Rick Chiricosta was frustrated. The president and CEO of Medical Mutual of Ohio was involved in an effort to secure the renewal of a major customer’s group health insurance coverage, and negotiations were at a standstill. The company had lowered its price as much as it could without running the risk of incurring a loss. But the customer was still pressing for a lower price, even threatening to switch to a competitor.
Chiricosta decided the company had done everything it could to keep the customer’s business and advised his staff to hold the line.
“I said, ‘That’s the price of our product.’ If that and the promise of having our 2,000 employees in Northeast Ohio routinely support their business isn’t enough — if they want to move for, say, $50,000 — they should do it,” Chiricosta remembers. “And they didn’t.”
The experience made Chiricosta realize that Medical Mutual holds an advantage that no big national carrier does: The buying power of 2,000 employees in Northeast Ohio and 500 employees in the Toledo area. That realization spawned Mutual Appreciation, a program that encourages employees to patronize customer businesses and gives them an incentive — a drawing for two $50 bankcards every month and to-be-determined prizes at the end of the year.
Since the program’s inception in November 2011, employees have logged $2.5 million in purchases, and because most of Medical Mutual’s clients are local and regional businesses, those dollars have remained in employees’ communities. Chiricosta believes it’s the first program of its kind, and Randy Carpenter, director of corporate communications for the Council of Smaller Enterprises, agrees.
“The program is unique in the way they’ve structured it,” Carpenter says. “There are a lot of companies out there that tout buying local, but Medical Mutual puts their money where their mouth is and actually rewards employees for shopping with their customers.”
Chiricosta shows off the Mutual Appreciation page on the company’s intranet site, demonstrating how employees can view a list of more than 4,000 client retailers and service providers by county or zip code. (The program has been implemented for employees in Indiana, Georgia and South Carolina, although their numbers are far less than those in northern Ohio.)
A search of sit-down and takeout restaurants in Lorain County, for example, yields a wide range of options — everything from Fratello’s in Avon Lake and Strip Steakhouse in Avon to Marco’s Pizza locations in Amherst and Grafton. Employees keep their receipts and log their purchases on the site. A single purchase from a customer (even a pack of chewing gum) enters the buyer’s name into the following month’s bankcard drawing.
The company also encourages Medical Mutual employees to identify themselves to clerks, waiters and managers. Chiricosta improvises a recommended line: “Thank you for being a Medical Mutual customer. That’s why I’m here.”
According to media relations manager Ed Byers, approximately 35 percent of employees are participating in Mutual Appreciation. He points to the wastebasket by the cash register in the company cafeteria — an operation run by AVI Foodsystems, a Medical Mutual customer — as evidence.
“You used to see all kinds of receipts in there,” Byers says. “That thing is empty now.”
June Bailey is one of the more dedicated program participants. A data and reporting analyst, Bailey has spent more than $30,000 with Medical Mutual customers. When it was time to buy a new car, she consulted the Mutual Appreciation page before purchasing a Chevrolet Equinox from Joe Firment Chevrolet in Lorain. And she began picking up grocery items at Discount Drug Marts and lunching once a week at a Winking Lizard location across the street from Medical Mutual’s downtown Cleveland offices. She won a $50 bankcard in January for a $9 Winking Lizard tab. But that’s not why she does it.
“I was going to another restaurant when this program came up,” says Bailey, a Medical Mutual employee for 29 years. “I thought, hey, I’m going to be spending the money anyway. I might as well spend it somewhere where they support us.”
Chris Marhofer, operations manager for four of the six Ron Marhofer automobile dealerships in northeast Ohio, says his Chevrolet, Hyundai, Mitsubishi and Nissan stores have benefited from that way of thinking. He estimates the dealerships have sold 20 to 30 new and used cars to Medical Mutual employees.
“We gave them special pricing because they were part of that group,” Marhofer says. “It was just a pleasure. We had customers who were outside of our normal market area coming in and buying cars from us just because we were [a customer of] Medical Mutual of Ohio.”
He adds that those sales will figure into the dealerships’ decision of whether to stay with the insurer. “It’s a nice perk. Any kind of incremental business is great.”
Chiricosta stresses that he isn’t trying to get employees to spend more money, just rethink where they’re spending it. He admits the program isn’t perfect. At press time, employees couldn’t log on to the company intranet from their homes, a real barrier to planning impromptu shopping trips and nights on the town. Some will not find a specific client retailer — a shoe store, for example — in their immediate neighborhoods or will balk at trying a new service-provider. Others may not see the value of saving and entering receipt totals just for the chance to win a $50 bankcard. Chiricosta plans to rectify the last problem by offering bigger incentives.
“I’m going to put some financial resources behind this,” he declares. “Somewhere along the line, employees who support our customers are going to have opportunities for some significant rewards.”
Although he doesn’t want to favor one customer over another, Chiricosta also talks enthusiastically of staging promotions such as an MMO Bank Month that offers a monetary reward to any employee who opens a new
account at a client bank during that period.
“Suppose that I’m able to sit down with the CEO of one of those local institutions and say, ‘Do you know that 260 Medical Mutual employees opened accounts at your bank last month? Here are the names.’ Can you imagine the impact of that? I really think this could be a game-changer for us.”