The Four Simple Steps To Success In Cross-Selling Voluntary Benefits! By NELSON L. GRISWOLD Cross-Selling Coaching and Mentoring for Benefits Brokers * This White Paper was the basis for Nelson s groundbreaking article, Four Steps to Cross-Selling Voluntary, that was published in the March 2008 issue of Benefits Selling magazine. to learn how to grow your practice by successfully cross-selling voluntary benefits.
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A recent cover story in a leading insurance industry publication proclaimed: Everyone says they re doing it. But these guys really are. 1 The headline referred to cross-selling worksite voluntary benefits and one broker s recent bold steps in this area. But what of the unspoken implication of the headline? Despite strong incentives and the best intentions of some, the overwhelming majority of brokers are not cross-selling voluntary benefits. Why not? Why are brokers not cross-selling voluntary benefits even when: Commissions on major medical plans are decreasing due to market pressures; Voluntary benefits continue to be one of the fastest growing product segments; Voluntary benefits provide a substantial, new revenue source that can help replace declining commissions from major medical; Cross-selling existing clients is about 60 percent less expensive than developing new business; The Aflac and Colonial sales armies are hammering continuously on their clients door to put in voluntary benefits; Employees ask for it at work thanks to Aflac s persistent, high-profile advertising campaign; and From small shops to the regional and national houses, brokers are implementing cross-selling initiatives? Ignorance and fear Despite the popularity of voluntary benefits (VB) with employees and growing pressure from agency management and practice leaders, most producers either refuse or are failing to cross-sell voluntary benefits because they don t understand voluntary and/or they are afraid of it. Producers don t recognize the revenue potential of voluntary benefits just how much money VB can put on their bottom line. They don t understand the value proposition of voluntary the value of the benefits to both the employers plan design and the lives of their employees. Producers also don t know how to sell voluntary benefits to their clients the unique value proposition of VB that can create a tremendous win-win situation for both the client and the producer. Finally, many producers fear that the voluntary benefit process particularly the enrollment and billing will put existing business at risk. Producers fear the how of voluntary benefits, a fear that can be dispelled only by trust in a strategic enrollment partner that will handle almost all of the how of voluntary. Producers must take four steps to effectively cross-sell voluntary benefits: 1) Recognize the revenue potential of voluntary benefits; 2) Understand voluntary s value proposition; 3) Learn how to sell voluntary to the client; and 4) Select the right enrollment and carrier partners. These four steps will lead to higher income and enhanced client retention from successful cross-selling. 1 Denis Storey, Voluntary Crusader, Benefits Selling June 2007: cover. to learn how to grow your practice by successfully cross-selling voluntary benefits.
STEP 1 RECOGNIZE VB S REVENUE POTENTIAL When asked about worksite voluntary benefits, brokers and producers often make comments such as, There s not enough money in that to mess with it. Many producers discount the revenue impact of VB, to both their firm and their own income, seeing voluntary benefits as producing insignificant marginal revenue and not worth the effort. Yet a successful cross-selling initiative can generate substantial commission dollars. Group voluntary vs. worksite voluntary Most brokers think in terms of low commissions on voluntary benefits because they are familiar only with the voluntary versions of typical group products such as term life, long-term disability, dental and vision. It s hard to get excited about the 10-15% commissions on these voluntary products. Worksite voluntary commissions, on the other hand, typically pay a high percentage of the first-year premiums in the 50-110% range with renewals in ensuing years of 5-10%. Most accident and individual shortterm disability plans pay commissions in the 60-65% range, critical illness plans pay in the 70-80% range, and permanent life products pay 90-110%. Assuming that a permanent life product is one of the two or three VB products offered during an enrollment, the blended commission rate on the worksite benefits is usually about 70%. With that kind of money at stake, if producers don t cross-sell voluntary benefits to their clients, someone else surely will. How deep is your voluntary revenue stream? With a decent book of business, a typical P&C or employee benefits broker easily can earn $100,000 by crossselling voluntary, even after splitting commissions with his enrollment partner who does all the heavy lifting. A broker with a healthy book can expect to drive upwards of half a million dollars to the bottom line. That s $500,000 in new revenue with no real work required. With that kind of money at stake, if producers don t cross-sell voluntary benefits to their clients, someone else surely will. And it s unlikely that that someone will be content with the BOR on just the voluntary. STEP 2 UNDERSTAND VOLUNTARY S VALUE PROPOSITION Many otherwise savvy producers dismiss voluntary benefits as low-quality products that return little value to policyholders. Even many of those producers who recognize the value of today s voluntary benefits don t know how effectively to present worksite benefits to employers. And, in fact, the value proposition of voluntary benefits for employees is different than the value proposition for employers. Employees are sold on voluntary benefits Understanding the very real value of voluntary benefits to employees makes clear that voluntary benefits are not just another revenue stream for producers but also a meaningful addition to an employee benefits package. to learn how to grow your practice by successfully cross-selling voluntary benefits.
