I’m talking to the machine shop in the local town? Let’s say there are 12 employees, and they may have gotten

rid of one, and added two in the last year. As a producer, as someone who lives off commissions, I have adifficult time justifying the expense of going back and visiting those people to reenroll, add more products, and so on.”

Large-company and small-company worksites each have their own special set of problems to contend with.

“So if you’re looking at the marketplace,” Cooper affirmed, “there are different problems at either end. But you need to think about that whole reenrollment piece of the puzzle.”

Billing is crucial And there are other considerations. “Another piece that is difficult for companies,” Cooper

revealed, “is when employees leave the workplace. Can they ‘port’ their coverage, or can they take it with them?

And how do they do that, and what happens to the billing, and so on? That’s where, if you’re working with a product provider, or an insurance carrier, their systems need to be able to handle that-or your systems need to-in terms of knowing when the employee leaves, how to set up an individual bill case, or preauthorized check, or all those kinds of things that go into that whole mix. And it has to be done right.”

In fact, proper billing procedure can be crucial to the success of your worksite program.

“We worked with one client,” Cooper confided, “where we added $8 million to their bottom line-just by changing the way they went about converting that billing to an individual process. We did some creative things in there. And none of this stuff is all that complicated. But it needs to be thought through.”

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CHOOSING THE RIGHT PRODUCTS: A MODEL THAT WORKS

aking the right product choices is a tough chal- lenge. Even Bill Schrempf will admit that, and M he has helped a lot of banks structure their

insurance programs. Schrempf, who is a principal with Ernst & Young,

LLP’s Insurance Consulting Practice, New York, New York, shared some of his insights at a recent convention of the Association of Banks in Insurance (Washington, DC).

How much risk? To choose the right products, a bank must first gauge

how much risk it wants to take. That’s because, like everything else in life, bigger risk means bigger reward.

“The farther out there you move, the more likely you are to have superior growth rates and high rates of return,” Schrempf noted, “but also much higher levels of risk. For example, annuities are afairly simple product extension for banks, offering improved revenue and reasonable risks. Creating an agency may be the next step out, and it might include parity, sort of an ‘everyone else is doing it’ product line. But that is not likely to create competitive advantage. And if you move even farther out, the bank says, ‘I’m going to put together a portfolio of products aimed at a particular

market, in combination with some technology and some allies’ ; it might have significant opportunities for competi- tive advantage. But now you’re starting to talk about increases in risk and investment.”

In choosing insurance products, Schrempf said banks also have to look at each product’s “value proposition.” What are you offeringcustomers? And what are the tradeoffs they are making to get what you’re offering?

“I think it’s clear that products are sold in context of a value proposition,” Schrempf asserted. “That value propo- sition is the sum of a whole collection of variables, which include features, and service, and price. Trust is another element. And inherently, we know that consumers and providers make tradeoffs among these variables-depend- ing on their target and the needs of those people.”

Different tradeoffs result in products for different niches. “In the same marketplace,” Schrempf remarked, “we

can have a Price Club or a COSTCO, and a Nordstrom’s- aimed at quite different people, with quite different propo- sitions. Or in the insurance industry, in personal lines propertykasualty, you can have a GEICO selling personal lines direct; or you can have a Chubb, with a very high-end set of products that would be most suited, probably, to the

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