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We're deep in the throes of selling season in PEO Land.  Since joining PEO Distillery I (Trevor) thought I could shed some light on some of the pitfalls we look to avoid here at PEO Distillery.  In order of frequency encountered and without further ado let's dive in:

 

1.) Falling in love with a sales rep.

 

In my 10 year career, it was beaten into me that my job was to go out into the world and make friends with powerful people and make them want to buy from me.  Truth be told, I was never very good at this, I've always been much better at going out into the world and finding problems to solve.  The sales reps I work with on the other hand, had truly amazing skill sets in this department.

 

My first deal with one of the PEO's I got to work with a senior rep and we hopped on a call with an old client of mine.  One that actually liked me!  By the end of the call however, I was an afterthought.  It was as if the senior rep (we'll call her Valorie) it was as if Valorie had waved a magic wand over the COO and they became instant friends.  Over subsequent calls I watched her work her magic and by the end of the sales process despite protests from several folks in the organization, they bought from Valorie largely because the COO was completely and utterly transfixed on Valorie.

 

Flash forward 3 months, implementation was a disaster, the software didn't do numerous things that the staff had called out during demos and behind closed doors, the service team was left with an unhappy client and the COO called a "Come to Jesus" meeting with Valorie and myself.  

 

"This is not going according to plan.  What can we do to make things right?!"  -COO

"The system limitations do not allow us to do the things you want, we can give you a fee credit for the issues you've been having and we'll have our service team do a bunch of manual processes behind the scenes to accomplish what you used to be able to do on your old PEO". - Valorie

 

The relationship limped on from there with much effort from Valorie and myself, but in truth we probably should not have won that deal.  Period.

 

This vignette is all too real and all to frequent in our industry.  Bad decision after bad decision is made because leadership likes a person that has minimal control over the long term relationship between client and PEO.  This is why you need an unbiased resource whether it be us or someone else to help you through this process.

 

2.) Wasting countless hours on demos and in "Value Building Calls".

 

I'll never forget the scathing email I received from a CEO of a 50 employee manufacturing company out of Kansas.  We met because he had used our PEO in the past and he reached out as he saw one of my linkedin posts about a promotion we had going on.

 

One 30 minute call later I had a commitment from his team to provide documents to go through underwriting.  I set up a meeting to collect documents required by my PEO and the controller and CEO jumped on to facilitate.  It went for an hour.  While underwriting was chewing on the submission, I had the CEO's entire HR team sit on an hour long demo to see how easy it was for employees to enroll in benefits, take HR actions, and operate the APP.  We had a follow up demo for the Finance team to see how easy it is to run payroll (30 minutes).

 

Then the news hit.  They were completely and utterly unwritable from a benefits risk perspective.  We had declined to quote defeating the whole purpose for all of those meetings.

 

The CEOs email absolutely ripped into me and he actually calculated that we had cost the organization 15000$ in salaried time and that they would never ever use our PEO again for the rest of his career and that we had made HIM look terrible to his team and to his board.

 

He was right.

 

In my defence, back then, PEOs rarely declined to quote groups for medical or Worker's Comp.  It was a different time.  Today, PEOs decline 40% of business right out of the gate NECESSITATING the need for you to quote first, spend time later!  Unfortunately reps have been trained the opposite and want you to experience the "Sunk cost fallacy" and commit countless hours to them before they even know whether it makes sense financially to partner.

 

3.) Negotiating on the Service Fee Alone.

 

Nisse's written other articles on what's negotiable and it's worth checking out here.  The biggest mistake I see is leadership shopping PEO and then getting fixated on negotiating the Per Employee Per Month (PEPM) fee when in reality EVERYTHING is negotiable.

 

PEPM, Medical Rates, Worker''s Comp Rates, SUTA, One Time Fees, Implementation Fees... it's all negotiable.  I've seen it a hundred times in deals where the CEO/CFO will look proudly at me and say look at the PEPM Paychex is giving me!  Why can't you match that?!  Well, I could match that if I were charging you what they're charging you on Workers Comp and SUTA... but we don't build in margin there like they do!

 

And so on and so forth.  It's all about total cost of ownership and what value the PEO brings for that cost.

 

That's all for now!  Excited to be on board and don't hesitate to reach out if you have questions about the article or want help shopping PEO!

 

-Trevor