A retirement plan provider develops a cost-effective model for business growth

The challenge

A top-five U.S. full-service retirement and defined contributions investment only (DCIO) plan provider had been growing steadily for several years, becoming a category leader. As the organization looked to the future, it saw opportunities to extend growth in new segments, as well as a need to protect its large core business. But its existing distribution organization was not positioned to capture this growth or defend against these risks. Its teams were full-service-centric and too reactive. It was clear that a new model was needed to drive growth while controlling operating expenses.

While the company had seen exceptional growth, this was offset by comparable growth in operating expenses. The sales process was inefficient and sales operations were not scalable. The company’s incentives were growing in a nonlinear fashion, with pay increases running faster than the pace of growth.

The solution

ZS collaborated closely with leaders in sales, marketing, relationship management and operations to define distribution priorities. Building from this vision, sales roles were redefined to focus on increased alignment to consultants and intermediaries. Roles were also reimagined for better reach and depth into the DCIO opportunity set through team selling and a dedicated focus on the broader marketplace.

To set up the new sales model for success, ZS helped redesign the entire selling process and restructure operational roles. Changes included a new, unique approach to managing RFPs and consultant inquiries. Coordination among teams was also clarified and better enabled.

ZS moved the organization off of a pure commission-based incentive approach, which contributed to expense inflation and did not align with the company’s business growth goals. In doing so, we introduced a new program that included performance goals as well as qualitative and account management measures to align with business needs.

The impact

• A more productive distribution team: The net impact of the changes was cost neutral to the business. With these process and compensation improvements in place, the organization was able to free enough expense to invest significantly in its growth sectors without raising costs. These investments included an approximately 30% expansion through new selling roles. In the two years following the change, the firm grew new assets by more than 25% and exceeded its new, higher sales goals.

• A better organizational culture: In addition to the financial impact of these changes, they brought the distribution organization closer to the organization as a whole. Where previously many salespeople were seen as “lone wolves,” after working with ZS, there was significantly better alignment and collaboration with the whole business—an essential change in what is an increasingly competitive, institutional-buyer-driven market. As one leader put it, “The changes took friction out of the system, and we’re better off for it.”