If your company has engaged one or more SaaS solutions to power your business, like COBRApoint, your firm’s most common and frequent visitor will be an existing client or member. 

It is time to recognize your site is no longer a single purpose marketing brochure, but rather a place where mission critical work is performed by your client and members.  Like any other client interaction, your firm’s value and services are being judged each time a client accesses your site. 

Here are some questions to ask your site:

*        Does your site have a modern feel and layout and is the content current and easily refreshed?

o   I am astonished by the number of websites in this industry which look like they were created by a high-school student using Microsoft FrontPage 98.

*        Are there any broken links or incomplete pages. 

o   One site I looked at had a 2007 copyright and a NEWS page that said ‘Coming Soon’…are you kidding me?

*        Does your site’s message reinforce and reengage the client relationship by demonstrating your expertise, service oriented culture, leadership position and desire to deliver value to your clients?

o   I love websites that speak directly to their existing clients and actively engages them in the delivery of their services.

*        Are the login pages prominent and easily accessible?

o   Most sites bury their client and member login links deep within the site.  This just proves to me the site does not have a well-defined client engagement strategy.

*        Does your website message promote cross-selling opportunities for clients to review?

o   Prospects are only legitimate if they have a need AND a budget.  Most sites do not clearly describe their solutions or services, their value statement and testimonials/case studies.  One site I reviewed does not even list all the services they offer. 

*        Are you tracking website traffic and usage in your site? 

o   We love Google Analytics and leverage this business intelligence to improve our site.

*        Are you considering how social media may benefit your client/member engagement and your marketing efforts?

o   Simply putting a Twitter logo on your site is worthless unless you actively use this tool to engage your stakeholders.

I would recommend taking time to review your site, ask your clients what they like and don’t like, look at other well designed corporate websites and make it a 2011 priority to redesign and rebrand your most important client engagement opportunity…your website.  We are!

I couldn’t resist the salacious title, but before your mind wanders too far, these three do go brilliantly together, and not just in the libidinal sense.  If you’re one of our customers or you’ve read some of my prior posts, you know that I’m almost never afraid to open the kimono – an open, frank relationship with a prospect or a customer is always better in the long run than the alternative.  You’ll also note that I’ve written primarily in this blog about selling, but in this post I want to talk about serving – specifically serving new customers.  I’m not sure where I first heard the saying that true selling starts after the contract is signed, and I don’t know that I fully agree with it, but I do believe that the initial honeymoon period with a new customer is absolutely critical.  It provides a firm first impression for the customer that either paves the road forward for a great relationship or ensures that there will be bumps ahead.

One of the very many benefits to starting a company is that sooner or later you get to experience in direct, concentrated form, all of the issues big businesses face regularly but sometimes lose in the numbers.  One of these that we’ve been thinking a lot about recently is how effectively we serve our newest customers, and how this impacts our long term relationships with them.  For many of our customers I believe that we’ve done a truly outstanding job of supporting them in their transition to our services in a well designed, well ordered process.  More importantly, our people recognized early on that each new customer was a precious opportunity.  They (I can’t take credit for it) chose, even before we started working on more formal on-boarding processes, to serve each new customer to the fullest extent of their time and talent.  The result is astonishing.  We have customers who truly, in every sense of the word, treat us like partners.  They appreciate us, and more importantly, they trust us.  We proved our worth in the early days through service, and the long term dividends are priceless.

Then we started growing fast, and for a couple customers, we made some very early rookie mistakes in their first weeks as a customer.  The result – everything we’ve done since has been viewed with some skepticism by these customers.  We dug ourselves a hole right out of the gate, and we’ve been climbing out of these holes ever since.  We’ve learned from these mistakes and added processes and controls to prevent them from happening again, but we’ve also learned how critical the honeymoon phase is with each new customer.  The basic gist of what we’ve learned is this:

1.       First impressions with new customers may last the length of our relationship;

2.       We have a short, initial period with each new customer to gain their trust and respect;

3.       We open the kimono – we clearly and openly explain to each new customer the steps we’ll go through to migrate them to COBRApoint, and we don’t sugar coat the effort which will be involved;

4.       We ensure that each of us who touches a new customer relationship understands how import it is that we approach each new customer relationship with an attitude of service.

I confess.  I’m a strong proponent of the school of thought that “telling isn’t selling.”  When I have my customer hat on in both my personal and professional lives, few things annoy me more than amateurish sales people who launch right into their song and dance without ever bothering to find out from me what my needs are.  If the sales person doesn’t care what my needs are, then I assume this reflects the attitude of their entire company – and I certainly don’t want to be their customer.

