Selling to each sales channel requires a unique sales strategy, marketing message, and distribution model.
Small Employer Channel
There are over 500,000 employers representing 34 million employees in the small employer market. Distribution is the primary barrier to success in this market as direct sales efforts are prohibitively expensive and inefficient. For this reason, it often makes sense to sell through employee benefit brokers who already have existing relationships with small employers.
Large Employer Channel
The large employer channel, often synonymous with Fortune 1,000 employers, consists of over 3,000 employers and nearly 40 million employees. Because the average company employees over 5,000 people, it is cost-effective for HR service providers to employ a direct sales force to call on HR professionals at these companies.
Midsize Employer Channel
The midsize employer channel consists of employers between 500 and 2,500 employees. This channel includes over 12 thousand companies and over 13 million employees. Penetrating this channel requires a combination of direct and non-direct sales efforts and cooperation between a vendor’s direct sales force and key broker/reseller partnerships.
Public Sector Channel
The public sector can be divided into federal and state employers. The federal government consists of over 200 agencies, represents nearly three million employees (not including uniformed military personnel). The highly fragmented state and local employer market employs over 15 million individuals. Procedures and processes to securing public sector contracts are lengthy, onerous, detailed, and often confusing. However, it is a channel well worth penetrating. Because of its uniqueness, HR service providers should have a dedicated sales professional focusing exclusively on the public sector channel.
Faced with declining tax revenues and a sputtering economy, companies selling to schools are bracing for another tough year. The deep cuts in school budgets have forced more buying decisions to the districts and central administration in colleges and universities, which can be a difficult to penetrate. Plus, selling to senior-level school administrators can be intimidating to a lot of sales people. However, there are still many HR service providers that successfully sell millions of dollars of products and services every month to the education market.
Labor Union Channel
The Labor-Management Relations Act, more commonly known as the Taft-Hartley Act, governs the way employee benefits are financed and eligibility is determined in the negotiated settings of labor unions. Like the small employer market, selling to the labor market is c omplicated and time consuming. Nevertheless, the sheer size of the labor union market justifies some sort of sales effort.
Associations and Affinity Group Channel
Although associations and affinity groups face an ongoing challenge of recruiting and retaining membership, there are currently hundreds of active HR-related associations that represent a viable marketing and sales channel for human resource service providers. These organizations are good targets for discounted group sales and co-marketing opportunities that would in turn create new sales opportunities.