As more partners launch embedded payroll, they're getting the benefits they expected from putting payroll into more logical homes: revenue. But they're also reporting a few things they didn't expect, too. We didn't think "Embed payroll: expect the unexpected" would be a good tagline, so we did a quick roundup of early reports and decided to share them here.
Our partners typically embed payroll for obvious reasons - to boost revenue and increase retention. Both of these are simple to understand and calculate. For example, platforms can increase or even double annual contract revenue by adding a payroll offering. And we all know how sticky payroll is - it is a critical aspect of any business. Once a company starts using a payroll solution, they are less likely to switch to another provider. We estimate that companies add at least a year to customer retention by adding payroll.
Together, these dramatically increase customer lifetime value, which is one of the essential metrics software platforms track. Higher lifetime value means these platforms can spend more money profitably attracting new customers, invest more into product innovation, and provide more support. These things are a win/win for both the platform and its customers.
A new acquisition channel
[.c-highlighted]One of the first things platforms are surprised to notice is new customer inbounds from businesses searching for a new payroll solution and finding an entire platform instead. [.c-highlighted]Customers in the market for a new payroll solution are more likely to pick a platform that offers this feature. Our partners are surprised that launching payroll can create a new channel or lead source - thus helping to grow the customer base, not just make the existing base more profitable.
Improved win rates
Adding payroll can also help win rates improve. When our partners offer another core business feature like payroll, it creates a competitive edge that allows winning new customers. Businesses are looking for platforms that can do more for them and are attracted to a comprehensive product suite with payroll functionality. With more capabilities, software platforms can differentiate themselves from competitors and offer a one-stop shop for all their customers' needs.
Build a relationship with a new type of customer
The last benefit is the most overlooked and the most exciting: a chance to build a direct relationship with their business's employees. By offering payroll, software platforms gain access to employee data, such as pay rates, hours worked, and tax information. This data is invaluable, as it opens the door to new products and solutions that can help workers. For example, software platforms can use this data to directly offer workers financial services, insurance products, or retirement savings plans.
Furthermore, some of our platforms that serve a specific industry or vertical are excited about the chance to hold on to the relationship with workers when they move between employers. Opportunities here are:
- Allowing seamless job switching
- Offering the ability to create a staffing/talent network
- Driving lead generation by letting workers introduce the partner's platform to new businesses
Building this valuable relationship opens the door to new products and opportunities, and we're excited to see how our partners leverage these relationships to solve problems in their industry.
The results are in: your platform is better with payroll!
When we started Salsa, we knew that giving excellent payroll infrastructure to developers would result in products that reimagine payroll. We're thrilled to see our partners getting all these benefits and more. Please keep us posted with your stories and findings, and if you're just getting started, schedule a demo with us today!
