A Sign of Zenefits' Desperation?

By Kevin Trokey

To the various claims and insinuations being made by Zenefits, I’m gonna have to call bullshit. To me, their latest tactic is an early sign of desperation, but as I have commented before, I’m sure the weight of $500,000,000 of other people’s money gets heavy quickly.

Be careful what you ask (for)

By now, you have all probably seen the newest “resource” Zenefits is providing – a side-by-side comparison of their services to those of their competitors. If you haven’t seen their head-to-head comparisons yet, don’t be surprised to discover you are a target of their most recent “brilliant” marketing maneuver.

The first time I saw one of Zenefits’ comparisons, they attempted to make a line-by-line comparison with lots of assumed and missing information filled in on behalf of their competition. I’m only guessing that the marketing department’s latest and greatest made its way to a tired, exhausted, and probably grumpy legal department who must have wondered, “What the hell are you doing now?!” I don’t think there is anything illegal about what they are doing, but at the very least, I would expect that their general counsel would advise them of the age-old lawyer rule of never asking a question to which you don’t know the answer.

They are already scrambling with this comparison tactic. When I went back (the morning of this writing) and looked at the same comparison sheet, I found it is now mostly blank on the competitor’s side. Gone is most of the assumed and missing information and in its place is an invitation to the competitor to “edit and update this page”. Really?!

For someone with so much on the line, Zenefits seems awfully reckless. Not only are they asking questions to which they don’t know answers, they seem to be making up answers to their own misguided questions. On the current comparison sheet, they seem to have answered the question of whether or not Benefits & Insurance Services are provided for free as “Yes” for every single competitor (at least every one I checked). I challenge anyone reading this to introduce me to an agency anywhere that is providing its services for free. And, yes, I know why they say this, but I would NEVER promote my services as free, and I would consider anyone making that claim about me to be defamatory.

Despite retracted information, limited remaining information, heavy use of “we don’t know what we’re talking about” asterisks on that limited remaining information, Zenefits promotes their non-comparison comparison as a helpful tool to choose a broker. To that suggestion, I call my first bullshit.

What business are they really in?

As if their non-attempt at a real comparison isn’t funny enough, here’s the even funnier part: everything that is on the Zenefits side of the ledger is likely offered (or in the process of being added) by most every one of their competitors.

On top of that, almost every point of comparison on their side falls under the category of “software”. You would think they were a technology company! Oh wait, they are. Or at least that’s how their CEO/co-founder has described them. So, I have to ask anyone from Zenefits who might be reading this, why aren’t you begging for a comparison to the countless other tech companies competing in your space?

Comparing themselves to brokers rather than tech companies would imply they are a broker supported by technology rather than a technology company pretending to be a broker. To that implication, I call bullshit.

They don’t seem to understand real value

Based on the list of what they offer, you would think the only thing a business owner needed was software. Perhaps the most blatant example of their misunderstanding of the broker role is the additional items that should be considered in a broker comparison but aren’t included. Of course, what else would you expect from a tech company pretending to be a broker? They don’t understand what really matters to clients. If I were Zenefits, the absolute last thing I would want my prospects/clients to be doing is comparing me at a meaningful level to other brokers.

It’s not the items on your list that creates value; it’s how you use those items to address client needs/strategy that creates value.

Zenefits, to the implication that you deliver more value because of the items on a list, I call bullshit.

Let’s make a meaningful comparison

To Parker Conrad and the rest of the leadership team, I would love for you to “edit and update” your side of the ledger based the following services needed by today’s business owners; this is the list that matters most. If you really want to provide a meaningful broker comparison, add these items to your comparison sheet. Does Zenefits do the following for their clients?

