401(k) Provider Improves Distribution Effectiveness

The Problem



A 401(k) provider had recently experienced strong sales results, but was uncertain about how to distinguish between market-driven growth and the performance of its sales team.

In general, the company felt that it could do better, given the amount of money it spent on distribution.

The Solution


ZS conducted a quantitative and qualitative assessment of the company’s product offering, sales organization and the sales planning and goal setting process. ZS also studied the 401(k) market, developing a clear point of view on the market opportunity, plan turnover rates and the company’s performance by customer segment. Through this work, ZS reshaped the way the company assessed its performance, including:

  • Creating a market-driven forecast model to estimate and evaluate the company’s market share
  • Identifying unprofitable areas of marketing and sales spend that could be eliminated
  • Establishing a methodology for setting budgets and goals moving forward

Looking through the lens of market growth and turnover, the company realized that its sales organization was underperforming. It was able to redirect some spend to segments where returns were higher. In addition, the company was equipped with a new approach to business planning for future years.

The Results


By eliminating some of the company’s marketing and sales expense (previously, more than 25% of its marketing and sales spend had been unprofitable), the company was able to reduce its total distribution costs by 10 to 20 basis points (BPS) with minimal impact on asset gathering.