A new approach to helping employers identify their varying benefit needs
by Elizabeth HalkosMs. Halkos is chief operating officer at Purchasing Power, a voluntary benefit provider of an employee purchase program. She has over 15 years of experience in client relationship development, sales, marketing and product strategy. Visit www.purchasingpower.com
It’s a new benefit world today. Employees expect employers to respond to their needs and with an employee workforce more diverse than ever, employers want advisors’ help to find the right benefit solutions for their companies.
According to MetLife’s 15th Annual U.S. Employee Benefit Trends Study earlier this year, one of the topics employers specifically identified as an area they seek their brokers’ and advisers’ recommendations on is “providing insights on employee needs/desires for benefits.” In 2016, 63 percent of employers sought these recommendations from their brokers and advisors, up 10 percent from 2015.
Customizing Beyond the Generations
The new way to customize benefits is going beyond the generations – using employee profiling based on specific lifestyle and buying preferences. There’s more to customizing benefits than considering age alone. Within the generations there are varying lifestyles and buying preferences that dictate what benefits are important to them. This is especially key for non-traditional voluntary benefits that offer the ultimate customization opportunity to the workforce.
A more personalized, segmented approach to employee benefits conveys the value of the program and yields a greater enrollment rate. Within the generations there are different personas that don’t fit overall generalizations. These unique personas are critical in employee benefits because of the vastly different needs of workforce populations. Brokers and advisers should lean on their benefit partners to do the work for them and customize the marketing because carriers and providers have the data.
Adding another level of segmentation – using eight specific employee personas based on lifestyle and buying preferences – provides a more informed method for employers to offer the voluntary benefits that are important to their workforce.
Looking Within the Generations
A large portion of the population within the three primary generations – Baby Boomers, Generation X and Millennials – fits the average description of that generation and can be classified as “mainstream.” But while they may fall in the same age group of one of those three generations, not all employees fit the overall lifestyle and buying preferences of that generation.
The eight personas that further segment these generations are identified below as Content Boomer, Budget Living, Balanced Bliss, Savvy Starters, Flourishing Family, Urban Crew, Settled in the City and Cultural Mix. In some cases, a segment may transcend into a portion of the next generation. This chart illustrates how the segments line up within the generations.
|Baby Boomers (52-70)
|Generation X (37-51)
|Millennials (16 – 36)
|Content Boomer (52-70)
|Budget Living (37-44)
|Budget Living (34-36)
|Balanced Bliss (41-51)
|Savvy Starters (25-34)
|Flourishing Family (38-46)
|Urban Crew (30-36)
|Urban Crew (37-40)
|Cultural Mix (36)
|Settled in the City (43-50)
|Cultural Mix (37-44)
Benefits by Purpose
The segments’ varying buying and lifestyle preferences dictate the benefits they prefer. These differences are best illustrated in non-traditional voluntary benefit offerings.
Categorizing non-traditional voluntary benefits by purpose helps employers prioritize what to offer. Purposes can be classified as buying and banking options; lifestyle and convenience options; personal care and improvement options; and financial safety nets.
Buying and banking benefits give employees alternative ways to save, spend or borrow. They provide help to employees who are underserved by traditional financing options or who want access to services that aren’t generally available to them otherwise. These options include paycards, short-term loans, employee purchase programs, employee discount programs, credit union and flexible spending accounts.
Lifestyle and convenience benefits allow the employee to take advantage of cost savings that they wouldn’t get otherwise because they are accessing these benefits through their employer. Plus, by paying for these through payroll deduction, they have the convenience of one less bill to worry about. Among the lifestyle and convenience benefits are child care, elder care, pet insurance, auto insurance, adoption assistance, auto insurance, cyber security and identity theft insurance, and legal assistance.
When employers offer personal care and improvement benefits, they show that they care about the whole employee while also encouraging them to be proactive about their physical, mental and financial health. Among the personal care and improvement benefits are financial counseling services, wellness programs, employee assistance programs and tuition assistance programs.
Financial safety nets offer protection from financial crises that can be potentially devastating for employees. Included in this category are home warranty insurance, homeowner’s insurance, identity theft protection and long-term care insurance.
Benefits from each of these categories can appeal to employees of all generations, depending on their priorities and demographics.
Profiling the generations through the eight segments, however, shows a more distinctive differentiation.
Implications for Employers and Brokers
This segmentation isn’t scientific, but it does provide a more personalized view of employee lifestyles and benefits needs rather than lumping them all into one of three generations. It gives insight into the types of benefits the various employee segments believe to be the most valuable.
This segmented approach also can be helpful at benefits evaluation time. At the annual review when employers and brokers look at the benefit program to see what’s working and not working, be sure to evaluate in terms of the total employee population as well as the segments. Are the benefits that these segments say are valuable available through the program?
With voluntary benefits that are paid for by employees, it’s relatively easy to add benefits. When considering new benefit options, take a look at how current benefits line up with what these segments say are important, and look into adding non-traditional voluntary benefits that will make a difference to the workforce.
Organizations that take customization of benefits to heart and embrace further segmentation of the generations will be able to structure their benefits in a way that will attract, retain and engage the talent they need for the future. Brokers and advisors who provide benefit customization solutions not only are proving their value to their clients but are likely increasing their own revenue stream.◊