I’m becoming a little concerned though that we’re now raising a generation of sales people who miss the whole point and are so hyper focused on the prospect’s wishes that they’ve lost the art of actually SELLING.  The goal behind asking prospects questions is to (a) get the customer to articulate (and hear themselves saying it) why they are dissatisfied with the current status quo – i.e. get them to fully recognize that they have a need which must be fixed – and (b) gain an understanding of their pains so that we, the sales people, can then speak to how we can solve those pains.  The key is that we’re looking for fundamental, emotional pains.  We’re not looking for nickel and dime features the prospect wishes they had, and most importantly, if we can solve their fundamental emotional pains, this is what we sell.   Sure, a prospect may wish we had feature A or feature B which we don’t have, but we do not need to have those features to actually sell to the prospect if we can in fact solve their fundamental pains.

Waving your hands and bemoaning the fact that you can’t sell to your prospect without feature A or B is pure bunk as long as you can solve their most important pains.  If you don’t believe me, just ask anyone of our current customers.  Every single one of them wished we had at least one more additional feature, but at some point when you’re building a new company and a new product or service you have to decide when it is good enough to start selling – as long as your core product or service is ready to meet the big whopping needs out there in the market.  Additional features will come with time, but if you can meet your prospects’ significant pains today, then you’re ready to start SELLING today.

Spend a few quick minutes on Google, and you’ll find that just about everyone in history has made a quote about opportunity knocking or the perils of waiting for your ship to come in.  It is kind of like watching American Idol with my kids each week – I begin to long for someone to do something different – something unique.  On the other hand, perhaps the message in the monotony is that simple truths are simply true.

The American Recovery and Reinvestment Act of 2009 has swamped our industry for the last two months, and more than any other event in the long history of COBRA, it is separating the wheat from the chaff, the professionals from the amateurs, you get the point.  Opportunity is knocking.

Two of our customers report closing more new business between February 17, 2009 and April 1, 2009 than in all of 2008.  Another customer reported to me in late March that they had closed new business in this timeframe which will increase their COBRA population by 33%.  A third customer had one of their competitors reach out to inquire whether our customer would absorb their 450 COBRA clients because the current COBRA administrator was convinced they would fail in trying to comply with the ARRA on time. 

More than ever, employers are looking for professional benefits administrators who have the systems, processes, and people in place to respond rapidly and professionally to change.  Do not doubt that more change is coming, and employers know it.  Now is the time for COBRA administrators to call every employer they know.  Opportunity isn’t just out there…it is knocking loudly.

As a young, fresh from college and very wet behind the ears sales professional, I read my fair share of “how to” selling books.  Some were and are gems, like those by Neil Rackham, but most of them oozed oily sleaze from their very pages.  The gimmicks, the tricks, the techniques (i.e. how to lie effectively) abound.  Is it any wonder our profession has a bad rep?  I’d read things like “ABC – Always Be Closing,” but I couldn’t truly picture myself doing such a thing.  Was I supposed to “ask for the order” every time I talked to a prospect?  Really?

True learning, for me, came from personal experience (I had to find my own voice, my own style, my own confidence) and from the rare, but welcomed, opportunities to watch some truly outstanding sales professionals at work.  The best of these mentors for me was Harry Scott, co-founder of Carr Scott Software.  Harry’s company and mine sold complimentary software solutions, and from time to time I’d have the opportunity to team sell with Harry.  I remember being in awe.  Like most truly outstanding sales professionals, Harry’s charisma and intelligence are boundless and effortless, but what most impressed me, is that Harry is trusted and respected, and he is always in control of each interaction with the prospect.  If I can distill the magic into words it would be this – Harry always tells the prospect the truth, he is always professional, and in return, he expects them to respect the fact that the very existence of their relationship is centered on the prospect making a decision – to buy or not to buy.  In each and every interaction with a prospect, Harry would ask the prospect to commit to the next step down the path towards making a buy decision.

This is what “Always Be Closing” means.  Always be reminding your prospect that your relationship is a professional one which is focused on them making a yes or no purchase decision.  Each interaction should result in an affirmation from the prospect that they’re moving towards a buy decision with a mutually agreed upon next step.  If the prospect is dragging his or her feet about committing to a next step, don’t be afraid to ask if “we’re done.”  When they do commit to a next step, write it down, put it in your calendar, and be absolutely prompt in initiating that next step at the agreed upon time.   If you act like a professional, your prospect will treat you like a professional.  That is the science of Always Be Closing.  The art is learning how to do it so that it is a reasonable, effortless, friendly, polite, and expected part of each interaction.  Holding a prospect accountable for their role in the sales process is awkward for young sales people.  It only becomes effortless with practice, though if you ever have a chance to watch a Harry Scott at work, jump at the opportunity.  Listen, watch, imitate, and learn.

