3 steps to cross-sell voluntary benefits
Why aren’t brokers cross-selling these benefits? It comes down to a lack of understanding and a fear of voluntary.
It makes a lot of sense to do so, especially when:
- Commissions on major medical plans are decreasing because of market pressures, while voluntary benefits continue to be one of the fastest growing products
- Voluntary benefits provide a new, substantial source of revenue and can help replace decreasing revenue from major medical plans
- Cross-selling to existing clients is significantly less expensive than developing new clients
- Employees are asking for it
So why aren’t brokers cross-selling these benefits? It comes down to a lack of understanding and a fear of voluntary.
It’s hard to sell something when, like Eric, you don’t understand it and/or you’re afraid of it.
Brokers often don’t understand:
- The revenue potential
- The unique value propositions
- The value of the benefits to both employer and employee
- How to sell voluntary
- The “how” of voluntary benefits— the nuts-and-bolts enrollment and billing
There are three key steps brokers can take to move past this fear and effectively cross-sell voluntary benefits.
- Recognize the revenue potential. Voluntary has a reputation for producing insignificant “marginal revenue” that isn’t worth the effort. But when done right, voluntary can create substantial revenue dollars.
As you know, the revenue a broker makes depends on a lot of factors: What do the employer-provided benefits look like? What voluntary products make sense to offer without overwhelming the employees? How many voluntary products are you offering? How many eligible employees are there?
Related: 2018 voluntary survey: The fight for employers’ business grows fiercer
A general rule of thumb is that roughly 60 percent of employees will elect at least one of the voluntary products and an average premium is going to be around $520 per year or $10 per week. The average first year commission for the broker varies by product, but I’d say an average of 25 percent in the first year and 5 percent for future years as long as the policy stays in force is about right.
Let’s say there are 100 benefit-eligible employees and 60 percent of them buy the $10 per week voluntary product. That ends up being $31,200 in annual premiums, with a $7,800 in revenue for you.
Broken down even further, that ends up being around $6 PEPM for the first year, somewhere around a 30 percent increase in first year revenue, with a lower renewal “trail” that when consistently sold, will build over time to be a significant ongoing revenue stream.
- Understand the value proposition. Voluntary benefits range from critical illness and accident plans to short-term disability and permanent life insurance. Many voluntary carriers offer high-value health and life plans that fit the needs and lifestyles of today’s employee.
Voluntary also fills a vital gap in both life and health insurance in employee benefit plans and shields employees from their increased exposure in high-deductible, consumer-driven plans.
Plus, for most employees, voluntary enrollments are the only place they can get insurance benefits and benefit counseling.
- Learn how to sell voluntary. Once you understand the value proposition, the key is to not present voluntary as an additional product to offer employees.
When clients need to enhance their benefits offering without adding additional costs to the company, or when clients want to fill gaps in the benefit design but can’t spend extra money, voluntary benefits are the ideal solution because the employer doesn’t incur any direct cost but still provides these valuable benefits to their employees.
The best way to sell voluntary is for brokers to learn how voluntary can help them solve some of the problems facing their clients. For most clients, the value of voluntary isn’t even the products themselves. It’s the valuable process of communication and enrollment that it provides HR.
As with all selling, identify the client’s pain point. Then, offer the solution that takes it away.
HR departments say that some of their most common problems are:
- Unwieldy paper enrollments
- Ineffective benefit communication
- High turnover rate
- Poor participation in programs like retirement plans and FSAs
- Outdated employee data
- Low employee morale
Voluntary enrollment helps companies solve these HR problems, often at no direct cost to the company. Services such as personalized benefit statements and electronic enrollment reduce HR’s burden and solve their most pressing pain points.
In Eric’s case, once he understood the revenue potential, value proposition, and how to sell voluntary, he quickly got on board. The enrollment at that company went well, and the client was thrilled.