Cost Effective Health Insurance – Mike Schroeder of Roundstone

Mike Schroeder, the President of Roundstone

Mike Schroeder, the President of Roundstone, grew his company’s revenue from $6m in 2014 to $13.4m in 2017, a 122% increase, and now they are on track to hit $17m this year.  

Roundstone provides health insurance solutions for small and mid-size employers that are transparent, flexible and cost-effective.  

In this interview with Eversprint‘s Malcolm Lui, Mike shares how he and his team accelerated their high value sales by:  

  • Solving a big problem for middle market companies: health insurance with rising costs that was also difficult for their employees to evaluate and select.  
  • Educating insurance advisers and employers about how their solution can solve these big problems through their sales force, website, public speaking, tradeshows and their own Medical Captive Forum.  
  • Constantly refining their message for the buying motivators and pain points of insurance advisors, employers and employees. 

Roundstone Interview - (computer generated transcript) (transcribed by Sonix)

Download the "Roundstone Interview - (computer generated transcript)" audio file directly from here. It was automatically transcribed by Sonix.ai below:

Malcolm Lui: Malcolm Lui here. Welcome to the High Value Sales Show of Eversprint.com. Today we're speaking with Mike Schroeder, the President of Roundstone, a fast growing provider of turnkey health insurance solutions for small and midsize employers that are transparent flexible and cost effective. Welcome to the call Mike.

Mike Schroeder: Thank you for having me Malcolm.

Malcolm Lui: Mike. You grew your company's revenue from $6 million in 2014 to $13.4 million in 2017, a 122% percent increase, and now you're on track to hit $17 million in 2018. What's the one thing that allowed your team to achieve this revenue growth over the past four years?

Their solution controls health insurance costs and minimizes the increase.

Mike Schroeder: Malcolm, We're able to control the rising cost of health benefits for employees of middle market firms and that is a circumstance that the middle market is really challenged by. They're seeing their costs double every four years. Our solution our health insurance product is able to control those costs and minimise the increases. And so the fact that we're able to deliver that effectively to the middle market employers with 50 to a thousand employees has really driven our growth

Malcolm Lui: Now we're these companies beating a path to your door to buy your product buy your solution or did your team ethic go out and find them and show them that there was a better way out there.

Mike Schroeder: No interesting. Know we distribute through retail insurance advisers and for a period of time we had to reach out to those advisers and inform them let them know about our strategy to help their clients and then more recently we've had to go out to the employer market and let them know that there are alternatives to the traditional insurance funding approach and that there's a different way where they can basically fund their benefits much like a Fortune 500 company. So we've had to do both things we have we we've had to educate the distributor market and we've done that over the last several years. And then more recently we've started to inform and let the employer market know that they do have a choice in how they fund their health benefits for their employees

Malcolm Lui: So for the employee market when they see that they have alternatives that they can you directly or did you or do they still go through a distributor.

Mike Schroeder: Now we maintain our distributor our retail advisor relationships. And so the employer market would access our solution through their advisor and if they don't have an adviser they're comfortable with or is familiar with our approach then we're able to introduce them to an adviser in their neighborhood that can help them out.

Malcolm Lui: Ok. So to do grow your market and develop it they get the word out to educate your distributors educate employers. What was the biggest challenge your team had to overcome to get to where you are today.

Mike Schroeder: Well like anything that you're selling you need to find out what's important to that buyer and going through a process to find out what is driving the buying decisions of employers. What is driving the decision by the intermediary to introduce solutions to the employers was a process and it took some time was sort of a trial and error. But what we did once we discovered some of that what we call pain or we discovered some of that motivation we were able to more effectively connect the dots for them as to how our solution could respond very well to some of the challenges they were confronting. And that idea of that approach applied to both the adviser distributors we use as well as the employers. But it was really finding out what these employers needed and why they needed it

Malcolm Lui: How did you go about finding out the pain points that you need to do a huge survey of your advisors and your employers and ask them what the biggest challenge was or is it just grassroots speaking to people one on one one percent at a time to figure it out

