By Dennis H. Pillsbury
”The way you win a client is the way you’ll lose that client,” says John Basten, CIC, CWCA, CRA, risk navigator with The Mid-State Group in Lynchburg, Virginia.
That was a harsh lesson that John learned soon after joining the agency his father had purchased in 1980, which was known since its founding in 1964 as Mid-State Insurance. John started out in personal lines about 15 years ago.
“I sold everything and anything. Things were really booming. I developed a wonderful relationship with GE and was hired by them to do 401(k)s. I was really a jack of all trades and, as my father pointed out, an expert in nothing.”
But all this chasing after new business took time and, since most of the accounts were small, John needed to have a lot of them to succeed. “So I started going after the larger accounts and found that the techniques I had developed to talk my way into the smaller accounts no longer worked. But I was convinced that, if the agency was going to really grow, we needed to land a big account and then other large accounts would follow.
“Well, I finally succeeded or at least I thought so at the time. A business owner gave me the opportunity to quote his business,” John remembers. So he sharpened his pencil and shopped the business around to the agency’s company partners and was able to cut the price for the business while nearly doubling coverage. “I got the business…
“A few years later….
“I lost it ….
“Someone came in with a quote that was lower.” And so was John’s morale.
That was about six or seven years ago.
“My dad was an expert in executive risk. He knew it inside and out. His relationships were built on his knowledge and his ability to help his clients navigate this very tricky area. They had a relationship with him that had very little to do with the cost of coverage. It was all about the value he brought to the equation,” John says.
It was right around that time that John ran across Scott Addis, who, as part of his Beyond Insurance® risk management system, was explaining to agents that they needed to become a unique resource for their clients, to stand out from the herd, to become a “purple cow” in a world that was dominated by herds of brown cows all doing the same thing.
“And we were a brown cow,” John says. “That had to change. Owners and stakeholders in companies all have dreams about what they want to accomplish. We needed to become partners in helping them realize those dreams.
“The first step we undertook was to create a process, Mid-State GPS™ (Growth Positioning Strategies), that focused on five key areas where we could help business owners–safety, HR, finance, wellness, and leadership. Our objective for those businesses was threefold-to decrease costs, increase profit, and create a thriving workplace.
“We also wanted to make clear to our clients and prospects that we were in business to help them deal effectively with risk,” John continues. “Insurance is only one part of that equation, so we determined that we needed to get insurance out of our name. That’s when we became The Mid-State Group, with the cornerstone being our Growth Positioning Strategies. Changing our name was one of the biggest things we did. In the eyes of the people we met with, we were no longer insurance salespeople; we instead represented a risk management and consulting agency that was there to understand and serve its clients.”
The Mid-State Group now serves as an umbrella for a number of entities that have emerged to provide needed services to clients, including: Mid-State Insurance, Mid-State Risk Management, Mid-State HR, Mid-State Safety, Mid-State Wellness, Mid-State Wealth Management, and Mid-State Academy of Risk Management.
The better mousetrap
An idea and a name change can only go so far. Mid-State then had to get out in front of clients and prospects in a manner that showed how it had transformed itself. And that meant getting the right people on board to provide those services that clients needed. It also meant changing the conversation with clients and prospects from one where the insurance product was being sold to one where Mid-State representatives listened to their clients and prospects to find out what their goals were and come up with ways they could help them achieve those goals.
”We talk about growth projections and driving down costs,” John notes. ”We make an effort to get clients and prospects to talk about their problems. And we always bring at least three people to a meeting, usually a risk navigator as well as our director of HR and our director of safety or finance, depending on the type of client or prospect we are visiting. And these are knowledgeable, quality people that we bring to the discussion.
“Our HR person was in charge of 2,000 employees before she joined us five years ago. Our safety director has more than 30 years of experience. Our finance director came to us from the banking industry where he worked with commercial clients with revenues up to $100 million. Our wealth management person is an Accredited Investment Fiduciary AnalystTM, one of only nine in the state of Virginia.”
Turning clients into raving fans
Nothing’s more fun for a business person than an OSHA inspection and the concomitant fines for unexpected violations. Okay, so maybe it’s not really that much fun. But what if a faux inspector who had nearly 40 years of experience who teaches OSHA 10 and 30 classes provided a dry run? That’s Frank Goodwin, director of Mid State Safety.
“I do safety training and inspections for our clients,” Frank reports. “Just recently, I worked with a large car dealership with several garages. I act like the OSHA guy, visiting each site and working up a report. At the end of that process, I present them with that report which includes a delineation of what each violation would have cost them in terms of fines. And then we work with them to eliminate potential problems.