The leading voluntary worksite benefits include permanent life insurance, innovative critical illness and accident plans and short-term disability coverage. The portfolios of today s top voluntary benefit carriers offer benefits worthy of inclusion in the most gold-plated benefit plans. Familiar only with yesterday s hospital indemnity plan or shabby cancer policy, far too many producers mistakenly perceive voluntary benefits as low-value products. The high-quality benefits available from the many blue-chip voluntary carriers are valuable life and health plans that meet the needs and fit the lifestyles of today s employees. In a well-planned worksite enrollment supported by HR, participation in a new voluntary offering can reach 50-60% or more of eligible employees. Voluntary benefits do not sell themselves; but when trained benefit counselors explain these benefits to employees, employees want these benefits because they understand their value and want the financial protection they offer. The high-quality benefits available from voluntary carriers meet the needs and fit the lifestyles of today s employees. Additionally, few producers understand the vital role that voluntary benefits both life and health can play to fill gaps in an employee benefit plan. Additionally, VB offers significant value in high-deductible, consumer-driven plans to shield employees from their increased exposure. Case Study When a popular, long-time employee of a large Pennsylvania-based publishing house returned to work after successful treatment for cancer, her colleagues were first delighted to see her then stunned to learn that she now owed almost $50,000 in medical debt above what her employerprovided health insurance paid. Deductibles, copays, experimental treatment and other uncovered expenses quickly added up to saddle her with a tremendous debt. Despite a very generous major medical plan, she had incurred a severe financial burden due to her illness. As word of her financial plight spread through the company, the human resources director asked their broker if there was a way to fill this glaring gap in their health coverage; the broker recommended a voluntary critical illness plan. The eventual critical illness policy selected provided up to $100,000 lump-sum payment upon diagnosis of cancer, heart attack, stroke and several other serious conditions. Employee awareness of their colleague s plight paired with a professional enrollment supported by full employee access produced high participation in the voluntary offering. HR and employees were extremely pleased with the process and the additional level of financial protection available to them. Finally, and this point cannot be overemphasized, for almost all employees in the U.S., voluntary worksite enrollments have replaced the kitchen table as the only place to get advice and counsel on insurance benefits. Only the top earners are still being called on by agents with insurance and planning advice. A worksite enrollment offers Joe and Jane Lunchbucket the opportunity to talk with a trained, licensed benefit counselor about their personal insurance needs and how his employee benefits can meet those needs. Yet the value proposition of voluntary benefits extends far beyond the value of the products themselves. to learn how to grow your practice by successfully cross-selling voluntary benefits.
STEP 3 LEARN HOW TO SELL VOLUNTARY TO THE CLIENT The value proposition of voluntary benefits to the client is the most important lesson for producers to learn. Even if they embrace the value proposition of voluntary benefits for employees, most producers make the mistake of presenting voluntary to the client merely as additional products to offer employees. In other words, they push products and try to sell the client on offering voluntary benefits. Of course, for the client who needs to enhance or freshen the benefits offering without adding cost to the company, voluntary products are the perfect solution. Ditto for the client who wants to fill gaps in the benefit design but doesn t have the budget. In both cases, the employer incurs no hard costs while providing valuable new benefits to employees. The value proposition of voluntary benefits to the client is the most important lesson for producers to learn. But the only time a producer should be selling voluntary products to the client is when a voluntary benefit offering solves a client s problem. Otherwise, rarely is the human resources director interested in adding more benefits to their plan. Pushing products is the primary reason why so many producers fail to cross-sell voluntary benefits. Solving problems with the process, not products To effectively cross-sell voluntary benefits, producers must learn how voluntary can solve some of the most painful problems facing their HR clients, usually without costing the client a penny. Using voluntary benefits, the producer can provide HR with solutions not just products and eliminate HR s pain not just make a sale. While the voluntary products themselves benefit the employees, the process of offering voluntary benefits the communication and enrollment of a voluntary offering almost always can benefit the client. For almost all clients, the value of voluntary benefits is not in the products themselves but in the process and the valuable ancillary services that it can provide HR. Key to success is using advisory selling to uncover the client s problems and then knowing how the voluntary benefit process can solve those problems. Advisory selling is about working closely with HR staff to ask discovery questions, identify the client s pain and offer a solution that removes the pain. Human resources departments report that many of their most common problems are related to enrollment and plan participation. Other common complaints are outdated employee data, low employee morale, and high turnover rate. These are all problems that can be solved by a successful voluntary enrollment. The various valuable services available as part of a voluntary enrollment enable a producer to solve many of HR s most painful problems. Among other things, these services can streamline and improve the enrollment process, increase plan participation and reduce the burden on HR, freeing up their staff for other projects. to learn how to grow your practice by successfully cross-selling voluntary benefits.