Mike Schroeder: Was a little bit of both. There's there's no question the best is one on one conversations with with an employer that fits our target market. No no doubt how we speak with them whether that's in a conference setting whether that's in a webinar setting whether it's a survey that kind of all over the board but every chance we have to speak at association meetings or conferences every chance we have to speak to their trusted advisers to get their input that that's what we did. And you know you just learn a tremendous amount and you know quite frankly a lot of it is trial and error where you present your proposal you present your solution you may succeed you may fail but you always follow up to get some feedback as to as to why that decision was made one way or the other

Malcolm Lui: Right. How many how many advisors how many employees do you speak to before you guys finally got it out in

Mike Schroeder: Always still are. We're always talking to him and always trying to make sure we have a good understanding of of what they're trying to accomplish. Know we spoke to thousands and thousands before we even came up with the first couple ideas of what's paramount in their minds and you know and things change too. Over the past several years since we've been offering our our product in the marketplace employee satisfaction and the impact to the employees from rising health care costs and the impact to employees on their on their paycheck has become more and more important to the employers and that's something that we've discovered and come to know over the last couple of years maybe five years ago wasn't talked about as much but today where you have raises for employees going up at a rate of inflation but you have health care costs being allocated out to these employees at you know 10 or 20 or even 30 percent. The financial impact is a hype to these employees is a high priority for any employer especially today in the middle market where there is almost full employment in recruiting and retaining employees is paramount. They better figure out a way to stop shifting these costs to the employees and hurting their their paycheck. And so that that is something. Malcolm we've really just learned in the last year to

Malcolm Lui: Now was a quite obvious or this new pain point is involving pain point. Or is this something that you have to. You get no hints of it and then your team has to put the pieces together and figure out the puzzle.

Mike Schroeder: Now it's pretty obvious if you just mentioned the word health insurance and what are your thoughts on

Malcolm Lui: Okay

Mike Schroeder: Your use today almost any any employer today if you suggest the idea of health insurance and asked for their thoughts. You're gonna hear and one of the top three concerns is the financial impact to their employees

Malcolm Lui: Right.

Mike Schroeder: And

Malcolm Lui: What. What are the other pain points that you see coming into the picture. They're not that big right now but you're hearing it mentioned more and more often

Mike Schroeder: Now we see it evolving where employers want to know how they can make their employees more effective at purchasing health care. They've tried the idea of just raising a deductible or raising a copay on a on a on a service and that kind of consumerism. They thought that financial burden would would drive good purchasing of health care by the employees and that hasn't worked as well as they initially thought. So they're looking for other ways to educate and inform the consumer their employees and their family members and how to purchase health care more efficiently and how to get the most highest quality care at the most effective price in any kind of tool or any kind of solution like round stones that helps them do that. We're finding that as they're having a keen interest in learning more about that

Malcolm Lui: Right now. You provide a portal to your clients where their employees can go into the portal and see what their health care options are

Mike Schroeder: Yeah we have quite a few tools that allow the employees to become better informed how to purchase health care and it's. If you could call it a portal I To me it's just a handheld app that they can place on their phone and that'll let them know the cost of certain care. The quality of the provider which is critically important and then the cost to the employee based on the plan the employer provides to them. All of that available real time. It's all customized for that employee. It's all very confidential to that employee but the key is making sure that that employee is aware of the qualities impact on cost in that making a choice to go to a certain provider to receive care at a certain location will have an impact on what it ultimately costs them that employ. And so making a decision that's well informed at that time is really important and the employer wants to encourage that kind of behavior because ultimately they're the employer is the one who's paying the the bulk of these costs and so making a more educated purchaser and their employee is going to help out that employer. But it's all handheld it's all available on an app on your phone just like any other other the downloadable apps we have today.

Malcolm Lui: Who will. Can you share how many clients you had back in 2014 when you were at 6 million in revenue and how many you're planning to have projected to have by the end of 2018

Mike Schroeder: You know my memory on 14th. Probably not all that great. My my hunch is we were probably at a couple hundred back then but I don't recall precisely today in December of 2018. We're trending right around 500 and we think we add a little more than one hundred a year and we're kind of trending towards one hundred and fifty to two hundred new employers every year.

Malcolm Lui: Four years ago were companies paying a lower price point or a higher price point

Mike Schroeder: Keep in mind our whole strategy is to keep that cost flat.

Malcolm Lui: Okay.

