Today’s episode features Patrick Toner from Customer Benefits Analytics. Patrick’s company helps employee benefits companies provide the right benefits with the right conversations for employer organizations.
In this podcast I got Patrick to focus on his product from the employer’s point of view. Although most employers would never use his product, they are in fact the end user. If you’re not paying attention
If you’re not paying attention to your benefits program and what it does for your company, then you’re missing a big opportunity to make your business more successful and therefore sustainable. This episode will make you think differently about your employee benefits program and you’ll learn some new things about how to think about your programs.
Here are some of the things you’ll learn today:
- Why an employee benefits program is important for your business.
- The surprise that some of the benefits you provide might not be the ones your employees want.
- Where a good employee benefits consultant can help you with your employee satisfaction.
- Why you need to survey your employees to see what benefits they want.
- How you can use a pool of money to provide more flexibility for employee benefits.
Narrator: Welcome to The Sustainable Business Radio Show podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. In The Sustainable Business, we focus on what it’s going to take for you to take your successful business and make it economically and personally successful.
Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning and thinking about what it takes to make a successful business sustainable.
Josh: Hey, how are you today? This is Josh Patrick and you’re at The Sustainable Business.
Today, our guest is Patrick Toner. Patrick is the founder of Customer Benefit Analytics. Today, we’re going to talk about Customer Benefit Analytics, why is it important field and why you want to pay attention to it? So, without further ado, let’s bring Patrick in and we’ll start a conversation.
Hey, Patrick. How are you today?
Patrick: I’m doing great. Thanks, Josh.
Josh: Hey, what is Customer Benefit Analytics to start off with?
Patrick: This is a company that really is formed about two and a half years ago based on my background of being head of the marketing and in roman strategy for Cigna as voluntary products and the idea of Customer Benefit Analytics is really to help make the benefit purchasing decision a better experience for employees. In that way, get more people to buy coverage which is quite honestly very important to them, but many people go without simply because they don’t understand what’s being offered to them or the process is really too difficult.
Josh: Patrick, let’s take a step back in— define for the folks on this show. What are voluntary benefits in the first place?
Patrick: Great question. Voluntary benefits, the definition in industry kind of shifts around as well, but Customer Benefit Analytics defines it as benefits where the employee pays for some of the benefit. Now, sometimes in the industry at a restricted to 100% paid by the employee. The way we look at it is even things like medical or dental where there’s usually a contribution from the employee. That becomes a purchase decision and people will make a decision as to whether they sign up or not based on that kind of value equation. So, we focus on that as essentially a voluntary action.
Josh: Do you consider a 401K plan, a voluntary benefit as well?
Patrick: Definitely, it’s early the decision to put into a 401k as a voluntary benefit. It is not however one of the ones the Customer Benefit Analytics has focused on. We focused on really the health and financial protection product. Things like a medical, dental envision— your life in disability and then what’s often called Supplemental Health like accident, critical illness, cancer or hospital.
Josh: So, sounds like you guys also work a bit on a decision making process that people use if you’re going to buy a voluntary benefit.
Patrick: Oh, absolutely. This is one of the things which is— people have to step back, recognize that benefits sold through the workplace really represent maybe the largest, maybe cost-effective means of getting financial protection to American consumers. Certainly in the mass market and lower-income people, most financial services firms really don’t target people in those areas.
They focus on affluent and mass affluent and so when you get to the workplace for a lot of Americans is really the only shot they’ve got at a life insurance, disability insurance, critical illness [inaudible 00:03:47] like that. Getting at as an opportunity is very important. So that decision process which typically comes only once a year is something that we want people to focus on, but for a lot of reasons it’s not very easy for them.
Josh: So, there’s two pieces to voluntary benefits. I used to own a vending company and we would offer benefits and the piece was, which benefits were we going to offer whether it was fully paid by the employee or partially paid by the employee and partially paid by us then the second piece of that was, okay once we offered the benefits getting folks to sign up for was like pulling teeth.
Josh: So, can you talk a little bit about both sides of that? About employers, what they going to decide, how they go about that and then how to get your employees once you decide to sign up at a higher levels.
