GOING AGAINST THE GRAIN

Rough Notes, Nov 2004 by Pillsbury, Dennis H

Cold calling and lots of small accounts fuel rapid growth for Nixon & Lindstrom

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."

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.