As we all settle into this “new normal” and some states are beginning to reopen, the question on everyone’s mind is this: When will business pick back up?


As published previously, ZS has been hosting a consortium of insurers to track how demand is being impacted by COVID-19 (see more on this collaboration in the footnote). We’ve aggregated top-of-the-funnel prospect data across eight employee benefits insurance carriers, and we can look at this data as a reasonable measure of B-to-B demand impact since it spans industry and company size and is a common purchase for most companies.


As of early April, we saw a steep decline across all segments, most pronounced in the small business market. With another two weeks of tracking, we now are seeing some signs of improvement. Below are our updated findings:

  • Small business customer demand is still the most impacted with little gain. In the four weeks ending April 18, new prospect demand from businesses with fewer than 100 employees was down 40% versus the same four weeks in 2019. And they have seen little rebound: The most recent week (ending April 18) was still down 37% over 2019.
  • Large business customer demand might be seeing a recovery. For businesses with over 1,000 employees, demand had fallen from March 22 to April 11, with this segment posting a decline of 21% over 2019. However, the most recent week ending April 18 shows a marked improvement to a 4% decline.
  • We have yet to see definitive differences in demand trends by geography. The impact trend by state is unclear. We didn’t see a trend by timing of the initial stay-at-home guidance, but there is a small correlation to size of outbreak. Looking at the most recent four weeks, states with the most significant declines in total quotes include Michigan and New Jersey, which have fairly large outbreaks. However, states like Louisiana and Massachusetts with similar outbreaks are faring better than most other states in terms of quote impacts across all segments.

The continued depression of small business demand is not surprising—many expect small businesses to be most impacted by the COVID crisis. But we believe the accelerated rate of decline among small businesses has more to do with the unique aspects of the small business buying process than an impact from closure or unemployment at this point, although that could be changing.


In the insurance sector, small businesses tend to follow shorter buying cycles and purchasing is typically done by someone with multiple roles, such as the owner or HR and finance lead, who would likely be more distracted themselves. Further, small businesses are disproportionately represented by smaller, independent brokers, who themselves may be more adversely affected by COVID constraints. According to a LIMRA study, by early April, 84% of insurance agents had implemented alternative work arrangements and 86% had changed the way they communicated with clients. We also know many companies are increasing their retention efforts in the small business market, pushing price freezes and automatic renewals for accounts in this space. This means fewer plans for takeovers in the market.


The large market is more isolated from these trends, which helps explain why we see less of an impact. Large companies are more equipped to work virtually and are less likely to receive the same renewal deals. It’s hard to say at this point if the trough will come back. Was this a just a distraction or an early signal toward a shift in demand?

This data has provided one important point: There is little evidence so far for different impact models by U.S. state, at least that we can predict. Many of our insurance clients have been weighing forecasting, incentive and performance management decisions that would differ based on how a state was affected by COVID. But at least so far it would be hard to tie those decisions to measurable COVID data such as  outbreak size or state restrictions. However, as states reopen and economies start picking up at different paces, we may see differences emerge. We’ll continue to track the implications and report on any trends.


The broader implications, though, could be felt if these trends persist. If small businesses continue to have significant demand impacts while the large market recovers fully, do companies revisit their segment strategy to focus on bigger, more stable accounts? Should others then be more defensive in this space to retain and renew their large accounts with pricing reductions or persistency incentives?


It’s also unclear to us at this time how these changes in demand will impact sold business at the end of the day. What if this drop in volume is actually just representative of a smaller consideration set (perhaps due to distraction or effort)? Moreover, anecdotally we’ve heard that win rates are increasing lately. That trend makes sense—we typically see an inverse relationship between prospects and conversion, whether from higher-quality opportunities or just more hustle from the sales team to win them. A higher win rate could balance much of the demand shifts and reducing quotes could actually help operational efficiency and profitability for companies.


The full impact of this COVID crisis on B-to-B sales is unknown, and we have more questions than answers at this point. We’ll continue to track this, and hopefully we’ll get more clarity as time goes on.