Many clients that subscribe to Paychex 401(k) services receive discounts early in the contract. Over time, the company recaptures this revenue by reducing the discounts year by year until eventually eliminating them. This gradual phaseout means discount decisions can get complex fast.
"In the interest of customer retention, we typically avoid removing the discounts all at once, which would result in a sizable price increase for the client," explains Doug Baxter, director of financial operations for Paychex. However, the company's billing software was not designed to accommodate this approach. "The system perpetuates the same discount for a particular client until an employee goes in and changes it. So, in the past, we had a manual process for figuring out how to adjust discounts."
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Meg Waters
Meg Waters is the editor in chief of Treasury & Risk. She is the former editor in chief of BPM Magazine and the former managing editor of Business Finance.
