Where is Zenefits headed?
March 31, 2015 2:44 AM
Where is Zenefits headed?
From its broker recruitment efforts to commission-based business model, common misconceptions and areas of business Zenefits will never enter, former CEO Parker Conrad got candid on the future of the fastest growing small-group brokerage in the country in a May 2015 EBA interview.
[Image: Eric Millette]
[Image: Eric Millette]
On how other brokers view the company
Zenefits is viewed by other brokers as a profoundly evil company because weve stolen a lot of business from folks. I get it. I get that thats painful. I hate losing clients myself, he says. But, he adds, such detractors have no idea what we do, having never seen the product or understood its value proposition, he says.
[Image: Fotolia]
[Image: Fotolia]
On how Zenefits will impact the industry
One of the things that I really believe is that Zenefits will be extremely good for this industry and extremely good for brokers themselves, he says. I think it will be painful for a lot of agencies if we continue to be successful, but for the actual people in question, the people who want to focus on client service and who want to help people with these difficult decisions, I think what Zenefits lets you do is just that.
[Image: Fotolia]
[Image: Fotolia]
On common misconceptions
Conrad, who turns 35 in April, says one of the most common misconceptions about Zenefits is that it lacks the ability to be a trusted adviser to clients: That is sort of a cultural bias that we have around the United States; its either technology or its people. If you have technology, that must mean theres no person behind it. And thats not the way we look at it.
[Image: Fotolia]
[Image: Fotolia]
On where Zenefits won't go
Wellness:
Lets be honest, every study of any wellness program ever, the only time we have found actual scientific evidence that that cuts costs is smoking cessation, says Conrad. The rest of that is, like, not real. So we dont spend a lot of time on wellness programs because we dont think its something that works.
Payroll:
The reason is that payroll is really complex and there are really high switching costs. Wed much rather just be connected to everyone in that space and be friends with everyone in that space, he says.
[Image: Fotolia]
Lets be honest, every study of any wellness program ever, the only time we have found actual scientific evidence that that cuts costs is smoking cessation, says Conrad. The rest of that is, like, not real. So we dont spend a lot of time on wellness programs because we dont think its something that works.
Payroll:
The reason is that payroll is really complex and there are really high switching costs. Wed much rather just be connected to everyone in that space and be friends with everyone in that space, he says.
[Image: Fotolia]
On commissions
In states where theres a bunch of different carriers and employers need help and advice navigating these complex decisions around this stuff, then carriers do pay commissions. I tend to not think that that will change, he says. If it does change, what I expect happens is that maybe this market ends up being smaller. The revenue per subscriber is lower for brokers, but maybe Zenefits ends up having much, much, much, much larger market share because the technology that we have will allow us to operate in that sort of different model. Thats not where we are today, but if the industry does move in that direction I feel good about our chances.
[Image: Fotolia]
[Image: Fotolia]
On the competition
Other industry technology players, such as enrollment firms, love us, he says, because
all these companies that sell technology to brokers, suddenly brokers are interested in buying it from them. In fact, hes got a collection of 15 or so marketing emails from other companies with subject lines such as, Protect your clients from Zenefits. Zenefits is probably the best thing that ever happened to those companies, Conrad says.
[Image: Fotolia]
[Image: Fotolia]
On youth
I think there is a misconception, particularly in the broker community, particularly on this issue, that Zenefits is a bunch of young people who dont know what theyre doing and dont have any experience in the insurance industry, he says. That might describe me. But it would not describe the team as a whole. There are a lot of people now in the company who have pretty deep experience in the insurance industry, who have 30 years experience working for agencies, working for big firms, are trainers at NAHU, these are people who know their s***.
[Image: Fotolia]
[Image: Fotolia]
On recruiting
Its not our goal to recruit young people. Its our goal to recruit good people, he says. In fact, in a lot of cases were really trying very hard to recruit people who have a ton of experience.
Hes thought about acquiring firms, but to do so would mean more than a redirected phone line and a new name on the door. We actually have to convince people to implement and use our software, which is a much bigger change for them. Hopefully, its a positive change and a lot of them might be excited about it, but you still need to convince them, he says. Wed actually have to go through a sales process with each and every client if we were to buy a book of business in a way that a more traditional broker wouldnt have to.
Then theres the fact that Zenefits doesnt need to. Frankly, right now we can acquire customers for sales and marketing costs that correspond to about six months worth of revenue, Conrad says. Most brokers, if theyre selling their book, they want about three years worth of revenue to buy the book. So its basically easier for us to sell the client direct than it is for us to buy it from the broker, or less expensive.
[Image: Fotolia]
Hes thought about acquiring firms, but to do so would mean more than a redirected phone line and a new name on the door. We actually have to convince people to implement and use our software, which is a much bigger change for them. Hopefully, its a positive change and a lot of them might be excited about it, but you still need to convince them, he says. Wed actually have to go through a sales process with each and every client if we were to buy a book of business in a way that a more traditional broker wouldnt have to.
Then theres the fact that Zenefits doesnt need to. Frankly, right now we can acquire customers for sales and marketing costs that correspond to about six months worth of revenue, Conrad says. Most brokers, if theyre selling their book, they want about three years worth of revenue to buy the book. So its basically easier for us to sell the client direct than it is for us to buy it from the broker, or less expensive.
[Image: Fotolia]