“I also help clients who are having trouble with OSHA. If a client gets a complaint from OSHA,” Frank says, “I will work with them to develop an answer to the complaint and will hand carry that to OSHA and represent the client before OSHA.” A number of Mid-State people accompany Frank on these visits so they will eventually be ready to step into his shoes and provide this kind of service to clients. Needless to say, companies that have gone through this process are happy to recommend Mid-State to their peers.”
Frank also provides one of the group’s most effective marketing efforts. He hosts a bi-monthly radio show called “Ask the Expert” to discuss relevant safety and OSHA topics. And, more recently, he has developed radio public service announcements (PSAs) from his bi-monthly safety blog. These PSAs, called “The Mid-State Safety Minute,” have started appearing on the radio 40 times a month. Frank has completed 10 PSAs and is working on an additional 40.
Human resources is another area where many Mid-State clients are looking for help. ”With the bad economy, HR was seen as expendable by many smaller businesses,” says Ronny Smith, director of Mid-State HR. She says she will step in and “oversee all HR functions for a lot of our clients. There are so many compliance issues and so much training needed in the areas of EEO, ADA, FLSA, IRCA, FMLA, ERISA and COBRA, to name just some of the areas in the alphabet soup that businesses need to be aware of.
“And for employers with 15 to 100 employees who don’t have the wherewithal to hire a full-time HR person, we are there to help them. That’s our sweet spot, but we’re also able to help larger companies that don’t have the time to deal with the plethora of issues (and problems) that can arise,” she points out. “It truly does help us develop a partnership with our clients where we differentiate ourselves from the competition and gives credence to our mission to be ‘beyond insurance.’
In fact,” Ronny adds proudly, “I purposely don’t have my producer license. That way our clients know that I am there to help them and I’m not even able to sell them something.”
Needless to say, companies who have worked with Ronny on their HR issues have developed a nearly unbreakable loyalty to Mid-State.
How many of us are happy with our banking relationship, which, these days, seems to focus on fees paid to the bank and little or no interest (both personally and monetarily) coming back in our direction? Wouldn’t it be nice to have a personal banker? Well, that’s what Jon-Michael Gugliotta was before he joined Mid-State and that’s the service he provides to the agency’s clients. He is director of finance with Mid-State Wealth Management, a unit where his wife, Margaret M. Gugliotta, AIFA, is the director.
Shortly after he came on board in August 2012, Jon-Michael’s first assignment was “to work with a manufacturer that was being bullied by its financial service provider. I went in and spent three weeks scouring over six year’s worth of financial statements, loan agreements, company e-mails and general ledger reconciliations,” Jon-Michael reports. “Once I was up to speed, I met with their financial service provider. The bank quickly realized that it was now on a level playing field and made several concessions to the client that resulted in an immediate savings of $90,000 on loan renewal.”
The manufacturer also was in the process of searching for a new CFO.
“They had been without a CFO for about 18 months and were considering whether they would fill that $150,000 position.” The client has since decided to use Jon-Michael as their outsourced CFO.
Needless to say, a client that has saved nearly a quarter of a million dollars since August is extremely happy with Mid-State.
Interestingly, Mid-State Wealth Management, which focuses on high net worth individuals and 401(k)s, has emerged as the group’s fastest growing sector. In its first eight months, the unit produced more than $200,000 in revenue, with a number of sizable opportunities in the pipeline.
“My father’s experience in executive risk allowed us to realize that smaller firms really didn’t have a handle on maintaining compliance in the areas of employment law and fiduciary responsibilities,” John concludes. “It was through my father’s training that I realized having someone like Jon-Michael on our team could help companies with the financials that will be provided to lenders, thus helping to lower the company’s potential liability. Our consulting in several areas also helps lower a company’s exposure to D&O liability.
“Making the leap to our ‘Beyond Insurance’ model wouldn’t have happened without my father’s expertise in D&O liability (Finance), employment practices liability (Human Resources) and fiduciary liability (Wealth Management). So, in essence three directorships were created because of our understanding of executive risk. Mid-State Wellness and Mid-State Safety were a result of our understanding of workers comp and group health and disability.”
Mid-State exemplifies the entrepreneurial zeal that characterizes successful independent agencies. Rather than sitting back and waiting for opportunities, the group has gone out and created new ones. Areas that a few years ago would never have been considered in the purview of independent agents have been developed and prospered.
It is for this adaptability and focus on service that Rough Notes magazine is proud to recognize The Mid-State Group as our Marketing Agency of the Month.