by Dennis Bernstein, Kaul Sales Partners

Are Referrals Enough to Drive Predictable Revenue for a PEO?

After 20 years in the PEO space, I still meet a lot of business leaders at these companies who regard referrals as a key driver of new revenue. Referrals have grown even more attractive as a strategy as more companies leave cold calling behind; my 20 years in the space were largely spent networking and building relationships in an effort to more effectively drive business.

My hindsight? It works, but not systematically enough to drive real growth — at least not enough to project real goals against (like burnishing a portfolio prior to acquisition or company succession). I would caution against hinging critical revenue on hit-and-miss referrals that put me in the position of being totally reliant on somebody else to be thinking about me in conversations with one of their prospects.

Are Insurance Brokers Really Your Revenue Partners?

Almost any PEO leader will tell you that insurance brokers are your best referral partners. Because PEOs are really a form of insurance brokers, there was a natural synergy to band together when companies faced higher worker’s comp rates in Florida, Texas and elsewhere.

When first PEOs emerged on the scene, they focused primarily on payroll and insurance. People weren’t thinking about the “total outsourced HR” concept yet. It made sense on the surface to think that insurance brokers were a great partner channel, because they talked all day long to the kind of clients PEOs wanted. But I never saw significant revenue materialize from these efforts, even when the incentives were right.

Why? Because skilled, long-term strategic thinkers in front-line sales roles are rare birds. The average broker who is in front of a client wants to sell insurance. You can lecture all day long about becoming more valuable to a client by offering longer term strategic benefit and asking questions about root issues where you can help them think through imminent business challenges. But at the end of the day, most salespeople want to push product. Their product.

Long story short: show me the CEO of a PEO who has a salesforce of one-three people working events and broker/consultant/CPA networks, and I’ll show you a revenue stream that is passive and unpredictable.

My colleague Larry Kaul wrote this great article about the sales traps that small companies routinely fall into. Has your PEO stumbled into any of these? Have you thought about a more systematic way to build your PEO’s value, but nothing seems to change no matter which levers you push or chairs you switch around? Might be time to think about it in a new way.

Reach out for a conversation and let’s compare notes. Thanks for reading!


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