We are often asked by our customers how we priced for COBRA and Direct Billing administration services at our former company.  Many administrators are not satisfied with their current pricing models and are looking for a better strategy.  This post contains our analysis of current pricing methodologies and offers several innovative alternatives.

The two traditional pricing models employed by COBRA and Direct Bill administrators have been either ‘Per Employee per Month’ (PEPM) or ‘Per Occurrence’ (PO).  Both of these models have their advantages and disadvantages. 

PEPM
We loved this pricing model at our former company because:

1. Easy for us to communicate to the prospective client.
2. Easy for our HR contact to understand, budget, and explain to upper management.
3. Allowed us to make sound revenue forecasts and budgets.
4. Easy for us to increase our pricing year over year to existing clients.
5. Easy for our Accounts Receivable department to manage.
6. We invoiced our services for the upcoming month.
7. Could impose early termination penalties based upon projected annual revenues.

The problems with the PEPM pricing models are:

1. Subjects the administrator to ‘inventory shrinkage’ risk.  There is not an efficient and accurate way for an administrator to verify that the employer is not subtracting employees of the billing statement each month.
2. As qualifying events occur, the expense increases to the administrator while the billing population shrinks.
3. Adds additional billing reconciliation burdens on the AR staff when a carrier bill does come in with an invoice.
4. Does not sync up work performed with revenue from the client.  PEPM causes an inverse (revenue to work) relationship with the client.
5. Empowers the prospective client to price-shop for administrators who offer the lowest PEPM fee.  This commoditization of pricing distracts the sales process away from the true value an administrator can deliver.

Per Occurrence
About 15% of our overall revenue came from a PO pricing model.  We liked this pricing model because:

1. The amount of work performed for the client was directly linked to revenue.
2. We could easily and accurately calculate monthly billing invoices -- eliminates the ‘inventory shrinkage’ risk.
3. Allowed us to calculate a ‘per letter processing’ cost and then add sufficient margin to ensure each letter processed was a profitable activity.
4. Processing events are emotionally more fun since the administrator is making money.  PEPM events cost the administrator money.

The problems with PO pricing models are:

1. Is more difficult to communicate to a prospective client.
2. Is more difficult for HR to understand, budget, and communicate to upper management.
3. Penalizes the company for a surge in qualifying event activity which can become a powerful sales tool for administrators who sell a PEPM model and are competing for the same piece of business.
4. Is hard for the administrator to make revenue and budget forecasts.
5. Billing occurs in arrears which expose the administrator to performing services for which they may never be paid.  Also, the expense associated with AR aging is introduced.

With the massive changes to COBRA looming on the horizon, it may be time to explore new ways to price for COBRA and Direct Billing services. Consider:

1. An administrator’s ‘same store sales’ are exploding.  With the contraction in the labor markets, more events from existing clients will come to administrator for processing.  Good news for PO administrators, bad news for PEPM administrators.  Invert this for perspective from your clients.
2. COBRA continuation periods will increase for a large number of qualified beneficiaries.
3. More qualified beneficiaries will elect to continue benefits under COBRA.
4. New letters and reporting requirements will increase the per client transaction costs

Alternative #1 - Bill based upon enrolled COBRA participants
Given the pending increases to COBRA elections and continuation periods, this pricing model empowers the administrator to match the work performed with the revenue earned. 

Alternative #2 - Bill based upon premiums processed
It looks likely a new type of qualified beneficiary is coming.  Assistance Eligible Individuals (AEI) will elect and pay a highly subsidized premium each month.  Since administrators will no longer receive 100% of the applicable premium each month, they may be able to have clients to pay for COBRA services by sacrificing a flat number of basis points off premiums each month, for example the administrator retains 2% admin fee + 30 basis points for all monies collected.

Alternative #3 - Bill based upon a mix of PEPM and PO
By creating a hybrid pricing model that balances the advantages of both while minimizing the disadvantages may surface as an attractive alternative for employers and administrators.

In conclusion, regardless which pricing model is adopted, administrators must always strive to ‘document the value’ of their services.  I always said to my sales team we only lost sales for one of two reasons a) we don’t provide the service requested; or b) we failed to document our value to the prospect.  Also, the downward pricing pressures for administration services will continue.  This will force every administrator to be hyper-efficient to make every single client relationship as profitable as possible.

