Luke Nixon, CIC, President of Nixon & Lindstrom.
MARKETING AGENCY OF THE MONTH
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Luke Nixon, CIC, President of Nixon & Lindstrom. |
Cold calling and lots of small accounts
fuel rapid growth for Nixon & Lindstrom
By Dennis H. Pillsbury
As it approaches its 50th anniversary, Nixon & Lindstrom Insurance of Springfield, Missouri, has grown to become a dominant player in its marketing area. In eight years, the agency has tripled its premium income, moving from the ninth largest agency in Springfield to number two, with nearly $28 million in premium income.
We talked to Luke Nixon, CIC, agency president, about the counterintuitive approach Nixon & Lindstrom has taken to become successful.
Luke’s father, Jerry, started the agency in 1955 as Jerry Nixon Insurance, Inc. It was a one-man show, initially operating out of Jerry’s garage. Jerry was a student of the business, who earned a CIC, CLU and CPCU. He was joined in the business by his sons, Mark in 1981 and Luke in 1985. The agency continued to operate as a well-respected, small agency that provided excellent service to its clients.
Also in 1985, the agency was presented with an opportunity to bring in a successful agent who was looking for a new home. “We were also looking at perhaps expanding ownership outside the family to provide for a more stable perpetuation strategy,” Luke notes. Roger Lindstrom was being sought by several agencies. Jerry, Luke and Mark sat down and decided to offer to change the name of the agency to Nixon & Lindstrom. Luke says that Roger later told him the name change had nothing to do with his final decision. However, as Luke notes, “I have yet to meet a producer who doesn’t have an ego. That was certainly something that we were offering that no other agency was including in the package.”
In 1995, Jerry died suddenly of an aortic aneurysm. Fortunately, there was a funded buy-sell agreement in place, and Mark and Luke were able to buy the shares from his estate. But they now found themselves in charge of an agency at a crossroads. “We sat down in January of 1996 and asked ourselves what we should do,” Luke remembers. “We now owned an agency with about $8 million in premium with a good name and reputation, but we didn’t have a whole lot of depth.”
Luke remembers that they decided on an aggressive approach to grow the agency. “We were trying to have one plus one equal five. We decided to remain straight commission producers and take all the profits and roll them right back into the agency. We used that money to recruit, hire and train a new producer every six months. We also decided that we wanted people without any preconceived ideas, so we looked for people without any insurance background.” Luke says that one area that is ripe for the picking is the hospitality business because the people in that business are used to working long hours that include nights and weekends. “The hospitality business has a reputation for not paying its people very well. If we find someone in that business who wants to control their own destiny … then we have a fit.”
The counterintuitive approach
Luke says, “We looked at the commercial market and it seemed that the focus of our competition was to concentrate on larger businesses and handle the smaller accounts generically. So we decided on a marketing strategy that focused on the smaller accounts. We decided to ‘hit ’em where they ain’t,’” adds Luke, using the words of Baseball Hall of Famer Wee Willie Keeler who used this phrase to explain his .432 batting average, and later ascribed to General Norman Schwarzkoff to explain his tactic of maneuvering around enemy strongpoints.
“We target the $5,000 to $50,000 premium account,” he continues. “We don’t use a service center. We don’t have a small business unit. Our producers are responsible for the account from start to finish. We have support staff to help them out, but the producer bears the ultimate responsibility.”
As a result, “we have dominated the small business marketplace in Springfield,” Luke says. “I really think that the industry has forgotten the adage about dancing with who brung ya.”
Luke adds, “I’d rather have 10 smaller accounts who are loyal and appreciate our efforts than one jumbo account that might leave if it gets a better offer. Small businesses are extremely loyal. And there’s another important point to remember: Some small accounts become big accounts. If you look at who the top accounts in our marketing territory were 10 years ago and who’s there now, most of them have changed. Ten years from now, we’ll have grown with our accounts and could very well be handling some jumbos. We already have our share of six-figure accounts and many of those started out smaller.”
Luke continues, “We’ve also focused on finding loyal companies. We primarily use regional carriers. They’re more sensitive to what’s happening locally and also react more quickly to changes in local market conditions. In addition, they tend to be pretty consistent.”
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From left: Producer Greg Lindstrom, Luke and Partner Roger Lindstrom. |
Overcoming adversity
Luke and Mark were really starting to see their efforts come to fruition when tragedy struck again. Mark died in 1999 at the age of 40. He, too, had an aortic aneurysm. Because genetics could have played a role, Luke faced the possibility of having the same problem. In 2000, he went into the hospital to check things out and wound up having open-heart surgery.
Somehow, Luke continued his aggressive pace. At this point, he had become a full-time trainer, a decision that was questioned by his partner, Roger Lindstrom. “Luke was a record-setting producer and decided to take himself out of production,” Roger says. “It didn’t make sense to me.” The results, however, speak for themselves. Premium income growth has been outstanding, jumping from $11.9 million in 2001 to $23.6 million in 2003. Luke’s vision proved to be correct. And Roger readily admits that Luke’s decision was the “wisest, most visionary decision that anyone could ever have made.”