  • Gain an understanding of what the employer is looking to accomplish through their HR/benefit program and then define and create an employer value proposition that ensures the client an ability to attract the highest level of talent
  • Drive retention of existing employees by helping build an employee experience that results in higher levels of employee morale and engagement
  • Create a true competitive advantage over their competition
  • Provide experienced and knowledgeable advisors (beyond your small handful of token hires)
  • Have the flexibility to align the best available solution (“in-house” doesn’t always mean the best) to each client need
  • Coordinate planning sessions to define the goals (and a plan of execution) of the ENTIRE benefits strategy (WAY beyond just insurance and technology) for each employer
  • Craft customized communication strategies to ensure every employee and dependent understands and values what is being offered
  • Build personal relationships with the carriers in the local market (they do matter)
  • Establish personal relationships with each client (this too matters)
  • Hold yourself accountable for results via stewardship reporting
  • And, of course, this list could go on

To the implication that they have the depth and sophistication of talent to serve their clients at this level, I call bullshit.

The source of the solution doesn’t really matter

I could start a new agency tomorrow and in very short order be able to provide every single item I see on Zenefits’ list. I couldn’t provide the technology solutions in-house, but what I could do is align myself with multiple technology companies who truly understand their role and partner with them to ensure the best technology solution is put in place for each client.

And, why does Zenefits think “in-house” equates to better? Think about it – the only solution bringing any revenue into their organization is the insurance solution; a solution they don’t provide in-house. The best solution for a client is the one effectively implemented and which most closely aligns with their situational needs; the source is irrelevant.

To the implication that in-house equals better, I call bullshit.

You get what you pay for

As funny (in a really sad way) as all of this is, it’s their pricing model that makes me laugh the loudest. At least as of this writing, in every single area where they beg to be compared to you, they promote themselves as being free. How pathetic that they don’t value their in-house technology solutions enough to actually charge for them. How arrogant and insulting to the business community they serve that any reasonable business owner would believe they get Zenefits’ services for free!

I was recently listening to an HBR podcast of an interview with the CEO of another tech company. When asked about the expectation of technology solutions to be provided for free, his response told me that he and his company really understand what their customers want.

“People don’t expect free, they expect great.”

He was so spot on. As I thought about that observation, it struck me that in the absence of being able to provide a great experience, companies must cloak a mediocre (or maybe even aspirations to achieve mediocre) value proposition with the distraction and illusion of free.

To the claim you are free, I call my loudest bullshit of all.

Go on the offensive

To all of those who Zenefits is begging for a head-to-head comparison, I encourage you to accept their challenge. But, don’t play the mediocre comparison game of “bright and shinys”; compare yourself on what really matters.

If every broker would go to every client and have the following two conversations, most would never lose a client to Zenefits.

  • First, go have a stewardship conversation to ensure your client knows exactly what they would be giving up in exchange for a single technology solution.
  • Second, discuss exactly how much you are being paid so they understand just how much that “free” technology solution from Zenefits would cost.

Tell your clients approached by Zenefits to test how “free” they truly are. Tell them to ask for a written guarantee that they are completely free and would receive no compensation on their behalf.

We all know they are being paid, but how comfortable should anyone be with such an important relationship that starts out with such a blatant lie? How could they be comfortable that their reckless tactics won’t place some part of their business in peril?

And, to many of the non-Zenefits agencies out there, I challenge you to be honest about how truly different you are from the Zenefits approach. Is your insurance agency value proposition depending on a product, pretending to be free, and not focusing on the broader needs of your clients? The answer to all three must be “no”.

I do give Zenefits credit where credit is due. They have been very successful at exploiting a new client pain point with a decades old solution. They are disrupting the industry, not because of their solution or approach, but merely because they are more aggressive than anyone else in the industry.

The industry needs to release its grip on the past; it’s an anchor weighing you down and holding you in place. And, there is no more vulnerable position than someone trapped in place. Yes, for the moment, you have an unbelievable advantage over the “Zenefits” players of the world because of your ability to deliver on the items I listed above. However, if you don’t plug new, broader solutions into your mix, if you don’t pay attention to new client needs/demands, you’ll never survive.

Period, no bullshit, end of story.

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Photo by Dave Beckers