When we decided to pursue securing a capital partner in the fall of 2007, I became an avid reader of two outstanding blogs by a couple venture capitalists, Brad Feld (Feld Thoughts) and Fred Wilson (A VC). Their blogs are a wonderful source of insight and advice for any entrepreneur seeking funding.    I spent most of my time reading and trying to internalize their posts on topics like the business plan, the funding presentation, and term sheets.  In the course of my reading, two simple posts they each wrote about saying “no” to funding requests really resonated with me.  Fred’s post was first and is here, and Brad’s comment on Fred’s post is here. 

I think these posts were comforting to me, because they made me realize that seeking funding was essentially major account selling.  When you’re selling, and you’re busy (see my last post), you come to learn that “no” can be your friend.  Naturally we’d love for every prospect to have genuine interest and ultimately buy, but we know that isn’t reality.   I’ll take an early and firm “no” any day over a long drawn out waste of time with a “maybe.” 

On the flip side, another maturity lesson every major account sales rep needs to learn is how to give a “no.”  In the long run it is far better for the business to lose a few deals because you didn’t have what the prospect wanted than to repeatedly sell things that don’t exist.  The first slows revenue growth – the second erodes the sales person’s reputation (internally and externally) and ultimately market confidence in the vendor.  The irony is that I’ve found that responding to prospect questions with confident honesty, even if the answer is “no,” increases a sales person’s effectiveness.  Major buy decisions are emotional decisions, and deals are most often awarded to the vendor whom the buyer most trusts.

One of the most challenging lessons though is learning when to say “yes,” when to say “yes but not now,” and when to say “no” to current customers.  We love it when our customers request enhancements to COBRApoint.  We have some outstanding customers, and we know that if we continue to deliver a system which meets their needs it will also be one which meets the needs of our target market.  The challenge is that we could never deliver everything each customer would like tomorrow – even if we had unlimited software development resources.  So, we have to make hard choices about priorities.  Sometimes we have to tell customers that we’ve intentionally delayed the release of a new feature in favor of making sure the current system remains strong; sometimes we have to tell customers that we’ve adjusted our development plan and elevated feature X over feature Y we know the customer was hoping for; sometimes we have to tell a customer that the feature they’d like is a nice idea, but well below others in our priority scoring model; and sometimes we have to simply tell a customer “no.” 

It is one thing for me to tell you that sales professionals should accept and even welcome a “no,” but it is quite another thing for me to think that any customer wants to hear “no” from their vendor – they don’t.  They do though want open and honest communication from their vendor.  “Under promise and over deliver” and “honesty is the best policy” may be an age old axioms, but more often than not these “age old” sayings are still around because they’re true.

“Sales.”  For years this was the only job title I wanted on my business card.  I’ve never understood sales people who wanted to disguise their true purpose with titles like “account executive,” “marketing representative,” or “business development manager.”  We don’t make cold calls and spend half our lives running through airports because we love traveling and want to make new friends.  I’ve always wanted the people to whom I’m selling to understand and respect that my job.  My very purpose in the relationship with them is to sell.  Most importantly, if they don’t want to buy from me, I simply want to know as quickly as possible so that neither of us wastes each others' time.

Any salesperson worth the title has worked a cold call campaign or two in their time.  Some of us have also had the luxury of working with world-class marketing teams who hand us only hot leads to work.  Regardless of the path to the prospect, once a prospect has expressed interest, my two simple rules in engaging any prospect relationship are these:

(1)    I won’t lie to you – don’t lie to me.

(2)    I won’t waste your time – don’t waste mine.

I wish all salespeople could have the experience I’ve had working for the last three years to build a new company.  Everyone in a new company wears numerous hats, and there are never enough hours in the day.  In an environment like this, you truly value every minute you have…and it starts to change your attitude when selling.  Here is the simplest example, and a great lesson learned.

Classic sales teaching tells us that we need to leave at least 5 to 7 voice mails (emails, direct mail pieces, etc.) for a prospect without response before we can assume that they aren’t interested and stop calling.  This may be fine in a cold call campaign, but who has time to do this with a prospect who has already told you they’re interested?  Somehow through the ages customers have learned that sales people will keep calling, so there’s no reason to actually return their calls.  As professional (and busy) salespeople, we need to politely but firmly make it clear that this isn’t the case.

The most voice mails I ever leave now without response is 3, and depending on the verbal agreement I had with the prospect about our next communication, many times only 2.  Here is how the last voice mail goes, “Hi John.  I’m sorry I missed you again and that we haven’t managed to connect since we last agreed to do so.  I know you’re busy and so am I, so I promise I won’t waste either of our time by leaving you any more voice mails.  I’m going to assume that you aren’t interested at this time in moving forward and will update my records.  When you are ready to move forward again, please give me a call at…” We find that over 50% of these voice mails are returned the same day.  Respect your own time, and others will too.