Small and midsized business owners evaluating PEOs often decide not to move forward due to concerns about cost transparency, losing employee control, and a negative impact on company morale, according to market research from NAPEO [membership required]. Now may be the time to examine your sales and marketing messaging, as well as your pricing strategy, to ensure you’re addressing these concerns clearly and head-on to improve your chances of winning more deals.
Let’s take a closer look at the top obstacles preventing SMBs from signing with PEOs, and what you can do to overcome them.
1. Improve pricing transparency
When you hear cost come up as a concern in the sales process, one may immediately think the buyer is balking because something is too expensive. However, the research indicates that the issue here is not necessarily that the quote is too high, but rather the perception that pricing isn’t being delivered transparently. There is a fear that costs will rise unexpectedly once the agreement has been signed. This is a trust issue that needs to be overcome.
Take a look at your proposal. Is the cost structure you use (e.g., flat fee per employee, percentage of W2) clear to your prospect and will they be able to communicate it clearly to internal stakeholders? Are there costs—however small—that may be perceived as hidden by potential clients? Intentional or not, these details may be costing you deals. However, if your pricing is upfront and predictable, this may be an opportunity to pull that forward in your messaging.
In preparing for this post, I took a look at a sample of ten PEO websites to see how many mentioned “transparent billing” on their homepage or “About Us” page. My findings? Only one.
2. Don’t make co-employment your headline
The business owners you’re targeting are used to being in charge. In many cases they were entrepreneurs who made sacrifices, persevered, and built their companies from nothing. And now they have the perception that you’re asking them to give up some of that control. It’s an education issue—opportunity—that can inform your messaging and generate content ideas. Perhaps it’s a brief video interview with a client discussing the impact the PEO relationship had (or more accurately, didn’t have) on how they run their business.
Whatever the format the content takes, there are a variety of ways to address this concern head-on to create a dialogue and allay their fears. That said, you may want to carefully consider when the co-employment discussion comes up during the sales process. NAPEO’s research shows that the top reason SMBs stay with PEOs is for the time savings outsourcing provides. So while it’s important to be prepared to cover the topic of co-employment, it may be wise to continue to frontload the conversation around the business owners’ problems and your time-saving solutions.
3. Focus on the employee experience
From an employee perspective, learning that your employer of record—the folks that sign your checks—is changing to a company you’ve never heard of can be jarring. What does that mean for their pay, their benefits, and their employment status? Like any change, it can bring confusion, and many business owners worry about the impact to morale and productivity. It can raise questions about who is in charge and who to turn to for support.
Take a look at your sales and marketing messaging. Undoubtedly, you’ve focused on the value of outsourcing, the savings you can offer by taking HR, payroll and benefits off their plates. But how have you highlighted the processes, services and technology you can implement to ensure a great employee experience through the transition and long-term? As the technical services PEOs offer become increasingly commoditized, it will be your capabilities related to culture and workforce engagement that can help set you apart from the competition.
NAPEO members can access a webinar featuring an in-depth discussion of the market research.