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Managing Growth at a Pet-Insurance Business – Natasha & Chris Ashton

http://images.businessweek.com/story/09/370/0424_petplan.jpg The British-born married couple moved to the U.S. in 2001 to attend the The Wharton School at the University of Pennsylvania. Shortly after enrolling, their cat, Bodey, became sick. The ensuing $5,000 vet bill forced the couple to move to a smaller apartment and prompted them to look for pet insurance. Their search did not prove fruitful. Even though the pet products industry was booming, pet insurance was practically nonexistent. The Ashtons thought the few available insurance products were overly complicated and restrictive, so they put their business degrees to use and started their own company to fill the gap. Following their graduation, in July 2006, the Ashtons launched Petplan Pet Insurance in the U.S. with coverage for all hereditary conditions for the life of an insured pet. Petplan now insures tens of thousands of pets across the country. Revenues: Estimated $15 million for 2009

Their Story: Anyone who's ever had a pet knows that accidents happen. Take one of our client's dogs, Cooper, an 8-month-old lab, that ran head-first into a mailbox while chasing a Frisbee. He fractured two of his vertebrae, landing him in the ER and his owners with a $12,000 veterinary bill. Luckily, Cooper made a full recovery and we picked up the tab. As a pet health-insurance provider, we are in the accident business. And it was accident, though of a different sort, that made us change our management and operations strategies to be able to handle growth. A year after launching our company, Chris shattered his ankle and broke two ribs. He endured several surgeries and six months of rehabilitation before he walked again. Complications from blood clots sent him back to the hospital twice. This accident could not have come at a more critical time in our business' short history. Demand for pet insurance was huge. By July 2007 we were seeing double-digit growth each month. We were selling policies nationwide, and we needed to expand our operations to accommodate the growth. Though we had built a strong team of 10, like many entrepreneurs, we had trouble delegating responsibility to enable us to push the business forward rather than just focus on the day-to-day tasks. After the accident, our hand was forced: We had to create more structure to enable our team to function in our absence. It was incredibly difficult at first. Chris and I were both hands-on managers. We were used to being in the office, doing everything from designing and marketing our products, to answering the phones and stuffing envelopes, to recruiting. There were many late nights where we would sit on the floor surrounded by hundreds of policies and completed claims that had to be collated and mailed. Often we would work through the night to make sure that everything got out. With policy sales and call volumes increasing at a rapid rate, we were so immersed in the doing that we became further and further removed from the strategic vision that fueled our early growth.


Chris' accident really forced us to rethink the company's organizational structure. For two (British) kids straight out of business school, with no experience of living or working in the U.S. and no experience in the insurance industry, let alone pet insurance, we had achieved a great deal. For instance, the Humane Society of the United States selected us as their exclusive pet health-insurance provider. Landing such a renowned client prompted us to seek clients of similar caliber, to build the strongest foundation possible for our business. And although we also had a number of strong external business partnerships, the accident prompted us to realize we couldn't do it all ourselves. We needed an internal partner who would help us refocus on the bigger picture to continue to drive growth.

ack during our days at Wharton, Chris had met Vernon W. Hill II, founder and retired chairman and CEO of Commerce Bancorp. Hill is known for having put the retail in retail banking, building his company to an $8.5 billion market cap from an original investment of $1.5 million in 1973. He is famous for reinventing retail banking in the same way we wanted to reinvent pet insurance in the U.S., so we approached him for help. Our first meeting took place in January 2008, with Chris still on crutches. Four months later, Chris was finally off his crutches—and Hill was now Petplan's chairman of the board. From the outset, we quickly learned that Hill is not one to procrastinate, and his get-it-done mantra meant the pace of our decision-making increased significantly. We learned to seize the moment. When we were presented with the opportunity for a partnership with a major pet products company, we got on a plane and flew halfway across the country to meet with the execs face-to-face—securing the deal. Prior to Hill's involvement, we would not have moved nearly as fast. In retrospect, that may have lost us a few deals along the way.


With Hill's guidance, we spent more time looking at the business as a whole and got back to discussing and formulating strategy. It was during one of Chris' many hospital stays that we discussed automating document processing. The office was coping remarkably well but only because our team was staying late and working weekends. It was taking three people a day to complete the printing of all of the documents and to mail them out. By automating administrative tasks, we could focus on taking better care of our rapidly growing customer base. When we finally introduced electronic documents three months later, we saw huge cost savings of over 90%. It also enabled us to reallocate resources to customer service, which was an area we had neglected. Additionally, we began to review customer feedback more carefully. Hill showed us that there was still room for improvement in terms of customer service. We had focused our business almost exclusively on building an unmatched product but what we really hadn't accounted for was servicing our customers once we secured them. As we looked at some of the comments we received from policyholders, we realized that all of our efforts had been focused on sales and claims but little or no thought had been put into the day-to-day experience of existing clients. One immediate change was that we extended our hours to cover West Coast business days fully. This small change resulted in an even bigger increase in sales—over 30% in a single month after implementation—and it practically eliminated complaints regarding our opening hours. We also received plenty of feedback regarding the length of our claim form from both clients and veterinarians alike. Upon close review, it became apparent that we could scale our claim form down from three pages to one. This was another small change that had a huge impact. From the client's point of view, completing and submitting a claim was a much simpler process. From an operational standpoint, it reduced the average time it took to assess a claim by 70%. Six months after his accident, Chris and I returned to the office full time. Since then we have continued to see double digit growth each month. Though there are times where we still answer the phones and get immersed in "doing the doing," we have learned that building a strong team and relying on it to handle the daily machinations is the best way forward. Doing so allowsus to continue to build the engine that drives our growth. We have always known that accidents happen. What we have learned since Chris' accident is that it's how you deal with them that really matters. One of Hill's favorite expressions is, "you got paid for yesterday." The accident made us focus on tomorrow. Reprinted from Businessweek.com by Sam Leccima & Shani Leccima

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