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Recently spoke with someone who has built a diverse career with stints as a social worker, recruiting/operations, and now, as a B2B salesperson.
The one constant throughout it all is this person has used their superpower of in-person networking to succeed which they’ve found to be a critically important skill to thriving in the world of outsourced HR/payroll.
We’ll dive into their experiences selling a PEO solution, day-in-the-life, and pros and cons for others considering a similar path.
Let’s dive in!
Overview of the outsourced/PEO industry
It can be a huge headache to manage payroll/HR internally which is why PEO companies exist - to offload much of the complex HR work so that businesses can focus on growth.
The term PEO stands for Professional Employer Organization which provides essential services for companies such as payroll, benefits, and compliance.
There are many companies that offer these services, with the most prevalent being ADP, Insperity, TriNet, and Paychex.
At a certain point, bringing HR internally is a must, but from 5 to 100 full-time employees, signing up with a PEO can drive huge benefits to employers and their employees, including:
- Lower healthcare costs & premiums
- Reduced HR overhead
- Mitigated compliance risks
- Improved employee retention
- Better infrastrure for scalability & efficiency
This post will provide a general overview of what it’s like to be a salesperson in the PEO industry without focusing on any one company.
Overview of an Account Executive role in the PEO industry
This is a relationship role, plain and simple. Deals can be long, and with a lot of direct competition in this industry, companies often choose the salesperson & provider they trust the most to handle their delicate and sensitive HR tasks.
One of the biggest challenge with selling a PEO solution is that companies typically look to switch benefit/payroll providers on January 1st or June 1st. Of course, companies can work “off-cycle”, but by and large, these are the big buying windows which means deals can be very “lumpy” throughout the year.
The other thing to note is it typically takes a while to build a network and start closing deals. The salesperson I spoke with said it can take about two years to get on solid ground and become a consistent producer.
At the company they work for, the #1 metric leadership cares about is meeting with potential prospects. As long as you’re an Account Executive hitting those targets, you’re not likely to get let go/fired during that first year.
Some PEO companies provide Account Executives with a geographical territory and others do it by industry i.e. Financial Services, Tech, etc. There are benefits to both types of models but what seems to be prevalent in this industry is splitting commission with peers.
Here are a few examples:
- Geographic territory: You’re assigned Massachusetts but meet someone who owns a business in New Hampshire
- Industry-focus: You’re assigned Financial Services but meet someone who owns/runs a tech business
In both of these examples, you’d likely need to bring an Account Executive into the deal who works the respective industry/territory and split commission with them.
There’s pros and cons with a model like this, and in my opinion, it’s better to be involved in more deals than less!
Day-in-the-life of a PEO Account Executive:
In an industry like this, most companies allow for a lot of autonomy in finding deals. The Account Executive I spoke with makes about 20 cold calls per day and looks to attend up to 3 in-person meetups per week.
They made it clear some of their colleagues are successful by banging the phones all day, where others (like them), focus on building a network of folks from in-person events that either refer business to them or can buy from them directly.
There is so much to learn about this industry so a big part of this job is educating potential customers on the benefits of working with a PEO firm and helping them navigate through sensitive and potentially painful experiences that they’re dealing with. Given they likely lack internal expertise around HR issues, having someone they can trust to provide them advice is huge!
Once you get a customer who is interested in moving forward, you then need to get them through the underwriting period. This can be tricky to navigate (and is essential) because the PEO company would enter into a co-employment relationship with their customer.
Definition of co-employment: Co-employment is a partnership where a PEO and a client company share employer responsibilities, with the PEO handling HR functions like payroll, benefits, and compliance, while the client maintains control over day-to-day business operations.
Underwriting helps a PEO determine risk assessment, workers’ compensation insurance, benefits/compliance, client fit, and financial stability. Once the underwriting process is completed, a PEO will be able to set appropriate pricing and ensure they can provide effective services to their clients.
Once a client is through the underwriting process, they are passed off to a Customer Success to in order to ensure the company (and employees) get properly set up.
Compensation/earning potential
Typically Account Executives at PEO companies can earn similar salaries to an SMB/Mid Market SaaS Account Executive (with higher salaries being awarded to salespeople who have more experience - especially relevant experience or through internal promotions over time).
The salesperson I spoke with said many salespeople can start to earn $200k+ in commission starting their second year (with the highest-earning Account Executives earning more than $1M annually).
Commission models can vary, but at a lot of PEO companies, an Account Executive earns more commission as their customers add W2 employees. Some PEO firms might cut off commission after a set number of years, and others, may offer commission on closed won customers for as long as the customer remains with them.
Pros/cons of working in the PEO industry
Pros:
- A lot of autonomy
- Working with very smart & tenured peers to learn from
- A lot of promotions, strong earning potential, and an opportunity to “run your own book of business”
- Recurring commissions as your clients grow
Cons:
- Slower ramp to start earning a lot of commission
- Lumpy deals - with periods of feast and famine (many PEO companies will set higher quotas during the “busy” season and lower quotas during the slower months
- If you leave the company you leave all commissions/residuals behind (but that’s likely standard for every industry)
- Minimal inbound leads - but there is an opportunity to earn “splits” on deals