Patrick: Yes, absolutely. And so, the employee benefits market— right you described it. It has what they call a First Sale and a Second Sale component. In the First Sale you see the insurance companies carriers like Cigna, Aetna, MetLife and Unum reaching out to the employers and they typically I would say more than 70% of that mark it as served through benefit brokers.
The insurance company really tries to work through the broker to see to it that say Acme Corporation is going to offer benefits to their employees whatever that benefit might be. The employers rely heavily on the broker to help them put together the benefit program that’s going to work for that organization. What employers are thinking about are things like, what are my— essentially, it’s a competition for labor. They want to keep track and retain good employees and so benefits becomes part of that. They’ll be interested on what their peer companies might be doing in terms of what kind of benefits are being offered and of course high under are the list of things as cost and then the ease of administration. Obviously, the employers don’t want to have too much of a burden of administering the benefits and that’s where the carriers and the brokers offer assistance.
Josh: So, that’s the employer’s side, but what about the employee side? Okay, I’ve decided to offer critical illness for example as a voluntary benefit. Now, those people in the companies I’ve controlled or managed or consulted on basically (a) don’t understand what critical illness is and why it might be more important than even disability coverage.
Patrick: You’re right and so what happens in that case is what we called the Second Sale and there, the employer is really responsible. He’s most interested in getting the information out to the employees about the benefits that are being offered and they haven’t—specifically once a year enrollment process where people sign up for medical. Let’s face it, medical is the big draw even before the ACA where it was made a requirement for companies of 50 employees.
Medical through the workplace is how most Americans get access to healthcare in this country. And so it becomes something of a forced march where this other benefits like voluntary benefits in critical illness as you pointed out are marketed. There’s not a single way that companies approach this. Some people enroll online, some is still done via paper forms and sometimes it’s done even face to face for smaller companies in a cafeteria for example.
The way people are educated about the benefits and I use education as a choice word there as companies would rather use that sense rather than advertise or marketed because they really want this to become much more of a— be viewed as something that is healthful to these employees as opposed to giving access to the employees to insurance companies in order just to sell.
So, there is a sense that they want to get the right fit to each employee and so those employees are given access to whether it’s emails or pdf brochures. Typically, two to three weeks before the enrollment begins and then there’s a two week enrollment process by which people come in and sign up for these benefits. Of course, these benefits are then most of my payroll deducted. The money comes directly out of the employee’s pay check.
Josh: So, I know this isn’t your business but I mean to ask you this question anyhow. I’m an employer and let’s pretend you’re a benefits broker walking into my office and you have a menu of twenty potential benefits that I could offer my people. I think there’s too many because I’ll confuse my folks. How would you help me choose what the five or six right benefits would be for my company?
Patrick: There would probably be an analysis of what other companies like yours are offering in the marketplace. We come in with, here’s the number of companies of your industry, of your size that are offering these types of benefits. That’s one approach. The second is really an analysis of your employee population in terms of what type— is it more white collars? Is it blue collar? Is it by age and by demographics?
There are certain products that tend to be better fit for people based on those types of attributes. And then I think what Customer Benefits Analytics does—this is something unique we bring to the broker is we give them an ability to actually do a fairly in-depth analysis of the employee population where we will benchmark this particular company’s performance or it’s appetite if you will for different benefits against a very large data set that we have.
It will help not only identify products which you may want to offer because people like your employees tend to buy these products, but they will also tell you whether or not the products you are currently offering are doing well by comparison to other companies like yours.
Josh: So, you have a digital marketing platform that integrates three innovations in consumer marketing’s— behavior economics. We’ve talked a bunch about this on this show. Data analytics which we’ve almost never talked about and address of all— Ad delivery. I don’t even know what that is. Can you kind of go over of what are those three innovations and why are they important?
Patrick: Sure. The first one behavioral economics, what we’re really talking about there is the ability to connect the right message to what the underlying buying motives are of this employee. In your example of critical illness, what our research have shown us is that many people approach critical illness really because they want to feel control as part of their innate personality— your senses.
Other people are buying critical illness more because they see that they’re likely to supplement their health insurance. Its high deductible health plans and they find it as this is a way to protect for that high deductible portion or that co-payment portion where they able to have expensive heart attack or a cancer diagnosis. A product like critical illness will pay a lump sum of say $20,000 which will go a long way to covering the out of pocket cost that somebody might have.