Mike Schroeder: So while our while our customers from five years ago are maybe paying a little bit more at most it's an inflation level increase and quite honestly many of them are paying the same amount they were paying five years ago.

Malcolm Lui: Okay

Mike Schroeder: But that's what that's what they find so attractive. That kind of flat cost increase compares to what they had been doing where it was doubling every four years. So one of the things we'd like to tell employers is in our program every four years you'll have saved enough money off of what you used to be paying. And the increases that you were used to incurring to essentially pay for an entire year for free. So sort of by force if by forgoing a fifth year free.

Malcolm Lui: Yeah yeah

Mike Schroeder: But

Malcolm Lui: I can

Mike Schroeder: Our

Malcolm Lui: See

Mike Schroeder: Customers

Malcolm Lui: That

Mike Schroeder: Think if if if things go the way we typically experience a client's not going to be paying too much more after four years and they were paying when they first bumped into us

Malcolm Lui: Now. They went through the traditional health insurance route on average. You know what's the average annual increase of traditional health insurance for a company.

Mike Schroeder: I think on the low end you're looking at 10 percent in on the higher end twice that

Malcolm Lui: Well yeah so literally after five years your key maintain your current traditional policy and be paying roughly speaking twice as much as five years ago.

Mike Schroeder: Yeah. And when you think about what these numbers are and you know our typical client has a hundred million dollars in healthcare spend. So that means in five years it's going to become two million dollars. And if they run that and they run that on their personnel and they look at what kind of impact that has to their profits with that kind of cost increase I mean it's dramatic and it's that kind of realization and that kind of quote unquote pain in the market that is causing us to to have find some real traction for our solution.

Malcolm Lui: Right. So given that you're roughly speaking your revenue per company that you have on board is about flat your growth this premise coming entirely from just adding more companies to your platform is that correct.

Mike Schroeder: Yeah that's correct.

Malcolm Lui: Right. And when you happen you onboard a new client how long do they stick with you. Have you found

90% renewal rate

Mike Schroeder: We have right around a 90 percent renewal rate. And so most of them the vast majority stay with us. You know four or five years there's really not a finite time. We we lose a customer because they're bought or we lose a customer because they perhaps change an adviser and the adviser isn't familiar with our product. But the vast majority of customers stick with us and you know it would be hard for them to go back to another funding strategy when they've been experiencing flat cost. They just you know and not only that they also are experiencing the information behind why they have flat costs and the choice of going back to another program where they might not get the information to explain their costs and run the risk of those costs starting to increase again. All of that plays very well into a high retention rate of our business.

Malcolm Lui: Yet 90 percent fantastic and essentially they're there with you for 10 years right.

Mike Schroeder: That's

Malcolm Lui: Yeah.

Mike Schroeder: Right.

Malcolm Lui: Good. No. Now when you grew your business your number of customers clients from 2000 from to hunt around 200 in 2014 to five hundred two thousand eighteen. How did your team do that. Was it purely just education. And then these people raise their hand they want to learn more over you. Word of mouth. Was it through some sort of advertising channel. How did you guys

Mike Schroeder: Yes we we did some marketing. A lot of it through our Web site FCO and we have a conference every year where we invite prospects and existing clients and we share best practices and solutions to them to control their costs. And then we have a sales team that's in the field throughout the United States and they're calling on advisors throughout the United States in introducing those advisors to the solution. And then lastly our sales team and our management team are actively involved in speaking throughout the country at different conferences. So a combination of some direct marketing through the through the Web site the Internet and some just old boots in the field approach with the sales side

Malcolm Lui: Write

Mike Schroeder: Really kind of set up to work market

Malcolm Lui: So what is the key adding more advisers to the OR program who can sell your product or more so just get you helping educate the advisors so they would think of your solution more often

Key growth driver is adding more investors who understand their solution, and making employers aware of the Roundstone solution.

