The middle market (defined by many as companies having 200 to 5,000 employees) is without question an attractive sector to target as many middle market businesses are on a strong growth trajectory. The latest Middle Market Indicator Report found that 72 percent of the nation’s middle market companies reported year-over-year growth in 2018 over 2017. Two-thirds also projected revenue increases in year 2018, and 46 percent planned on expanding their workforce. It is not lost on these executives that today’s employees are seeking out organizations that value their health and financial well-being, a finding attested to by the 2018 Mercer Global Talent Trends Study.
Their strong growth patterns aside, there are other traits that distinguish middle market companies from larger and smaller businesses. These traits require a marketing and sales strategy designed specifically for targeting the middle market. By gaining insight into what differentiates these businesses, as well as their challenges, brokers can gain better middle market positioning. Applying this insight with effective marketing and sales strategies will enable brokers to capture greater middle market business opportunities.
A Closer Look at the Middle Market
Forbes Insights conducted a study in 2012 in conjunction with BMO Harris. The study sought to assess the perceptions of middle market business senior executives regarding their companies. The findings from that study still hold today based on later surveys and reports. The study found that:
- Middle market executives are optimistic regarding their company’s fiscal health and future.
- Sixty-one percent reported revenue growth over the past two years.
- Seventy-five percent projected continued growth, with four in ten stating anticipated growth of six percent or more over the following two years.
- The executives who predicted continued growth for their companies also emphasized their plans to launch new products or services, enhance their internal technologies, and place more emphasis on sales and marketing.
Two other significant findings from the Forbes Insights/BMO Harris study were:
- Sixty percent of the middle market senior executives said improving their customer experience was their top priority.
- One-third indicated they were focusing on changing or evolving their business model believing that remaining agile was necessary to thrive.
All of these findings are important for brokers to keep in mind when presenting insurance products and employee benefits to middle market companies. If you consider that growth is a common denominator for a large percentage of middle market companies, and that growth often prompts the need to add employees, you can see why having the right benefits to attract and retain qualified employees would be a high value goal for these companies. The fact that many middle market executives also realize that employees are routinely under financial stress and concerned about health and accessing healthcare, the message from brokers to middle market companies begins to further crystallize. It is this: If you want to continue growing and thriving, and understand the relationship between this goal and having a stable qualified and loyal employee base, you recognize that offering the right employee benefits is critical.
How Middle Market Companies View Employee Benefits
Middle market company executives know just how important their benefit packages are to retaining and recruiting employees. In fact, the Society for Human Resource Management’s 2017 Employee Benefits Survey stated that one third of businesses increased their benefits in 2017 to include more choices. Many also have designed employee financial wellness programs as part of their enhanced employee benefits initiatives. In 2017, an estimated 84 percent (up from 76 percent in 2016) of large and mid-size American businesses had adopted these programs based on the National Business Group on Health and Fidelity Investments Employer-Sponsored Health and Well-Being Survey.
While many middle market companies have adequate retirement plans, there was room for improvement when it came to other employee benefits along with the financial literacy and health care education support many of their employees needed. While retirement plans are important to employees, it turns out they have a greater amount of stress related to the possibility of having a health crisis that prevents them from paying their household bills, protecting their families in the event of a medical emergency or accident, and other health care related concerns. Given today’s Internet-dependent lifestyles, worries over cyber related threats and protecting their identity and credit have also become major concerns. To illustrate the level of employee concern over these matters, the aforementioned Global Talent Trends Study found that employees spend an average of nine hours weekly worrying about them.
It is for this reason that voluntary benefits have become in high demand by employees and middle market business executives alike. These benefits range from accident, accidental death and dismemberment, critical illness, portable term life, disability and whole life insurance to dental, identity theft protection, legal and hearing benefits. They address the needs of the companies by enabling them to offer robust insurance, health and wellness benefits without having to assume additional costs. They also help their employees gain greater financial security and well-being. Additionally, voluntary benefits give current and future employees choices in benefits to best address their individual/family life stage needs.
For brokers to be viewed as a real resource to middle market businesses for their employee benefits, the right marketing and sales strategies must be deployed.
Communicating with Chief Financial Officers and Human Resource Executives
First and foremost, make sure you are targeting the right executive. While the Human Resource Executive (HRE) is involved in employee benefits, for many middle market businesses the real decision maker will be the Chief Financial Officer (CFO). To be sure you are reaching the right decision maker(s), a smart strategy is to initially communicate on both fronts with the HRE and CFO until one or the other emerges as the single point of contact.
When speaking with a CFO it is important to speak the language of finance and not healthcare. Present value propositions such as how voluntary benefits shift the cost from the employer to the employee and how having employees covered by various policies can help defray corporate health care costs. For example, the employee who has dental coverage and keeps up with routine dental care visits is less likely to succumb to a serious health-related condition such as oral cancers, hypertension, diabetes, kidney failure and/or heart disease. It is also a good idea to bring up medical stop loss to manage high-dollar claims, particularly if you have a product that is highly competitive with robust features and offered by a carrier that is a direct writer.
