Coyote Fireside Chats continued with a panel discussing “Selling Benefits to Employers.” We were grateful to be joined by Cara McCarty Abbott, CEO/Co-Founder of Betterleave (a Coyote portfolio company) and former VP of People, and Coyote Ventures’ Venture Partner Corina Leu, who is also a Strategy Consultant at Mercer. Melody Qiu, Coyote Venture Partner and VP at Progyny, moderated the event.
Our Fireside Chats aim to be transparent and tactical sessions to provide founders valuable lessons for navigating the digital health landscape. Selling your solution to the employer market requires a strategic approach that takes into account their unique needs and challenges. By understanding the market and providing value, you can successfully sell your products to employers. We want to demystify some of this and talk about how startup founders can effectively sell into and engage with employers.
Below are some of the key themes and takeaways that we took from this event:
Why sell your solution as a benefit to employers?
Macro trends in the benefits world show that employees, and by extension, their employers, are now seeking more than just the foundational medical and dental benefits. The next layer includes benefits such as parental support, fertility coverage, and caregiving. Now, many underserved areas are being revealed and are ripe for disruption, such as bereavement care.
Over half of Americans receive healthcare through an employer-sponsored plan. Employers are uniquely positioned to improve the health and wellbeing of their employees. If you’re a point solution, you have an opportunity to access this impact by addressing the workforce.
What are the first steps to prepare before you start selling to employers?
First, understand the type of employer that you want to sell to by categories such as:
Employee size: For size, identify what company size will cover your costs. While small and mid-market companies have fewer employees, they may be easier to sell to than large enterprises due to less bureaucracy. However, if your implementation costs are high, you may need a higher volume to cover costs, in which case large enterprises would be better targets.
Industry: The demographic of employees differs by industry, so there may be an industry that is more appropriate for the product. For example, Betterleave segmented toward workforces that were more likely to experience grief and loss. As a result, they can focus on industries where workers are older (such as manufacturing) and more exposed to loss (e.g., healthcare). Different industries may also have different pain points and priorities. For example, large tech companies with big employee benefit budgets may focus more on employee satisfaction and retention, whereas smaller companies with more limited budgets may focus more on cost savings.
Geography: This matters if your company's product has a physical location (e.g., clinics) that employees need to access. If so, a GeoAccess Disruption Analysis report that shows how close an employer's members are to a provider network is necessary for selling.
Once you identify your target customer, prepare your value proposition. Start with customer discovery to identify pain points and priorities. Currently, high costs and inflation in healthcare are a huge pain point, so it’s important that you speak to the ROI of your solution. You are competing with hundreds of benefits, so bring data where possible to back up your value proposition. Also make sure that you are showing not only how your solution benefits employees, but also how it benefits the HR team who’s managing it. Examples of information to illustrate your value proposition include:
Net Promoter Score (NPS) to show patient satisfaction
Health Risk Assessment (HRA) score to identify employees who may be at risk for certain health conditions
Referrals from existing clients
Client retention rate
Total number of clients and covered lives
Time and money saved per employee
Clinical outcomes, compared to a benchmark if possible
LOE and time to implement
Examples of reporting that will be provided to the client
Who are the key stakeholders to be aware of in the employee benefits market?
HR benefits team: The size of HR teams are typically scaled according to the size of the employer. Small and mid-sized companies could have teams of 5-10 people, whereas large enterprises may have full departments. The levels range from analysts to CHROs, and often the final decision-making power may reside with the CEO, CFO, or other CXO. Try to identify the decision maker(s) early on in your conversations.
HR benefit consultants: Consultants have an outsized influence in the benefits market. Given more and more point solutions entering the benefits space, HR teams often lean on consultants for support. As a result, consultants can be the gatekeeper or champion for many sales conversations. If you’re a new entrant to the benefits world, focus on developing relationships with benefit consultants to introduce yourself to employers. However, note that it won’t be helpful to reach out to benefit consultants until you’ve already had some traction, either by initiating partnerships with a medical carrier or working towards or having launched your first pilot. Employers are unwilling to take on an expensive business risk without some assurances that they won’t be the only guinea pigs in helping a point solution successfully launch and iterate on its product. Consultants are employed to consider all the potential risks, and they will provide their clients with advice and share information about the vendor and market landscape to help them make the best choice. Don’t reach out to consultants until you’re ready for the thorough vetting process and know that your product can stand on its feet. Come prepared to discuss your value proposition, potential savings for the employer, innovation roadmap, and pricing model. Notable benefit consultants include Mercer, Aon Hewitt, Willis Towers Watson, Deloitte, Korn Ferry, Accenture, EY, PwC, McKinsey, Bain, Locketon, USI, Gallagher, Alliant, HUB, Brown & Brown, NFP, and Segal.
