Deep Medical Insurance Exchange
Mike Chapman has spent about 15 years in health insurance consulting for small businesses and individuals. He is paid partly on a fee basis and partly as a broker, earning commissions from the plans clients choose. Roughly 75 percent of his business, he says, costs clients nothing.
Chapman launched the business in 2001 and went deep into the red, which he describes as typical for startups. He estimates he was 'probably a hundred grand' in the hole that first year, spent mostly on marketing. Income is seasonal: health insurance is bought mostly in the last quarter of the year, so he adds about a half-dozen part-time temporary staff during that period. In 2015 his total revenue was just under $1 million, and he estimated about half of it flowed through to profit.
Chapman says he was one of the first in the insurance space to use SEO, which brought in a lot of early business until rising AdWords prices made paid search less viable. Over time, client referrals took over. He argues that when clients trust an advisor's good heart and attentiveness, they refer others. He also speaks at 60 to 75 business, networking and church groups each year and runs email and web marketing to about 6,000 active subscribers.
Referrals became his most important channel. The model is recurring in nature: a commission on a plan can be modest, often 3 to 6 percent, so growth depends on volume and renewals over many months. In September 2016 he reported about $40,000 in gross monthly commission revenue before marketing and other expenses.
Chapman projected about a 20 percent increase, to roughly $650,000 for 2016. He says the health insurance market is shifting significantly, and he now spends his time curating options for clients as plans enter and leave the market.
- •Referrals compound because trust in a high-stakes, confusing category like health insurance is hard to win and easy to pass along once earned.
- •Commission-based recurring revenue turns a steady client base into an annuity-like income stream, which is why renewals matter more than any single sale.
- •Early SEO gave him a cheap acquisition channel in an underserved niche, and the shift to referrals as ad costs rose shows he reinvested in service quality rather than depending on paid traffic.
- •Seasonal enrollment windows were managed by scaling staff up for the busy quarter, which kept fixed costs low through the rest of the year.
- 1.Build an SEO-driven content presence early in an underserved niche, before competition makes paid search expensive.
- 2.Make client service the core retention and referral engine by following up, staying on top of market changes, and proactively recommending options.
- 3.Ask satisfied clients for introductions, and make referrals easy by staying visible through local speaking at business and networking groups.
- 4.Maintain an email list of engaged subscribers and track active users by recent opens, so you know which relationships are worth nurturing.
- 5.Plan staffing around your buying season, adding temporary support only when enrollment peaks.
Similar Companies
Zoom
$12.0M/moZoom is a freemium SaaS video conferencing platform founded by Eric Yuan in July 2011 after he left Cisco to build a next-generation collaboration solution. The company has grown to 850,000+ paying customers across individual, SMB, and enterprise segments, generating over $12M in monthly recurring revenue with approximately 100% year-over-year growth. Rather than focusing on customer stickiness or aggressive growth targets, Zoom emphasizes customer happiness and organic word-of-mouth acquisition, which has proven highly effective in driving viral adoption.
Plunge
$10.0M/moPlunge is a hardware company that manufactures and sells at-home cold plunge devices. Founded in 2020 by Ryan Duey and Michael after their brick-and-mortar float therapy and sauna businesses were impacted by COVID, the company grew from $270k in first-year revenue to $120M+ ARR in four years. Their success is driven by influencer gifting, organic word-of-mouth, and highly efficient paid advertising (7-10x ROAS on Facebook and Google).
Active Campaign
$4.2M/moActive Campaign started in 2003 as an on-premise email marketing solution built by Jason Vanderboom to fund his fine arts degree. After 10 years and 8 employees generating a couple million in revenue, he transitioned to a SaaS model starting at $9/month. The company now has over 60,000 customers generating over $50 million annually and employs 330 people, growing primarily through organic adoption, partnerships, and focus on the SMB market despite pressure to move upmarket.
NutriSense
$3.3M/moNutriSense is a direct-to-consumer metabolic health platform that pairs continuous glucose monitoring devices with proprietary software analytics and dietitian coaching. Launched in September 2019 with pre-sales in keto and Oura Ring Facebook groups, the company grew from under $1M MRR a year ago to $3.3M MRR today (3x growth), with 15,000-16,000 active paying customers and 170 employees. The business has raised $32M in funding across multiple rounds since a $250K seed in early 2020.
Batch Products
$2.5M/moBatch Products is a bootstrapped SaaS company founded in 2018 by three co-founders (Evo Dragunov and two partners) that provides five separate data and lead generation platforms for real estate professionals and other industries. Starting with Facebook group outreach and affiliate marketing, they grew to 18,000 customers generating $2.5M in monthly revenue ($30M ARR projected for 2021) with 57% profit margins, all while maintaining 100% ownership and adding 100 employees in six months during 2020.