Now, when behavioral economics teaches us right is that certain people respond to certain messages differently. I would say that if you look at the research, I would say 50% of the employees’ out there and extra largest single number in terms of [inaudible 00:11:55] are responding to this idea of control, of peace of mind, a feeling I’m covered— that emotional benefit. But if you look at what the industry is marketing, the message is that they’re sending— I’d say 80% of the carrier’s position critical illness as simply a compliment to high deductible health plan. Therein lies where I think there’s opportunity as being missed in terms of finding the right positioning based on what people are really—why they really buying the product?
Josh: If I was in that market place, I would be helping customers make the decision by looking at Law of Subversion which is a driving force for a really significant portion of our population especially blue collar workers. They live in moral of a Law of Subversion. By that, what I mean is— if you don’t buy this, can you afford the $20,000 deductible that’s going to happen if you get cancer, if you have a heart attack, if you have a stroke.
Patrick: Exactly right. Therein lies that difference. I think where the industry is kind of missed the mark a little bit is that they’re assuming that people are going to purchase this based on a fact that, “Oh, listen with the money you save on your premium from a high deductible health plan, you can go ahead and come out of head buying critical illness insurance.” I think as you’re saying is that dynamic of Law of Subversion is whether they have a high deductible plan or a traditional plan. They’re going to want that critical illness insurance really for that additional peace of mind.
Josh: Yeah, it comes down to insurance. The reason you should buy insurance is to cover expenses that you can’t afford. I mean that’s how we position this all the time.
Let’s talk about data analytics specifically— how do you use data analytics in your work?
Patrick: From the first we talked about was this idea that there are certain personalities that abide benefits for different reasons. That’s what that behavioral economics were used. They are to help match the message right to the personality. Customer Benefits Analytics is done through research— identifies seven different types of benefit buyers out there. We’ve got messages align to the way those different people tend to make decision about benefits.
What data analytics does then, it gives us models that take readily available demographic and basic employer characteristics and predict what personality the employee falls into. Then that allows us to know what message to send to which employee about critical illness.
Josh: That’s really cool. Is this something that you provide to your brokers or who gets this information?
Patrick: Yeah, we provide it to brokers and the carriers themselves who can serve either one of them because those are the ones who have the most stake in these voluntary benefits in enrollment outcome. I mean, I will just make a point. Employers could stand the benefit for them but for them they don’t really have an economic incentive as to whether or not 15% of the employee sign up or 25%, but the broker and the carrier are strongly incentivize.
Josh: Yes, I would argue about that I think like business owners have a huge stake in who gets covered by benefits. Tell you a little more story— back then my food service company, our sick day policy was you get five days a year, but you could accumulate it up to sixty. So, if you didn’t take any sick day for twelve years and you had a heart attack, you will get paid sixty work days while you were out.
That was a huge benefit because a couple of people actually did qualify for it when we did it. So, I will submit that your data analytics matching the right message to the right person is just as important if not more important for the employer because lot of employers have benefits in the first place.
Patrick: You’re exactly right. I think that the carriers and brokers would love to wheel you out as a testimonial because of the truth of the matter is probably about somewhere between a third and a half of employers think that way.
Other employers are a little bit less in enlightened about benefits and they will get it as something they either they have to do and they kind of do it grudgingly. But I think that you are absolutely right— that they had value proposition around benefits for the employer not just about the ability to attract and retain workers but about really productivity and employee well-being is really the core message.
Josh: For me, benefits is more about employee productivity than attraction because at the end of the day whether you have a critical illness program or free launch program is probably not going to get somebody come to work for you, but it is going to have a big effect on how happy they are once they get there. I think that employers need to really think about not just the attraction, but the retention— the cause of replacing somebody is gotten to be pretty much out of control.
Patrick: Yes, absolutely. One of the things which we did in a research that we just completed last year, 3,000 employees did we surveyed found that their willingness to recommend their employer as the place to work based on the benefits program was substantially higher among those employees who were engaged in their benefits.