Case Study When a Maryland construction firm invited the broker for their construction bonds to quote their health and supplemental insurance, the broker dug deeper than the client s acknowledged problem with year-over-year increases in their medical plan. He discovered their frustration with the logistics of a paper enrollment, communicating benefits to their overwhelmingly Spanish-speaking employees, and the resultant poor participation in the plan. In addition to a health plan from a new carrier that would save the company $150,000 annually, the broker introduced the client to an enrollment firm that would conduct an electronic enrollment and provide each employee a one-on-one enrollment meeting with a bilingual benefit counselor and enrollment materials in both Spanish and English. The enrollment services would be paid for by offering employees a voluntary accident plan and permanent life insurance. With his BOR threatened, the in-place broker of long standing matched his competitor s proposal: the same plan, carrier and cost savings. But by solving additional problems for the client along with addressing the medical costs, the new broker won the BOR letter. By showing the client how to reduce HR s paperwork and increase plan participation and employee morale with an electronic and bilingual enrollment funded by a voluntary enrollment at no hard-dollar cost to HR, the broker created a proposal that the client couldn t resist and the old broker couldn t match. Using voluntary benefits, the producer can provide HR with valuable and meaningful solutions not just products and eliminate HR s pain not just make a sale. STEP 4 SELECT THE RIGHT ENROLLMENT & CARRIER PARTNERS Successful cross-selling doesn t end with the client saying yes to a voluntary offering; it ends with a successful enrollment that satisfies HR and produces high participation in the voluntary. Whether to ensure a successful voluntary enrollment or to overcome a fear of voluntary benefits, selecting the right partners is essential. Overcoming the fear factor Let s be honest, producers who resist cross-selling voluntary out of fear aren t imagining things: done badly, a voluntary enrollment can be a nightmare for the client and put the BOR at risk. So can billing and claims problems with the voluntary. But just as successful brokers succeed by For the producer who wants to cross-sell voluntary benefits, the key detail to get right is the selection of his or her enrollment partner. getting the details right with the plan design, carrier selection and the rates negotiation for the major medical and supplemental benefits, successful voluntary enrollments are the result of getting the details right. Picking the right enrollment partner For the producer who wants to cross-sell voluntary benefits, the key detail to get right is the selection of a strategic enrollment partner. The right benefit communication and enrollment firm will do 90 percent of the work on a voluntary case. The right enrollment partner is essential to dependably managing the project and effectively communicating the offering to employees. Both the operational success of the enrollment and the revenue generated depend on the expertise of the enrollment firm. And, since not all enrollment firms offer the same services, your enrollment partner must have among its capabilities the solution to your client s problems. to learn how to grow your practice by successfully cross-selling voluntary benefits.
While a growing number of companies offer worksite enrollment services, mid-size to large brokers need to decide carefully on a strategic enrollment partner with the right characteristics, capabilities and track record. Getting the carrier right The right enrollment partner, one who brings an extensive knowledge of the voluntary market and works with the leading voluntary carriers, can be of immense help in identifying those carriers with solid portfolios that can service what they sell. Choosing the right carrier is essential to ensuring the long-term satisfaction of both employees and HR. The right voluntary carrier will offer not only quality benefits at competitive rates but also a back office capable of supporting the products fully. Not all voluntary carriers are created equal. There are many carriers jumping into the voluntary benefits space; only a handful boasts a credible back office operation that can provide dependable billing and service claims efficiently. Choosing the right carrier is essential to ensuring the long-term satisfaction of both employees and HR. Learn the steps, choose a partner and dance The producer who masters these four basic steps to cross-selling voluntary benefits will discover a rich, untapped revenue source within an existing book of business. Additionally, imagine the client s loyalty to the producer who solves painful HR problems at little or no cost while enhancing the client s benefit plan. There s no better way to put more Velcro between you and your client, strengthening your relationship with the client and increasing client retention. Cross-selling voluntary benefits isn t just good business; it s good for business. About the Author Nelson L. Griswold is the insurance industry s recognized authority on cross-selling and solution-based selling. A former senior executive and top producer with a national enrollment firm, Nelson founded Cross-Sell Solutions to help brokers succeed at cross-selling worksite voluntary benefits and to transition from a mere insurance salesperson into the client s trusted advisor by following his Advisory Selling system. Nelson s innovative approach to cross-selling voluntary benefits is the result of his own real-world, trial-and-error search for success cross-selling voluntary benefits. He analyzed the attitudes and cross-selling efforts of hundreds of brokers, from those who refused to cross-sell to those who were highly successful with cross-selling. Nelson took the methods and strategies of the most successful brokers and synthesized them into his own system for cross-selling voluntary. That system turned Nelson into a top producer and that proven system is the basis for the Cross-Sell Solutions System. A featured speaker at industry conferences, Nelson is the author of numerous articles that have appeared in leading industry publications. His Four Steps to Cross-Selling Voluntary, published in the March 2008 Benefits Selling, remained for an entire year in the Top 10 Most Read articles on the magazine s website. to learn how to grow your practice by successfully cross-selling voluntary benefits.