How do I go about finding my first clients?
Leverage all the relationships that you have in the HR benefits and HR consulting world. Most benefits are sourced through warm introductions and consultant recommendations. Conferences in the employer health space are a great way to start building your network in the benefits world. Notable conferences include: Business Group on Health, The Conference Board, HIMSS Global Health Conference, HLTH, and others. Lastly, don’t underestimate the power of cold calls and emails.
How do I pitch my solution if I am just starting out and don’t have data yet?
If you don’t yet have data to include in a pitch, break down your pitch into phases. For example, Phase 1 may be a free pilot to prove out utilization. Phase 2 could build off of those initial data points and customers can pay for increased improvements. Engage your first customers as collaborative partners. One way to reduce the risk for your first customers is to include hefty performance guarantees based on measures of success (e.g. clinical outcomes, satisfaction, engagement rate).
What do I do if an employer doesn’t prioritize the problem I’m trying to solve?
If your solution is not currently viewed as a priority for an employer, there are a few ways to approach the situation. First, you may need to start with educational efforts backed by data. Many issues that have historically been ignored, such as women’s health issues, have always existed, but only recently have received attention due to more awareness of the topic. Drip campaigns to educate on the issue and its impact to employers and employees are helpful for setting that foundation. Second, often employers don’t prioritize an issue until a number of employees or the right employee surfaces it. Consider working with advocacy groups to build your brand and encourage employees to be vocal about the need for your benefit. Lastly, know when to move on if an employer is not currently prioritizing the problem you’re solving for so that you do not waste your time.
Are there any tactics to speed up the employer benefits sales cycle?
Typically, employers update their benefits annually and benefits often reset on January 1. This means that the length of a sale can take anywhere from months to years. Partnerships can be very helpful for getting your foot in the door as well as speeding up the sales cycle. Identify if there are vendors in adjacent spaces that you might be able to partner with. For example, Betterleave was introduced to a customer through a child care company. Partnerships can exist between a point solution and a medical carrier, or an established well-being platform and a smaller point solution offering a very niche product. Initially, you may also target a partnership with an HR marketplace such as Rippling, which is a great way to get in front of a variety of non-jumbo employers and refine your processes and operations before hitting the big leagues.
A few ideas to start developing partnerships:
Find synergistic solutions that are already established to sell together with. For example, Betterleave is considering bundling themselves with a leave administration tool.
In addition to partnering with large medical carriers and payers, forge partnerships with PBMs if the solution is Rx related. CVS, ESI, and Optum are huge players in this space with a lot of influence. Consultants also often have coalitions where they can promote certain solutions (e.g. WTW's Rx Collaborative).
Consider partnering with professional organizations with influence. For example, the Children's Hospital Association does not make purchasing decisions for children's hospitals, but they have significant influence and can promote certain solutions. Similarly, certain academic organizations (e.g. ASRM for fertility) can also have a large influence and may be willing to partner with companies for events and research.
Some TPAs and healthcare navigation companies can also help promote certain solutions or at the very least, partner in warm transfer relationships with employers. Established care navigation companies include Collective Health, Included Health, Surest, and Castlight.
What are some helpful pricing strategies to consider?
Early on, be flexible with what your customers may need. Include this in your discovery process. A PMPM (per member per month) structure is traditional, but many companies these days are moving away from a fee per covered member and moving towards value-based structures based on engagement, utilization, or clinical outcomes. The pricing structure should make sense for the product offered and the demographic of the users. For example, employee assistance or behavioral health solutions should be offered to everyone, so a PMPM may make the most sense. However, a caregiving and fertility benefit will only apply to a subset of most employee groups, so many employers may not want to pay a PMPM for point solutions that address an employee subset. Once you identify the cost structure that works for your ideal customer profile, try to keep it consistent so you can scale and forecast.
Once you’ve signed your first employer customers, what are best practices for retaining them?
Put the best foot forward so both the employees, HR benefit managers, and consultants continue to have the best experience. Consider creating a dedicated account management team to manage the client relationships and perform quarterly business reviews. Use data to show your impact and continuously sell the value of your benefit.
We hope this fireside chat series continues to be valuable, and we look forward to seeing you at our next session on partnering with employers!
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