Mike Schroeder: Yeah. It's adding more advisors who one certainly understand the value proposition of our funding strategy to believe in it and really lead with it meaning make it a real core piece of their solutions to their customer base. And then lastly it's also making sure the employer market. So we estimate that there's several hundred thousand employers in that 50 employees to 300 or 500 employee sized firms throughout the United States. I would tell you the vast majority almost two thirds of that are completely unaware of a funding strategy that could help them control their costs. And we need to educate those employers more so that when they do sit down with their advisor and usually that only happens once a year unfortunately but when they do sit down with an adviser they can tell them hey I'd like to see the Roundstone solution. I'd like to see the Roundstone insurance product and see how whether or not it can help me. And so we need to not only get more advisers that understand our program and that believe and lead with our program but there's no question that we have a lot of educating forming we need to do in that middle market employer space

Malcolm Lui: Right. Yeah. Have you. What is it. What is their marketing told you in regards to how much of your marketing direct to the companies are resulting in more new business as opposed to your marketing advisors. Which channel which

Mike Schroeder: You know this is a fact. Yeah. This is a poll through marketing as we like to say is a fairly new initiative for us.

Malcolm Lui: Okay

Mike Schroeder: And it's really I can't say we have a good handle on how much of our our new business just yet is attributable to it. You know just back to the envelope we can look at how many inquiries now are coming through our Web site Roundstone insurance dot com or how many calls we get from advisors on a daily basis or weekly basis asking to learn about our program because one of their clients asked to see it so that that those numbers have gone up considerably from a year ago when we started these initiatives directly communicating with the employers. But I can't tell you for sure we've got a good handle. I would say it's probably gone up you know in terms of that kind of volume you know 200 percent. How much of that is carried over into our business. We don't have that tied down just yet.

Malcolm Lui: Right so for 2013 what are your sales and marketing objectives.

Their 2019 objectives: 150 more new employers on their platform, and revenue over $20m.

Mike Schroeder: So we want to add one hundred and fifty new employers and we would like to see our revenue certainly jump up above 20 million dollars. And we have every reason to believe we'll do that

Malcolm Lui: Ok. What's the plan to get there. You're at 500 now so you can add another 150. You're looking to end the year at 17 million. So you're looking at another 3 million to your top line.

Mike Schroeder: Well. We need more of these employers and so these initiatives we've been discussing getting the word out there with our direct marketing to the employers and are we anticipate our conference this year will grow to be over 500 attendees and in May of this year of 19 I should say and our sales team obviously is maturing and their goals and their objectives are increasing as they get better at what they do. We we have launched an initiative called Roundstone a University which is an online learning management system that is focused on training and educating and supporting the advisor markets that they're very familiar with our solution and that's at Roundstone university dot org. And it's free and it's available to them so that they can become an expert in this new funding strategy and deliver the solution to their clients. So you know we're kind of hitting on all cylinders in terms of educating the advisor market introducing the concept to the employer market and informing them of it. And then lastly just continuing with our kind of word of mouth grass roots efforts through the conferences sales team and speaking. So I think hopefully with the combination of those those things those three items we should I'll be surprised if we don't hit our goal.

Malcolm Lui: So you mentioned a conference. Now this is a conference of your own that you organize that your company organizes and hosts. Are you tying up participating other industry events.

Mike Schroeder: No we we hosted we organized and hosted an annual we call it the medical captive forum and it's in May 8th and 9th of each year so May 8th 9th of 2019. And we invite our current customers and we invite prospect's employer prospects and we give them a full day of cost containment strategies that they can take back with them and implement in their health plan. There's no cost to the employers to attend. In fact we pay for their hotel room and it's intended to you know again educate and introduce to future customers how this approach saves them money and then for our current customers it's intended to share with them the latest and greatest ways and ideas of how they can continue to save money on their health benefit costs. We bring in national speakers that are experts in their area of cost containment. It's not a sales focused conference it's an educational focused folks walk out of there not so much with a Roundstone funding strategy you know sales job. They walk out of there saying Whoa I didn't realize that I could do all these things to really have an impact on my employees health benefit cost. And this Roundstone solution allows me to have this control this Roundstone solution allows me to have the information necessary to implement that control. And that's the kind of takeaway we see when we have this conference we've been doing it for three years it's gone from less than 100 people are four years I should say it's gone less from 100 people to 300 people and we fully anticipate we'll have more than 500 attendees this year.

Malcolm Lui: It sounds like a great event in the way you structured it right. It's not a it's not a pitch fest right. I'm here providing value in education and it sounds like Roundstone is more of a soft sell. Barba you know if they wish to implement these strategies were there to help you do it.

