In Part 1 of this series, we explored the importance of Total Addressable Market (TAM) analysis and how it can guide strategic decision-making for sales leaders in the employee benefits space. We dove deep into a bottoms-up approach to market sizing, leveraging data from BenefitFlow to identify and quantify the market opportunity.
Now, with a clear understanding of our TAM, it's time to shift our focus from analysis to action—how do we effectively reach and convert our identified market?
The Various Paths to the Benefits Market
Reaching the employee benefits market can be approached through multiple channels, each with its own set of advantages and challenges. Here are the primary paths:
- Direct to Employer: Selling directly to employers requires a robust sales force capable of engaging HR departments or executive decision-makers. This approach is hands-on and allows for deep relationship-building.
- Through Benefits Brokers: Partnering with benefits brokers can take time and patience, but it’s typically the most scalable distribution channel. Brokers have deep relationships with employers and can act as an extension of your sales force when you win them over.
- Through Carriers and/or TPAs (Third-Party Administrators): Working with insurance carriers or TPAs can extend your reach as they integrate your solutions into their offerings, leveraging their sales and distribution networks.
Determining Your Distribution Strategy
Path to market will usually depend on the nature of your solution and the maturity of your organization. In the section below, we break down some of the high-level factors that determine the mix of direct vs. broker-driven selling.
- Nature of the Solution
- Perks can include an extremely long tail of solutions that are viewed as “retention tools” to benefits brokers and their clients. This can include categories such as financial wellness, discount programs, pet insurance, rewards / recognition, and many others. More consultative brokers will view these as ‘in-scope’ while others may not be as collaborative with vendors. For this reason, these solutions tend to have a balance of direct vs. broker-driven sales.
- Point-Solutions include a broad set of companies that are typically viewed as “cost-containment” tools that supplement the traditional benefits offering. This can include categories such as Diabetes, MSK, Pharmacy Discounts, Wellness, Mental Health, Family benefits, among others. Although these solutions can apply to either fully-insured or self-funded groups, adoption will largely skew towards self-funded groups (who have a vested interest in cost-containment). Therefore, any broker that deals with self-funded groups should be proactively assessing various point solutions. For this reason, we’ll typically see that point-solutions have a high mix of broker-driven sales.
- Insurance will include anything that looks like or augments the ‘traditional benefits offering’. Health, Dental, Vision are the basics that come to mind, but the list of categories quickly gets much longer when considering supplemental insurance and the various vendors that support an unbundled / self-funded model. These solutions will skew heavily towards broker-driven distribution as these are areas where HR departments will lean on a broker / consultant’s technical expertise.
- Maturity of the Organization
- Early-stage companies that are still proving traction may lean towards direct selling. This allows them to build case studies and refine their value propositions before investing in broker partnerships. Further, going direct can also lead to quicker results, which can be crucial for companies that are sprinting at their next fundraise.
- Mid-stage companies looking to expand will find that brokers become key to scaling their distribution efforts. Brokers can help navigate the complex benefits landscape and introduce solutions to a wider audience. Simply put, winning over 1 employer translates to 1 closed deal. Winning over 1 broker can translate to a multitude of introductions and closed deals.
- Mature companies, such as large insurance carriers or large PEOs, already have established distribution networks and will focus heavily on optimizing their existing broker relationships and expanding walletshare.
💡 These figures are rough estimates based on what we observe across our customer base. The mix of Broker-led deals can depend on many factors.
Tuning Your Strategy
The analysis above naturally uses some generalizations and it’s important to mention that there are no ‘hard and fast’ rules. While this framework provides a starting point, it should be tailored based on firsthand market feedback. Engage actively with brokers and employers to gauge where your solutions resonate the most. Additionally, networking with peers and competitors can offer invaluable insights into effective distribution tactics and market expectations. This real-world feedback is crucial for refining your approach and aligning it with actual market dynamics.
Next Steps
Determining your path to market is just the beginning. Resource allocation—how much you invest in each channel and how you structure your sales teams—is critical to executing your strategy effectively. In Part 3, we’ll dive into the critical process of Territory Planning. We’ll explore how to segment the market based on the insights gathered, assign territories effectively, and align our sales resources to capitalize on the identified opportunities.