Tips for Selling to SMBs that Manage Everything Internally

Welcome back to our competitive intel series. So far, we’ve covered tips on positioning against TotalSource, TriNet, and Insperity. What about the small and medium-sized business (SMB) owner who’s managing everything themselves with a mix of services? This can sometimes be referred to as an in-house user. That’s exactly what we will discuss in this month’s competitive blog entry.

Fragmented Processes

There’s an argument to be made for targeting and prospecting SMBs that manage all of their HR functions themselves or through multiple third party vendors. Sure, they might require a bit more education on outsourced HR, but there’s a much greater opportunity to create value with this group. Their processes are normally fragmented, manual, and cumbersome, making it easier for you to show them how your solution can help make a positive impact on the organization.

A typical SMB managing their own HR functions will be doing payroll themselves possibly through QuickBooks or CPA (stay tuned for payroll service bureaus next month!). They likely get health benefits through another provider, ancillary benefits, workers compensation, and 401(k) through various other providers, and possibly a lawyer on retainer for compliance/labor issues. That’s a lot of vendors to manage and keep track of. Imagine this, a business owner who is handling payroll himself hires an employee. He now has to call his benefit broker: call Aflac (or Guardian or whomever handles his ancillaries), call his workers comp carrier, and 401(k) administrator. By utilizing your services, he’ll only have to make one call (in most cases). The same is true for terminations.

A lot of times, business owners don’t realize how many steps are needed to hire/fire an employee. A good way to help them discover how cumbersome their processes are is by running a thorough discovery meeting. Wrap up the discovery meeting by asking, “Why did you decide to open your own business and become an employer?” Often, you’ll hear things like:

“I was passionate about this industry,”

“I wanted to create something I could leave for my kids,”

“I wanted to make money,”

“I was tired of working for someone else.”

The list goes on and on. After they’re done, follow-up with something like,

“I hear those answers a lot. You know what I’ve never heard? That someone has gotten into business to run payroll, or handle comp claims, or benefits, or employee questions. No one has ever told me they got into business to make sure I9s are compliant, or to update employee handbooks. I call those the ‘because I got into business stuff.’ That’s what we’re here to do. We’re here to take all the ‘because’ off of your plate so you can focus on the ‘why’ again.”

This talk track also sets you up nicely to schedule a demo. Close with something to the effect of, “In our next meeting, I’d love to show you exactly how our technology can help streamline a lot of these functions and create efficiencies to give you more time back to focus on generating revenue.” Then schedule the demo!

Integrated Technology

Now let’s talk about some of the efficiencies that come with outsourcing the HR functions that are currently being handled in-house. (And if you’d like more info on the efficiencies, we covered them in more detail here.)

From hire to retire, each module in the system “talks.” They are all integrated, so instead of hiring an employee and needing to call a handful of people, a business owner can onboard an employee once. The system will automatically create the benefit enrollment workflow, which once completed, will automatically add the necessary deductions to payroll. This is the same for terminations. A business owner needs to take one action, not make several calls. Furthermore, the system is also built with compliance in mind. The HR Cloud will not allow an employee or manager to fill out incorrect information. It knows if a social security number is missing a digit. It automatically generates all the tax forms necessary depending on the zip code an employee puts in for his address. Saying something like “You don’t know what you don’t know, and that’s why when you partner with us, we take care of knowing for you.” A partnership with you means a business owner does not need to worry that something is falling through the cracks. With your service offering, powered by the HR Cloud, he can be confident that his business is protected.

Scalable

Believe it or not, some business owners hold back on their growth because they don’t want the administration of being an employer to take up too much time. Ask your prospects about this. You might be surprised to hear that yes, they’d like to grow, but they aren’t sure they can handle it. Again, by partnering with you and using technology to streamline their administrative functions, your prospect can focus on growth again and be confident that that administration is being taken care of.

Pricing

It’ll probably come as no surprise to know that in-house users are typically very price sensitive. However, by conducting a thorough discovery meeting, coupled with showing how the technology can directly impact and alleviate their inefficiencies, often you’ll be able to overcome the sticker shock. Education plays an important role in this as well. It’s important that you remind the business owner that time is money. Even though they’ll be spending more hard dollars, they should be able to make up for that by redirecting their time to areas that generate them money instead of HR. Several years ago, ADP commissioned a PricewaterhouseCoopers study to analyze the total cost of ownership of in-house users vs. those who outsourced to a single vendor. They found that outsourcing to a single vendor could increase cost efficiencies by more than 30%. They also give a very nice detailed explanation of how and why. If you’ve never read the study, Google “PwC TCO study” and it’ll pop right up. It’s a great tool to utilize when having the pricing discussion with someone who is handling everything themselves. A similar study has been done by the Department of Labor and the Small Business Association. The chart summarizing the findings is posted below, but can also be found with a quick Google search. Keep in mind that the percentages are of gross payroll.

Wrapping up

Selling to in-house users can be challenging since they aren’t used to outsourcing and may not be familiar with your services. They often require a lot more education than someone who is already using a competitor. However, these users often represent the area of most opportunity. There are a lot more businesses out there handling things internally than there are outsourcing. They don’t have any misconceptions about our industry, and if you can do a good job educating them on the benefits of outsourcing, showing them the value of your solution, and positioning yourself as a trusted advisor, you’ll find that closing these deals can be a lot more satisfying than most!