Mike Schroeder: Yeah we're at a platform where the funding mechanism that allows these employers to essentially control their costs the same way that Amazon and Berkshire Hathaway and JP Morgan are trying to do today some of those same strategies they're going to hear about and we're going to give them the how tos how to bring it back to their company and implement it in our funding are all were there for us to say we've got the platform or the tool that will allow you to do this

Malcolm Lui: Right now what are your challenges that you see in 2019. What do you wish you could do faster. What do you wish you could do. But you're not. You don't have the manpower at a time to do it is any any part in any piece of the puzzle missing for you.

Mike Schroeder: Well I just would love to be able to accelerate this process of of of introducing and educating the solution and finding those advisors that you know really want to support this approach to the for their clients. And again be able to more frequently and more effectively and more compelling in a more compelling way. Kate with the with the employer market. So we're we're doing it. We're having pretty strong growth and success but you know I just want you to when I hear that there's two hundred thousand employers that fit our target market and we're taking care of only you know less than 1 percent of them today. I really wish I could get that message out there a lot quicker than I am

Malcolm Lui: Right. What's keeping you from from doing that. I mean what you know. Why not have a advertise mint in the appropriate periodical that these 200 employers are looking at. If there is one why not do Google AdWords or linked in advertising to these employers. What's what's keeping you from flipping the switch and reaching out to these guys.

Mike Schroeder: Where we're doing that. You know the the Edwards as you mentioned that the pay per click those are things we're all doing are our projections or our impact is just again. It's in the hundreds right now instead of in the thousands and so I haven't really figured out yet how to make this as you might say go viral in terms of you know if I'm correct and I believe I am that you know this this pain the employers have is is real and our solution addresses that pain. I have to where we need to be more effective at communicating and reaching on because the numbers we're seeing while positive and are well strong. To me it just seems like it's a little bit more viral a little bit more a little quicker than it is. So

Malcolm Lui: Yeah

Mike Schroeder: I haven't quite figured it out.

Malcolm Lui: Well the story is fantastic. I mean essentially for a company is paying a million dollars of health care a year right now for their health care insurance in five years you can add an extra million dollars to their pre-tax bottom line. Right. Just go through your program plus its traditional program. That sounds pretty compelling. And at the same time you mentioned how providing a platform that improves employee satisfaction right. I mean no one likes it. You know very few people like their health care program right is having one that's better than most is a huge plus

Mike Schroeder: No I agree with you. We think it's a great story. It's very well received every time we deliver it and we just we have to get out there and continue to do that job.

Malcolm Lui: For my audience out there who have the companies that fit your profile a property of mine. You mean you recap who your ideal clients are and for those people. What's the best way for them to reach out to your team to learn how they can explore your health care solution.

Their ideal client, and the best way to contact Roundstone.

Mike Schroeder: Well the ideal customer is one that is sitting back and saying there's got to be a different way in terms of how these employee health benefits are being funded. You know whether it's from someone looking to minimize the cost increases or someone frustrated with the lack of disclosure as to what's driving those cost increases or if you're an employer that feels that you have some strategies you like to implement you're not being allowed to that there's no control from your traditional insurance mechanism to help you control those costs. Those are the type of employers that we'd like to talk to. We find that the employers in the middle market have those frustrations and there's not a lot of solutions that help them correct them that that 50 employees to a thousand employees if you will. And certainly from that 100 to 300 is kind of the center of the bull's eye that's kind of our ideal customer. So if you have some of those frustrations over information or control or cost savings you're you're someone we should talk with. And the easiest way to talk with us is we have a Web site Roundstone insurance dot.com. Very easy on there to get in touch with us to send us an email make a phone call and we'll we'll introduce you to the to the idea and how it works. And then if you have an adviser we're happy to work with them or if you want to be introduced to an insurance adviser in your backyard to implement the strategy. We'll do that for you as well. But that's the easiest way just to go around St. insurance dot com and send us a note

Malcolm Lui: Thanks for joining us today Mike and sharing how you accelerated your company's high value sales

Mike Schroeder: Malcolm was great talking with you.

Malcolm Lui: We've been speak with Mike Schroeder, the President of Roundstone, about his company's rapid growth. For interviews with other fast growing high value sales companies, or to learn how we can accelerate your firm's high value sales through automation, visit Eversprint.com.

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