Elevator Pitch: Health.com.au

Elevator Pitch is a regular feature on Lifehacker where we profile startups and new companies and pick their brains for entrepreneurial advice. This week, we're talking with Andy Sheats, CEO of Health.com.au.

In 128 words or less, explain your business idea.

Health.com.au set out to make health insurance simpler and more convenient for customers. The main bugbears for policyholders were difficult to understand policies and confusion over entitlements, spending too much time on hold/in queues, and the inconvenient requirement of submitting forms and hard copy receipts at a branch or by mail.

We solved these problems by providing transparent, easy-to-understand policies that state the fee and entitlements upfront (for example, our Basic65 costs $18.40 a week for full hospital cover and we reimburse 65 per cent of the bill for approved extras up to a set limit) and we let people contact us by phone, online chat, and email. Customers can pay and claim online and even transfer their policy from other insurers paperlessly.

What strategies are you using to grow and finance your idea?

Initially we raised $34 million from a consortium of individual investors and now have a $75 million debt line in place. We use this funding to pay our overheads and sales commissions as we bootstrap.

We sell online on our own site and through health insurance comparison websites like iSelect. Our growth has come from widening awareness of who we are and what we do differently, and also word-of-mouth as the customers from our first couple of years in business spread the love. We need to get really good at highly targeted online advertising and engagement to drive cost effective customer growth through direct sales.

In a couple of years we'll consider an IPO to retire the debt, and fund further growth from our cash flow. The timing of this will correspond with our funding needs and where we're placed in the market in terms of share and stability.

What's the biggest challenge facing your business?

There are a lot of insurance companies out there with a lot of money behind them and a lot to lose, so as a challenger we are constantly picking fights with organisations far larger and scarier than us, and we need to win these. We've found that the best way to do this is to change the rules before the fight, set the context so we can't lose. And just keep fighting so people know who we are and what we stand for.

How do your differentiate your business from your competitors?

We took the time to find out what customers really wanted from a health insurance company. Funnily enough, it's not just decent or even cheap health insurance, but the convenience of being able to make claims quickly and easily and the organisation valuing their custom. Unlike the large corporate health insurers, we consistently deliver great customer service with heart and empathy. Customers care about being treated like a human who really doesn't want to stand in a queue or sit on hold, waiting for someone to serve them.

What one phone, tablet or PC application could you not live without?

Professionally, Evernote. I have never been so organised with meeting notes and follow-ups. I like that they follow me from phone to iPad to my desktop so I am never left wondering. Personally, Snapseed. It makes my very average photos look professional.

What's the best piece of business advice you've ever received?

I paraphrase one of my former bosses, Bob Epstein of Sybase: "Treat your customers like you respect them, and if you don't respect them leave the business before they figure that out."

No business is unassailable and Bob made sure we never forgot that customers could leave. This reminds us to put customer needs front and centre so we never become complacent. Big companies often forget this; the dark days of Telstra showed us what happens when an organisation treats its customers with contempt. In the last couple of years it has been very good about turning that around and for the first time in a while Telstra acts like it doesn't hate us.

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