Tien-Tsin Huang: Hey, thanks. Yeah, just to close out the call, John, you mentioned the LTV for the PEO business being attractive. I don’t think I’ve heard that from Paychex all these years. So, can you elaborate on that relative to the ASO or HRO or even if you can’t size it, just the ratio there? Just love to learn more on that.
Bob Schrader: Yeah, I mean we’ve talked about it in the past that certainly when we look across all the different solutions that we offer, the PEO is certainly the highest lifetime value. And as you can imagine, when you start getting all of the — you get into that PEO model and they have — the client has their health insurance and their workers’ comp insurance and their SUI with us and all the different offerings, that’s really our full solution that we offer. You’re getting more hooks into them, and particularly when they have their health insurance with us. If they have their health insurance with us, if they were to leave the PEO, that would be very disruptive for their employees. They may have to get new insurance cards.
They may have to — they might be in a different network, might have to change doctors. So, it’s very disruptive. And so, you get a lot of hooks into them in that model. And as you know, retention is a big driver of lifetime value. So, although, when we’re selling clients, we want to put them in the right model that meets their needs. Ultimately, and that was, as we’ve talked about, one of our strategies this year is to really to go back into that base, get them over into that PEO model, because the economics in that model over the long term are very favorable. And so that’s part of our strategy.
Tien-Tsin Huang: Got it. Yeah. I know the notionals are high, but in my mind, the payroll [indiscernible] payroll business, the retention, [indiscernible] margins are so high, I figured that was also tough competition…
Bob Schrader: Yeah, it’s really the retention that drives it.
Tien-Tsin Huang: Thank you for that.
John Gibson: Yeah. Tien-Tsin, I think it’s a very easy thing. You think about the way we approach it, you got our HCM platform, and you know that on a standalone basis, is a good business to be in. We then add our, what you’d say is ASO, so you add HR professional. Now you got someone advising your business, there’s more value there. We know our retentive natures of that is high. Now you get into adding the insurance. And as Bob said, because we’ve done such a strong job of managing that over the long term, that there’s a predictable health inflation metric, that becomes very attractive in terms of certainty for the clients there. And then you mentioned SUI, you mentioned everything else. So, you’ve got a profitable business on top of a sticky product and so you just keep it there.
And I think the evidence is, both in terms of you look at the national studies, et cetera, is the survivability. Now it, to be fair, tends to be more attractive to larger clients, 20 plus if you will, so they naturally have a higher survivability rate, but the simple fact is what we see is there’s a higher business survivability rate in those that are going with the PEO solution and then they’re staying with us longer and we’re getting all of the flow through and benefit of the HCM and the HR outsourcing margins.
Tien-Tsin Huang: And the CAC is also low because a good chunk of it is still selling into exist. I know you said it’s coming [indiscernible]…
Bob Schrader: Good point.
John Gibson: Good point.
Tien-Tsin Huang: Okay. Very good. Thanks for the education and have a safe end of the year.
John Gibson: Thank you. You too. Okay, I think that was it. At this point, we’ll close the call. If you’re interested in a replay of the Webex of this conference call, it will be archived approximately 90 days on our website. We would certainly want to wish all of you and your families a very safe and happy holiday season. I want to continue to thank you for your interest in Paychex and hope everyone has a great day. Take care.
Operator: Thank you. Ladies and gentlemen, this concludes today’s program, and we appreciate your participation. You may disconnect at any time.
