How the Netflix Model Can Generate Revenue for Employee Benefits Brokers and Consulting Firms
Netflix, which made a name for itself with its on-line video rental concept is slowly disrupting the cable Industry space. They are using the same model that took down Industry giant Blockbuster and as a result, re-invented the movie rental space. What is interesting is that given the uniqueness of the employee benefits marketplace, the Netflix model is being used by consulting firms as a marketing tool to generate revenue.
What makes the employee benefits marketplace unique is that winning business in that marketplace starts with being able to recruit the best talent away from your competitors. So a consulting firm’s main objective is to hire the best talent because the firm that has the best consultants will win more business; just like a team with the best athletes will win more games.
The challenge is that the good consultants are very hard to recruit because they are most likely not actively on the market for a new job and their employer will make it very difficult for them to leave for another competitor. So, to recruit the best talent, consulting firms has to invest a lot of resources in their recruitment efforts (internal recruiters, job boards, social media, and headhunters). Most consulting firms do not have the budget, especially to pay headhunter fees. And in this economy, where they are challenged to do more with less, their recruitment strategy is typically one that is done on an as needed basis and mostly rely on the Internet as a means of saving money on recruitment spend. At the end of the day and because of this recruitment strategy, most consulting firms will not end up hiring the best talent; instead they will have to settle for the best talent that they can find.
The solution is to use a value-based model similar to Netflix. If you look closely at the cable Industry, the big cable providers (DIRECTV, Dish Network, Comcast, etc) are all offering to everyone, hundreds of channels of junk programs – with a heavy concentration of commercial advertisements. This model has a short shelf life not just because of the price, which is ridicules, but because it diminishes the customer experience. It forces their customers to record programs of interest; which is the only way customers can view their favorite shows at the times that are most convenient for them and have the ability to fast forward through the unwanted commercials.
Compare that to the Netflix; they offer more quality programs at a lower cost; easier access-customers can view programs at their convenience and without commercial interruptions. That is why the Netflix’s stock price continues to rise; they are offering more value to customers than the traditional cable giants.
How does that compare to recruiting?
The traditional recruitment model today is all about capturing good resumes fast, easy and cheap. How do you capture resumes? You advertise jobs on the Internet and you do this through the resume giants (LinkedIn, Monster, CareerBuilder, etc)
The problem with the Internet is that it has a very wide reach. Why is having a wide reach a problem? It’s a problem because the ads on the Internet tend to attract too many people with the wrong skills and very few with the right skill-set. The resume giants are all selling to you and your competitors the same junk resumes just like the programs the cable giants are selling to you. Junk resumes diminishes the customer experience because the customer has to invest more resources in weeding out and screening unqualified applicants prior to investing more valuable time interviewing those applicants.
The Netflix recruitment model is one where the consulting firms recruit qualified talent directly from the database of a headhunter who specializes in the benefits Industry.
What are the advantages of recruiting from the headhunter’s database compare to advertising jobs with the resume giants and how can consulting firms use the services of headhunters and save money on headhunter fees?
To answer that question, one needs to know how the headhunters recruit. Headhunting is a very mysterious profession. Since most do not understand what headhunting is, they are led to believe that headhunters simply advertise jobs and forward the best resumes. Based on “24 years a Headhunter” let me tell you the secret.
The headhunters’ secret for recruiting the best talent is to build relationships with the individuals you would like to recruit before you attempt to recruit them. The best headhunters recruit on a continuous basis. And after years of recruiting consultants, they have developed a database of only the qualified candidates. Because of their relationship, the individuals in the headhunter’s database are easier to identify, easier to approach and are more qualified that just another profile on LinkedIn. Since they are hands-on, the headhunters know who the best talents are, the hardest workers, the slackers, and the good one that are below the radar screen in the talent community. They are in a better position than LinkedIn to identify the one that is right for your job.
How can consulting firms save money on headhunter fees? They need to develop a strategic alliance with an Industry headhunter. Through that collaborative relationship, instead of paying the standard placement fee, you only pay for the services that you want/need from the headhunter!
Here are four ways to save money on headhunting fees:
- Advertise your jobs through the headhunter’s database instead of the Internet. Your ad will be seen by only qualified applicants. Which means less quantity and more quality resumes.
- Search the headhunter’s database for qualified applicants instead of viewing misleading profiles on LinkedIn.
- Use the headhunter as a consultant. Instead of paying a placement fee, you only pay a consulting fee which is based on an hourly rate.
- Negotiate small retainers and flat fee placements
The next time you find yourself surfing through hundreds of cable channels hoping to find something interesting, think of all the junk resumes that you might have to surf through to find your most powerful tool for generating revenue.