The new producers started out fast and kept moving. They were expected to make upwards of 500 cold calls the first week. They also had to achieve the CIC designation after six months. The emphasis on education that is evidenced by the requirement to have the CIC designation permeates the agency and involves internal staff as well as producers. “We have an in-house CPCU study group with several people only a few parts away from attaining the designation,” Luke says. “We also have a number of people involved in CIC, CRM, CISR, as well as health insurance-related course studies.”
“I went out with each new producer on every call for the first six months,” Luke says. “At first, I tried to continue my production but quickly realized that something had to give. I decided that I needed to become a full-time mentor if the program was going to work.”
To date, 13 new producers have gone through the training program, including Roger Lindstrom’s son. And Nixon & Lindstrom has defied the odds. In an industry that typically sees a high attrition rate among new producers with well over half leaving before completing the training, Nixon & Lindstrom still has 11 of the new producers working at the agency and bringing in new business. Through August 2004, the agency reported $5 million in new premium production.
The agency writes primarily commercial property/casualty coverages, which account for about 85% of its business. An additional 10% comes from health and benefits. “That’s a relatively new department for us,” Luke points out. “And it’s been wildly successful. The commission dollars are significant in the smaller group market. It’s also an underserved market where group health coverage is especially difficult to find. We have markets and that’s been very helpful.” The balance comes from personal lines, which has been offered primarily as an accommodation. However, Luke notes that the agency now is looking to increase its personal lines production because the agency has found a way to write it profitably. “We went completely paperless in personal lines,” Luke explains. “We also narrowed the number of companies down to three, each of which had to accommodate our paperless approach.” Another cost-saving measure was the move to direct bill on everything.
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Nixon & Lindstrom’s youthful producer team provides an infectious enthusiasm and energy level. |
The CSRs and service staff who comprise the rest of the team that keeps the agency humming and growing. |
Helping grease the wheels
“We realized that in order to be successful with cold calling, we needed to ‘warm up’ the calls by staying in front of everybody,” Luke says. “We have an aggressive television and business publication advertising campaign. The TV ads are strictly image advertising to keep our name recognition high. We advertise early in the morning on news shows and also are heavily involved in sports. We’re on the rotation for Kansas City Chiefs games. They’re very popular in this area. People mention that they see the ads and that’s the best we can hope for. When our producers call, usually the person on the other end of the line has heard of us and heard that we are professional.”
He continues, “We’re also very active in associations for industries in which we have significant penetration. For example, we support the trade shows for propane dealers in a four-state area, as well as shows for water well drillers and specialty contractors in the area.
“We also encourage involvement in civic activities. We encourage everyone at the agency to be involved in community organizations and support their efforts by paying their dues and making sure they have proper time off to participate. Additionally, we contribute to area not-for-profit organizations. And we support golf tournaments sponsored by local area charities with time, money and by providing giveaways.”
Perpetuation
Clearly, Luke knows the importance of a funded perpetuation plan. Currently, there is only one Nixon at the agency and two Lindstroms and there is a funded buy-sell in place. And the future perpetuation plan may include a few more Nixons. “I have eight children,” says Luke. “The oldest just graduated high school and the youngest is two. Clearly, I have to keep working for a while since I will have multiple children in college for 18 years. I’m 38 years old and, with the genetic problem fixed, I’ll be here for quite some time. There’s also a good chance that one or more of my children might want to get into the agency business.”
A fun place to work
Luke concludes, “There’s a real sense of teamwork here. This is the only agency I’ve worked for, so I can’t judge what it’s like at other places, but the CSRs and service staff who’ve come here from other agencies tell me there’s a different atmosphere here. We’re all having fun.
“I attribute that to the fact that there is virtually no middle management here. It’s just me managing 32 people, although we have had to make a few additions so I could remain sane. The other factor is that young people energize the company. We have 13 producers and nine of them are 35 or younger. These young people bring an enthusiasm and energy level that is infectious.
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Nancy Wagner, CIC, Business Manager (standing) is training Sophorn Yim, Commercial Lines CSR. |
“Another factor is the teamwork that has emerged. The staff and producers work together extremely well. I think this may be because the producer really depends on the CSR’s help, especially in the first few years. There’s a high degree of interaction that starts early. The CSRs take a lot of pride in knowing they helped train and mold the producer and the producers, conversely, feel a great deal of respect for the staff.
“I’ve been told by others in the business that I’m crazy to count on a cadre of young producers. They warn me that the youngsters could just leave with the business, especially once they hear that we allow all our producers to vest 50% ownership in their book of business and have a buy-out provision. But that gives them a sense that they own a piece of the pie and I’m naîve enough to think that if I treat them right, they’ll want to stay here. Plus, we’re the most dynamic agency in the area. My job is to help everybody here get what he or she wants, to make it so nobody wants to walk. If I do my job right, then I’ll be able to have everything I want.”
It’s a bold experiment that certainly seems to be working. For that reason, we are pleased to recognize Nixon & Lindstrom as our Marketing Agency of the Month. *