The Trouble With Benchmarking

Most employee benefits consultants held their breath as the 2024 Kaiser Family Foundation (KFF) Employer Health Survey was released last October, providing the latest benchmark figures on family premiums for employer-sponsored insurance, worker contributions, and more.

Inevitably, at least one of their clients wanted to know why they were so far off of trend.

And I’ll never forget the outraged tech CFO years ago who was frustrated that our agency’s renewal projections for his company’s healthcare coverage weren’t aligned with what he’d heard at a tech industry healthcare roundtable.

I noted the company’s poor claims history, workforce of large families, and an older than average population. He responded that it was “ridiculous” to say the business was a “victim” of its demographics.

I had to tell him that he was his demographic.

Advisors know that while benchmarking tells a story and provides a strategic goalpost for different aspects of a business’s function, it’s never a client’s whole story. If we know that’s true when it comes to our clients, why is it so hard to keep in mind as we evaluate our own agency operations?

I work with firms of all sizes to build high-performing client service teams. At the start of most conversations, agency principals lay out their current state and priorities.

The top thing I heard last year from agencies of all sizes nationwide was: “Our account managers should be able to manage bigger books of business.”

While quick to quote industry benchmarks to support that statement, most were slower to acknowledge their own data and team dynamics as variables.

Thoughtful analysis of the current state of your organization, coupled with quality benchmarking, are both necessary to build an organization equipped to deliver on your client commitments.

Evaluating Service Staff

I was delighted to see The Council roll out its own benchmarking survey last year to provide additional quality metrics on its members’ organic growth, staffing, and budgeting, among other operational areas.

Like most trend reports published by industry analysts or associations, it references the amount of business managed by non-sales staff (account executives, account managers, and so on).

But remember, while benchmarking tells a story, it’s never the whole story.

Just as you would caution your clients to pause and assess their workforce numbers in addition to looking at benchmarks, you need to do the same as you digest and respond to operational benchmarking information.

I’m concerned that some agencies are too quick to rely on benchmarking to defend staffing models that leave their teams underresourced or stretched thin. Those workloads are driving one concerning trend uncovered by The Council—turnover.

“Respondents reported that 61% of employee turnover is voluntary, indicating a competitive job market,” Julia Ruiz, The Council’s senior vice president for leadership and management resources, and Katie Consoli, director of leadership and management resources, wrote in an October 2024 Leader’s Edge article. “Firms must continue to focus on retention strategies, particularly with data showing the most significant turnover in service staff (where the total average turnover rate in 2023 was over 23%).”

Most firms have ambitious growth goals and these turnover trends are troubling because you need a team to do the work. A stable client service team that can handle an expanded book of business is the difference between a salesperson’s promise and execution.

Out in the wild, most firms initially leverage three factors to assess the size of a client service colleague’s book of business:

• Client Count
• Revenue
• Crying

Then they hold these numbers up against available industry benchmarks in these areas for the “truth” about the right size for that book.

My professional opinion is always that the answer regarding the right size for a book of business lies somewhere between what the practice leader hopes and the client service colleague believes is possible.

If your team doesn’t think it can manage more new clients and your metrics aren’t lining up with benchmarking, I have good news. There’s more data to consider.

In my experience, over 20 variables can influence a team member’s ability to expand their book. I’ll focus on three.

Salesperson Engagement

Does the salesperson stay engaged as a strategist after the sale is completed? When salespeople are trained and equipped to play a robust strategist or consulting role, the rest of the team can manage a larger book of business.

Scope and Process

If salespeople can sell anything, at any time, to anyone, at any price, that’s different than a team that has—and honors—its scope of service and best practices/processes. When sales and client service teams sell and service within a set of standards, they can manage a larger book of business.

Staffing

Some client service teams are heavily resourced internally with specialists assigned to complete tactical and strategic client tasks. Others have external business partners like general agents or BPOs such as Patra or ReSource Pro. When teams are required to fully leverage these investments, they can manage a larger book of business.

Is your team at, below, or exceeding benchmarks?

Can your key talent manage one more client? Two more? Or are you running too hot and need to staff up to avoid retention issues?

Whatever the case, resist all or nothing thinking when it comes to benchmarking or the underreported metric practices use more frequently than they’ll admit to their peers when it comes to the size of a book of business…how much people are crying.