If you thought that your benefits were you bought more voluntary benefits and you rated yourself as having been well informed. We asked questions about how were the benefits communicated to you and those who are very satisfied with the communication of benefits were also much more likely to be willing to recommend their employers a place to work. In tight labor markets like you say, if you want to grow and you need access to good employees, internal referrals is a far more cost-effective means of hiring than going out through recruiters.
Josh: So there’s an interested website called Glassdoor which I’m sure you’re aware of and if you want to have an interesting time, spent a little time on Glassdoor. Looking at the companies to get really high grades from their employees and almost universally you’re going to see people on Glassdoor talking about the great benefits that the company has that makes their life better.
Patrick: Right, that’s a great point.
Josh: It’s really something which I find really an interesting thing. I’ve done that a little bit just because I’m curious about it and I was really kind of astounded about how important benefits are for retention as much as getting the new person on.
So, Patrick what’s your business—big data is really on every body’s screen these days. It sounds like you have collected a huge amount of big data about what motivates employees to do certain things. Is that correct?
Patrick: Yes, certainly with respect to benefits. What we did is we basically went out and looked at ten different types of benefits and why did you buy or why did you waive. Whether you bought or waive those benefits and then we essentially appended hundreds of attributes of consumer demographic, psychographic and behavioral factors that we had and built this predictive model. It essentially allows us to simply look at a list of employees and we can tell the broker or the carrier which benefits are most likely to be purchased in this group.
So, that helps them when they’re offering a new benefit but also for example they may have had visibility insurance for ten years and the participation rate is 40%. They might think that’s very good, but based on our analysis we could say that employees of this type—the participation rate ought to be 55%. That tells the broker and carrier, there’s an opportunity for a significant increase in participation if the communication and the messaging could be optimized and that’s where we get to the right message.
That third step which is this deliverable advertising technology which by that we simply mean the ability to personalized the message in email, in banners and really in face to face meeting which are still used in the workplace and those are what we called Addressable Thing and quite honestly with the latest innovation which not only benefit programs are taking advantage of as far as I know yet is direct cable television where you can actually target a particular message to a particular household.
Josh: You can get that through Facebook if you’re watching these days, too.
Patrick: Yes, obviously Facebook and LinkedIn— other social media channels. That addressable technology is what we think benefit companies can be leveraging to make sure that the right motivational message is getting to the right employees.
Josh: One more quick question and this is really a yes or no. Would employer companies be able to buy your system?
Patrick: Employers would be able to— probably not. I don’t know how—we’re not really tuned in for employers but what we would do is we would allow the broker could provide that analysis for their employers for free because broker wants to essentially provide that value added service.
Josh: I’m going to assume most people listening to this podcast are not brokers or business owners. So, if a business owner wants to contact you to get in touch with the broker who uses your system, how would they go about doing that?
Patrick: Simply come to the website customerbenefitsanalytics.com or reach out to the contact information. Send us an email. I would be happy to put in touch with not only broker but we also have benefit enrollment partners—somebody’s benefit technology companies that are embedding our technology into their platforms.
Josh: Cool. If somebody wants to contact you, how would they go about doing that?
Patrick: You could just reach out to me as firstname.lastname@example.org
Josh: Great. Patrick thanks so much for your time and today we are unfortunately out of time and I also have an offer for you if you would like to get our free one-hour audio CD course on how to take your successful business and make it economically and personally sustainable. It’s really easy.
I hope you’re not driving right now, but if you are wait till you stop driving but just take out your smart phone and text the word SUSTAINABLE to 44222. That’s the word SUSTAINABLE to 44222. You’ll get a link. We’ll ask you for your name and your mailing address and as a physical CD you can play on your car or play at home or play while you’re working out. It doesn’t really matter, but you can play the thing and we will mail it to you and you can get it in a few days after you sign up for it.
This is Josh Patrick. You’ve been at The Sustainable Business. Thanks so much for coming by today. I hope to see you back here really soon.
Narrator: You’ve been listening to The Sustainable Business podcast where we ask the question, “What would it take for your business to still be around 100 years from now?” If you like what you’ve heard and want more information, please contact Josh Patrick at 802‑846‑1264 ext 2, or visit us on our website at www.askjoshpatrick.com, or you can send Josh an e-mail at email@example.com.
Thanks for listening. We hope to see you at The Sustainable Business in the near future.