Teetering on the edge

Just 24 hours.

Dave Bianconi wouldn’t allow himself any additional time to grieve.

He was devastated by the news: Liberty Mutual, his biggest client, was taking much of its business elsewhere — and it didn’t make sense to Bianconi, president of Westerville-based Progressive Medical Inc.

For almost 10 years he’d provided service to this client — service that was, by all accounts, high quality. He’d received positive feedback from the Liberty Mutual field offices that his company was well-liked and respected, and that customers were very satisfied with his service.

Liberty Mutual was providing most of the eggs in Bianconi’s basket — a deliberate business plan he was following to use one big client to bring success for his company, which coordinates medical services and supplies provided to injured workers through the managed care system.

Now he was faced with the possibility of losing all of the pharmacy business he was providing to Liberty — 45 percent of Progressive’s annual sales. Liberty was responsible for 85 percent of the referrals to the company’s pharmacy division.

“I felt very bad for our staff because they were very dedicated to the service to this company and kind of viewed it as a slap in the face,” Bianconi says. “It took a little time to recover emotionally.

After that first 24 hours, however, he was over the emotional hump and ready to take action. Rather than pull in the reins and wait for the worst, Bianconi took a risk and hired more staff to jumpstart sales to other clients.

With a little luck and some fast work, Progressive Medical didn’t miss a beat. Bianconi didn’t have to lay off a single worker, and the company’s overall revenue has continued to increase, from $17 million at the time of Liberty Mutual’s news in 1999 to about $38 million expected this year.

“Don’t give yourself very much time to cry over disappointments,” Bianconi says, “because you just don’t have time to do that. You just have to have that ultra-positive outlook.”

Breaking the news

Bianconi’s first course of action was to let employees in on the bad news. He met with managers and then with the entire pharmacy department.

“When your company goes through a tragedy or adverse situation, the staff needs to hear it from the owner and not from a second person,” he says.

Still, he knew this news could send shockwaves through the company.

“We went from a future that looked very safe and secure to one that was unknown overnight,” Bianconi says.

Instead of panicking, his staff turned around to support the company.

Sales staff and managers met with Bianconi to try to figure out what went wrong. Based on the positive feedback they’d been receiving from Liberty Mutual, they couldn’t find a single thing to change.

Bianconi says there’s really nothing the company could have done differently. Liberty Mutual executives told him they simply thought Progressive was too small a company to handle their needs.

“I don’t feel it was anything that Progressive did” that caused the loss, Bianconi says. “You could provide the best service in the world, and that does not guarantee you’re going to maintain that business relationship.

“One of the lessons we learned was, when you’re dealing with a large company, there are many factors that go into the equation of doing business with someone, and sometimes you really don’t know the real reason people do what they do,” he says.

Devising a plan

With no apparent need to change the way Progressive serviced customers, Bianconi and his staff decided to focus instead on finding new business.

“I’ve always found that no situation is ever as bad as it seems and that there are solutions for every problem. Once you have outlined the solution and start to work on that solution, all of your fears go away,” Bianconi says. “I’ve found that to be true in any aspect of business.”

So he set out to create an opportunity out of a bad situation.

“The positive face I painted on it was that Liberty Mutual was forcing us to do something we should have done a long time ago, and that is diversify our customer base more than we had,” he says. “So much of our resources and time were spent with Liberty Mutual. We refocused.”

Fortunately for Bianconi and Progressive Medical, the timing of this particular bad news was good.

“Two years earlier, we would not have been as prepared,” Bianconi says.

The company had just staffed its sales positions across the United States; up to that point, Bianconi had relied on Liberty Mutual’s sales staff to refer business to the company.

“We were getting ready to market to other companies because we knew the position we were in was not a really desirable one,” he says of his original business plan.

Calling for quick action

One thing reassured Bianconi: He was confident he wouldn’t lose the business overnight.

“I knew something this large and big was going to take time to make this transition work,” he says.

He also benefited from a stroke of luck. Liberty Mutual decided that, rather than doing away with all of its pharmaceutical business at Progressive, it would simply stop referring new business. Bianconi would keep Liberty’s existing business, but over four phases, he’d stop getting its referrals.

The best news: Those phases didn’t start until May 2001.

Bianconi lit a fire under the members of his newly expanded sales force. He wanted them to take full advantage of the time they’d have before the actual loss took place.

He knew he was going against the grain of what other businesses might do in his situation. Most would scale back and wait to see what happened with Liberty Mutual.

“I said, ‘We cannot let them dictate what our future is. We need to move forward now while we can,'” he says, admitting he knew he was taking a risk by hiring staff.

At the time of the bad news, Bianconi had 70 employees; now there are 103.

“Being in business is a risk, and you must be prepared to make risky decisions. But I look at them as smart decisions,” he says. “Certainly there’s a risk, but that doesn’t mean it’s the wrong thing to do.”

Progressive’s sales staff did, indeed, bring in new business. Now Liberty Mutual accounts for just 30 percent of the company’s referrals, and Bianconi says his goal is to bring in enough additional clients to reduce that figure to 10 percent.

Keeping good face with Liberty Mutual while growing Progressive Medical at such a fast rate has been key to handling the situation, says Rich Jacobs, with whom Bianconi regularly confers on business matters through TEC, an international organization for CEOs.

Jacobs, chair of a Central Ohio TEC group, says Bianconi’s predicament is similar to that of other TEC participants.

“Most of my members, they started out with one really strong company, and then they’ve all pretty much realized they need to have a strategic plan so they’re not so dependent on that company,” says Jacobs, a teacher in Franklin University’s MBA program who is a former consultant and manager for Columbia Energy Systems and former president of companies then known as Brockway Plastics Inc. and National Gas and Oil Corp. of Newark.

Business owners relying on one major client, Jacobs advises, need to keep two things in mind. First, they need to test the relationship with that client every day.

“So much of that is relationship selling,” he says. “If you know the person you’re dealing with is going to be leaving in two years, you need to do something. You can’t wait that two years and see what happens.”

Second, he says, business owners should always have a contingency plan.

“They always have to have a scenario that says, ‘What happens if I lose this client? Would I go out of business?'” Jacobs says. “So, I think they always have to have a scenario — best case, today’s case and worst case.”

The egg basket theory

“One part of the equation I think a lot of people miss regarding putting all your eggs in one basket is to not get complacent and sit back and say, ‘Well I have this business so I don’t have to look for new business,'” Bianconi says. “We never really did that; it’s just that we accelerated our efforts in the possibility of losing that business.

“Liberty Mutual is still our largest customer and they probably will be our largest customer for a long time — I certainly hope so. Somebody has to be your largest customer. They just will not be as large a percentage of our overall business as they previously had been.”

Bianconi, meanwhile, still credits Liberty Mutual with a large part of his company’s success, especially in its early years. The business climate as well as managed care and health care needs keep changing, requiring a response from Progressive Medical to keep up.

“That’s what makes business fun, is it’s not the same year after year after year,” he says. “It does change, and you have to be smart enough to pick up those changes and understand what the customer wants.” How to reach: Dave Bianconi, Progressive Medical Inc., 794-3300, ext. 2604 or [email protected]; Rich Jacobs, TEC, (740) 587-0714

Joan Slattery Wall ([email protected]) is senior editor of SBN Magazine in Columbus.