How Can a PEO Achieve Profitability and Organic Growth?

Andy Lubash, CEO at PrestigePEO

A lot of advice around PEO profitability and growth focuses on sales tactics, marketing campaigns, or other ideas. While these kinds of strategies may bring short-term success, they don’t necessarily lead to long-term growth. Instant gratification is nice, but over time, does the PEO really build on its success?

The true driver of a PEO’s long-term growth is its organizational culture. Organic growth is achieved and maintained by educating your employees, so they can then educate your clients. This fosters deeper client relationships, and over time, it lends to client retention and overall business growth.

Most people are unfamiliar with PEOs. That’s why it’s important to start the training process with the very basics when you hire a new employee, making sure to explain exactly what a PEO does and why. Organic growth begins with each team member fully understanding your value proposition and the benefits of the services you offer, so they can effectively communicate with clients and prospects.

It may sound obvious, but a clueless response is never acceptable to any client inquiry, even if it falls outside the realm of a PEO’s core expertise. COVID-19, for example, has given rise to a number of HR challenges for which there is little precedent on how to proceed. Your PEO’s HR specialists should be dedicated to understanding the evolving HR challenges SMBs face and figuring out the best ways to help lead them forward.

Ultimately, a knowledgeable and well-rounded employee is a valuable sales tool. If you succeed at educating your employees, they’ll succeed at demonstrating the value of each new service or tool you offer to enhance the client experience. Here are some practical tips to consider:

• Educate and train employees to communicate the long-term benefits of partnering with a PEO as opposed to short-term gains like cheaper employee benefits.
• Work one-on-one with clients and prospects to understand their unique pain points and identify how your services could help.
• First impressions are key. Utilize a standard sales presentation to ensure that your PEO is communicating a unified, cohesive value proposition to prospects.

Have you ever been in a meeting with skeptical faces all around the room as changes are communicated? When clients decide to engage a PEO for HR support, their employees generally have no idea what’s happening. Many employees may feel confused or even distrustful of a PEO or their employer if they don’t understand exactly how the relationship works.

Communicating with your client’s employees about the benefits of your PEO’s services is just as critical as communicating with business owners and senior leadership. It’s important to kick off the relationship by establishing clear and open lines of communication with your client’s employees. By introducing your company and its role from the onset, the PEO alleviates initial concerns or doubts about the arrangement. This approach may also help PEOs establish a stronger bond with the client and its employees.

Let’s review: a PEO’s growth over time largely depends on its internal culture. So how does organizational culture translate to client retention? It all comes down to your approach to client service.

Once the client is engaged, sales representatives at many companies tend to fall out of the process as implementation and operations teams take over to manage the client relationship. For true organic growth, however, your PEO’s sales force should remain actively engaged with the client, continuously educating these small businesses and their employees about what’s new and how to improve HR operations.

As your clients grow, so will their HR needs. When clients and their employees trust a PEO, they’ll naturally recognize the benefits of value-added services and support. Be sure to communicate with clients and their employees about new employee benefit programs, technology enhancements, and any other opportunities to improve their HR experience. The key is to always prioritize the needs of your clients and their employees – if you’re investing in educating your team, they’ll know exactly how to help clients in a way that benefits their business and employees, as well as your own bottom line.

It’s also vital to be available and responsive. In today’s digital world, it can be tempting to leave customer service to chatbots or automated responses, but this simply isn’t what clients want. A PEO should keep the “human” in human resources. One effective approach is to ensure that a live representative answers each phone call within three rings. It’s also a good idea to practice a “sundown rule”, which means clients that have open issues are guaranteed a status update at the end of each business day. Maintaining consistent communication with clients throughout the entire customer service process is essential, even when issues are being worked out in the background. Show your clients that you care!

Why all this focus on education and service?

It’s because strong relationships with clients are ultimately a PEO’s greatest sales driver. The value of a PEO’s expertise and support will speak for itself – a PEO that offers the unbeatable combination of a smart and insightful team and stellar service is bound to see organic growth over time. If your clients love your team and service, they’ll gladly share their experiences with peers, partners, and others in their business community. This has been a key ingredient to our own success at my PEO.

PEOs can encourage this by offering incentives for referrals, such as discounts or cash bonuses. A referral program can help PEOs effectively communicate overall value propositions and accelerate organic growth, all with the benefit of personalized testimonials from satisfied clients.

People may not be entirely aware of exactly what a PEO does, but the events of 2020 have awakened many business leaders to the critical need for expert HR support. Small and mid-sized businesses (SMBs) typically lack the resources to manage the complexities of employee benefits, employee relations, risk and compliance, payroll, and the many nuances surrounding HR on their own. COVID-19 has certainly added far more strain and confusion to the mix, leaving many businesses inundated with new HR burdens which they are unequipped to handle.

For PEOs, there has never been a better time to get out there and communicate the benefits of our services to businesses that need them. If you’re already focused on educating your employees and providing exceptional service, COVID-19 presents critical opportunities to continue to deliver on your promise as a PEO. PEOs have seen tremendous growth in 2020 simply due to the fact that we were armed and ready to help clients when they’ve needed it the most. As we look forward to 2021, PEOs should continue exploring new avenues to support clients through these unprecedented times, and truly demonstrate the value of partnering with a PEO.

For a PEO, profitability and organic growth comes down to HR expertise and a commitment to your clients. A happy and engaged client base is your biggest sales weapon – that starts with ensuring your team is prepared to handle your client’s challenges and dedicated to serving as a true partner to their business. As COVID-19 continues to impact our businesses and communities, PEOs have the opportunity to step up as leaders and guide the small business community forward.