If speaking with the HRE, recognize that many HREs are more involved with managing employee benefits and not necessarily in the purchasing decision. Where they are a significant center of influence they tend to be more inclined to remain with a current broker rather than disrupt things and consider a new broker. On the other hand, CFOs, based on their backgrounds and roles within a company, tend to be more empowered to serve as “disruptors” when it comes to their companies’ financial matters and financial product selection—whether ultimately purchased by the employee as in the case of voluntary benefits or the company for employer-sponsored health insurance and group life and/or medical stop loss coverage.
What will especially matter to HREs is the support that will be provided to employees at the worksite and beyond to help them make the right benefit choices. Be prepared to discuss the employee communications and product literature that will be available to help employees understand the purpose of each insurance product/employee benefit and exactly what it offers in terms of financial protection and/or health coverage. Since many workplaces now reflect our country’s growing multiculturalism, anticipate a possible need to have a bi-lingual or multi-lingual product specialist at the worksite and/or product literature in multiple languages. In addition, considering that millennials, our nation’s first digital natives, will soon replace baby boomers as the largest generation in the workforce, it’s important to cite online access to product information, member portals and mobile apps, as appropriate—all of which HREs will identify as being responsive to their companies’ employees.
Offering employee financial well-being seminars tied in with enrollment events is another strategy which will win favor with both CFOs and HREs. In addition to the financial literacy component of these events, brokers could suggest that enrollment events also include free preventive medical screenings (e.g., blood pressure tests, skin cancer checks, etc.), nutritional advice and fitness clinics.
Product Selection, Superior Customer Service, Flexibility
In addition to communicating effectively with the right decision maker whether a CFO and/or HRE, be sure to deliver the customer experience a middle market business expects. The three pillars of that experience when selling benefits are: A broad selection of the right benefits, seamless customer service, and a flexibility to accommodate the middle market company’s needs.
Regarding products, a broad portfolio of voluntary benefits is essential. It needs to include the products that will resonate with the specific middle market company’s employee base. This means a broker needs to have a basic understanding of a company’s workforce demographics. Are the employees older, younger, a mix of generations, blue-collar, while-collar, mixed ethnicities, etc.? Knowing this ahead of time will enable a broker to highlight those benefits that may be most meaningful to a particular company’s workforce. Keep in mind that many middle market businesses prefer purchasing voluntary benefits from the same carrier who provides their company’s health care or group insurance. Therefore, if a broker has already sold health or group insurance to a middle market business, that broker is in a better position than another broker to sell voluntary products to that client. Take advantage of that with all existing health care and group insurance middle market clients.
Be open with the carriers you are working with and let them know about the voluntary products your middle market prospects want. If a carrier needs to fill a product line gap by forming an alliance with another carrier to meet your middle market clients’ needs, that is a suggestion to make.
To deliver what a middle market business will consider superior, seamless service, brokers need to think personalization. Middle market companies do not identify with their size or the category of “middle market business.” Instead, they identify with their industry sector and their companies’ workforce composition. For example you are targeting a middle market manufacturer in the aviation industry, recognize that a large percentage of their workers will be blue collar or gray collar (i.e., more technical skilled workers) and a certain percentage may be in unions/Taft Hartley plans that provide benefits. Tailoring the voluntary benefit sales pitch to this manufacturer will require presenting the benefits as a way to accommodate all workers—regardless of their age, income, or ethnicity.
Worksite enrollments rather than self-enrollment processes will resonate with middle market companies. Even for companies with a highly-educated workforce, insurance products and benefits are complex. Offering face-to-face enrollment meetings with benefit specialists on hand will not only appeal to the middle market company’s management, but will also result in higher enrollment. Backing up these meetings with electronic brochures, product sheets, informational videos, etc., available online, is an essential support that middle market businesses will expect and that should be leveraged when marketing to this sector. Also regarding enrollment, being flexible about when employees can enroll, rather than insisting on a certain time of year, will also score points with middle market businesses. The days of the annual, one-time-of-year enrollment period are gone. It’s important that brokers and carriers be reminded that today’s businesses, and especially agile middle market companies, expect their product/service providers to be flexible when doing business with them.
Bringing innovation to the enrollment process will further make a broker more relatable to a middle market business executive. A simple measure such as having a state-of-the-art LED video display running educational videos on voluntary benefits during enrollment events will demonstrate to a middle market business that a broker is willing to go the extra step for a better customer experience.
Through greater awareness of what makes middle market businesses tick and the adoption of effective marketing and sales strategies, brokers can begin capturing a greater share of this growing, fertile market.