So, think of it today we are recording 6.5 million calls with our clients. This year, we are transcribing those call. We are using analytics to determine whether or not we have a service opportunity, or if we have a sales opportunity or an upsell opportunity in the conversations that we are having with our advisors. We are already doing almost 1 million natural language processing and analysis on our sales conversations with prospects looking for what are the right phrases, words, markets, segments where we are winning. And then adjusting that overnight and changing our sales play the next morning. Using some of that in our PEO, we’ve nearly doubled our close rates in the first quarter. I mean, I just could go on and on about where we are piloting and testing and using our data to do this.
And so, I think there are tremendous opportunities. And then, when you begin to productize this and start thinking about the value that we can provide, the Retention Insights, which we launched, I keep bringing this up. We launched this a year-and-a-half ago. We won an award for AI and I think at the time, no one even wrote anything much about it. And because I don’t think any people knew what AI was. And quite frankly it’s — I think that’s just one example of multiple examples we are going to be able to drive more value to customers. And so, I think we are going to be able to go with a value proposition. And to be fair, there’s other large competitors that probably are going to make similar claims, but I certainly think it’s a differentiator.
If you run a local payroll company, you’re not going to have the same data and the insights that Paychex has relative to what’s going on in your area, what’s going on in the labor market. And if we can harness that and use technology to deliver that to our salespeople, our service people and our HR advisors, I think the trusted advisor position that we’ve already established ourselves for small and medium-sized businesses, it’s only going to be further sustained and probably increase. So, I think Bob is going to — has given me the hook to get off the bandwagon. [indiscernible]
Mark Marcon: And then for my follow-up, just a quick question. Just in terms of the margin uplift from the first half to the second half, aside from normal seasonality and obviously float balances, certain forms of processing, is there anything to call out above and beyond that? Is it just pace of investments in the first half being a little bit front-end loaded?
Efrain Rivera: Yeah, I think that’s it. Mark, it’s a couple of things. One is, we — have you noticed the pattern in P&L, pretty obvious, we have attended to front-load a little bit more of spending, in part to make sure that we are prepared for selling season and then as we get into the fourth quarter typically we have heavied up our spending and anticipating — in anticipation of starting the year stronger. Q3, as you know, because you could have that influx of annual processing, generally makes Q3 margins higher and then in Q4, I don’t anticipate it would be quite as heavy as it has been in prior years when you combine those two, you get a little bit more spending in the first half, a little bit less in the back half, but more revenue in the back half, [indiscernible] margin uplift that I mentioned. There’s nothing unusual about it. It’s just the way that revenue and expenses flow through.
Mark Marcon: Terrific. Thanks again, Efrain. I’ll miss working with you.
Efrain Rivera: Yeah, thank you.
Operator: And we’ll take our last question from James Faucette with Morgan Stanley. Your line is open.
James Faucette: Thank you very much. And I want to share my congratulations to Bob and Efrain. Just wanted to quick follow-up question here on PEO, and you had mentioned some of your customers, and I think you’ve kind of talked about this and had pulled back on providing ancillary services like insurance and 401(k), et cetera. But now you’re calling out some growth in those same ancillary services as the driver of PEO growth in the quarter. What are the things that you’re watching for to gauge like the durability of that improvement and kind of response by your customers and employers?
Efrain Rivera: So, James, you mean, what are we looking at…
James Faucette: Yeah, like what are the things in a more macroeconomy or even in your customer behavior to try to gauge and project the durability of that improvement?
Efrain Rivera: Well, let me start, and then John and maybe Bob can weigh in. So, I just want to make sure that I’m answering the question correctly. I think the key thing in — if you step back on the PEO is, we saw that attachment last year where we expected it to be. And also we saw an opportunity to tilt the balance a bit between what was an ASO sale versus a PEO sale. So, what we are looking at, at least to start the year is, first, are we positioned appropriately on the insurance side to be able to take advantage of that, and create momentum as we go into some key points in the year which occur in the fall and then at the beginning of the year on insurance and attachment. But one thing, James, that’s important to point out, last year, when we were talking at this point, we were seeing actually something unusual where we are seeing clients dropping insurance and actually lowering their attachment — I’m sorry, not their attachment, their enrollment.
So, we haven’t seen that start of the year. So, the absence of a negative is a positive. So, I think — that’s one piece. And John called out something, I think, that is important, also that balance between what we are seeing on ASO and PEO that seems to kind of come into a little bit more in balance. So, I think those two things bode — or have started the year well. And…
John Gibson: Yeah, no, I’m trying to understand. So, remember, we’ve got — you’ve got existing client behavior, particularly as it relates to attachment, and again, it’s always difficult because the insurance it’s pass-through, it doesn’t have a huge impact on margin as an oversized impact on the revenue numbers right, because is that the way it works. And so you had two dynamics. One was existing customers that have the product, are they continuing to want that attachment? And then, what are they attaching on? Are they attaching the catalog plan or the basic low value plan? That’s the first decision. And last year, we had something we normally don’t see, and we have not seen thus far through our enrollment of people, as Efrain said, instead of going to a lower plan, dropping and not offering.
