A fast-growing intervention firm seeks treatment from FSB's experts.
ST. PAUL (FSB Magazine) - The emergency phone is ringing on a Thursday afternoon at Addiction Intervention Resources (AIR), a St. Paul firm (http://www.addictionintervention.com) that specializes in substance-abuse treatment. A counselor picks up. On the line is a woman, her voice soft, her accent Southern. She does not offer her name, only that she lives in Texas and that she is the mother of a 19-year-old whom she suspects is addicted to alcohol and possibly cocaine.
Her son is a college freshman, she says, but recently dropped out of school. He now spends most days sleeping and most nights hanging out with a new set of friends she suspects are stoners. When her son is not locked away in his room, he is grumpy and combative. He won't look for a job and shows no interest in returning to college.
The AIR counselor listens to the Texas woman's story, all the while putting together his own. He figures that the caller is middle-aged, educated, upper-middle-class--all of which translates to a positive "ability to pay." The counselor labels the case "hot," a notation reserved for callers who can probably afford to write a $6,000 check for AIR's services.
He takes her name and number and suggests a conference call with other family members and loved ones to discuss staging an AIR-led intervention, in which concerned family and friends would try to persuade the young addict to seek treatment. The counselor steps out of his office into the hallway, where he recaps the woman's case to his boss, AIR chief executive Bob Poznanovich, who sips a Diet Coke and listens intently.
"Yes, let's get on this one," says Poznanovich. "The kid's got all the symptoms. He needs some help."
Ironically, folks were saying the same thing about Bob Poznanovich just a few years ago. In the early 1990s Poznanovich, then in his mid-30s, was squandering what looked to be a bright future. Endowed with bravado and brains, the young man from Chicago's South Side was on the corporate fast track, pulling down $200,000 a year as a vice president of sales at Zenith and living at an upscale lakefront address on the city's Gold Coast.
His fortunes started to turn in the fall of 1992, he says, with his first snort of cocaine at a swank cocktail party. He really loved the stuff, and within months his penchant for the white powder was costing him as much as $1,000 a day. His performance at work started to lag, and his relationship with his fiancée began unraveling. Poznanovich's collapse came as a one-two punch: A corporate downsizing at Zenith cost him his job. Around the same time, his fiancée broke off the engagement after losing faith in his ability to beat his drug habit. "I had the world in my hands," he recalls. "I couldn't believe where I ended up."
Fearful that her son was slowly killing himself with drugs, Poznanovich's mother turned to a drug counselor who suggested she confront him. In February 1995, Poznanovich's mother called Hazelden, the renowned treatment center in Center City, Minn., and arranged for his admission. Then she and Poznanovich's brother staged an intervention in her living room. They demanded that he either move out of her home or go immediately into treatment.
Poznanovich checked himself into Hazelden the next day. There he found sobriety and met Andrew Wainwright, an Oxford graduate recovering from heroin addiction. A year later Poznanovich and Wainwright launched a national addiction-intervention company catering to relatives and friends of the estimated 16 million Americans who need--but are unwilling to seek--treatment for addictions ranging from substance abuse to overeating to gambling.
Launched in 2002 with $5,000 of Poznanovich's personal savings, AIR has grown steadily with a fairly simple business model. Customers pay AIR an average of $4,000 for a package of services that includes the intervention and some follow-up counseling after treatment. Clients find AIR through its website and via referrals from treatment centers such as Betty Ford, Hazelden, and Sierra Tucson (none of which offer interventions).
Last year AIR performed 180 interventions in 43 states and five countries. Its revenues rose from $600,000 in 2003 to $800,000 in 2004. This year the company projects sales in excess of $1 million.
In a recent letter to FSB, Poznanovich shared his wish list for AIR. He wants to raise capital to help fund a more aggressive marketing strategy. Family interventions, for example, currently account for 90% of AIR's revenue--60% of that business comes from treatment-center leads and the remainder from its website and word-of-mouth referrals. To expand its customer base, AIR wants to begin selling its services to corporate employee-assistance programs (EAPs) as well as sports teams and schools. The company would also like to start offering awareness programs about the dangers of overeating, steroid abuse, and other addictions.
FSB dispatched three experts to help ease AIR's growing pains. Nance Moeller-Roy is executive director for EAPs and disability services at Cigna Behavioral Health (http://www.cignabehavioral.com) in Minneapolis. Bob Thacker, former president of the advertising agency BBDO Minneapolis, is an independent marketing specialist. Jonathan Webb is a managing partner with Duff & Phelps (http://www.duffllc.com), a Chicago-based investment-banking firm.
Webb starts off by poring over AIR's financials. He applauds AIR's strong revenue growth--a 33% jump from 2003 to 2004--but questions why the firm's overhead rose 93.5% during the same period. Poznanovich explains that AIR's seven interventionists are paid on commission, which ranges from 25% to 40% of fees, depending on their seniority. "We've got a very experienced, effective staff," Poznanovich says. "We need to pay them what they're worth."
Webb balks at this reasoning. "You need to start looking at your variable costs," he says tersely. "There's no way your staff should be taking 40% of the revenue. I can understand that you needed to offer a really good deal to hire your first group of employees. But now you've got more credibility, more time in the market. Some people on staff are making six figures as part-time workers. You've got to stop letting them suck the money out of the business."
Poznanovich scratches his head. "I hear what you're saying, but cutting their commission would not go over well at all," he says. Webb nods. "I'm just saying that you'll never achieve any scale offering this kind of compensation," he insists. "You've been loyal to them. Now it's time for them to be loyal to you."
AIR's goal should be to move from its hugely expensive variable-compensation strategy to one that gives employees incentives to help the company grow. One obvious way to align the interests of the staff with those of AIR would be to make the most valuable employees shareholders in the company. The shares would not be liquid, given that AIR is a closely held company, but they could be valuable in the event of a sale or an IPO.
AIR might also make better use of its crisis call center. Poznanovich concedes that AIR's operators are working at about 50% of their capacity. But he isn't sure how to keep them busy when the phones aren't ringing. "Your growth strategy should include reaching out to schools, churches, and medical practices," Webb replies. "Use your call center folks to push these centers of influence during their downtime."
Webb closes by posing a question to Poznanovich: "If you had an unlimited checkbook, what companies would you buy?" Poznanovich shakes his head and glances over at Wainwright, who shrugs his shoulders. Webb looks surprised. "Look, I know you have been focusing on organic growth, but you'd be a lot more interesting to a company like ours if you were operating from a larger platform. Continuing care for addicts is the market you're in. Intervention is one of your products, but not the whole company."
Health-care expertnance Moeller-Roy is quick to interrupt Poznanovich's lengthy PowerPoint presentation on AIR's growth opportunities. "I think I get it," she says politely. The biggest challenge for AIR, she continues, is reaching those who want to help an addict recover and can pay for treatment. Waiting for hotline calls and referrals is too chancy, she says. Instead, AIR should tap the large and more dependable market of corporations that offer EAPs for workers with substance-abuse and other personal problems.
Poznanovich agrees. "It's hard going after families who are struggling financially themselves," he says. "Companies are the golden egg for us."
"The catch is that most EAPs don't reimburse for in-patient substance-abuse treatment or for interventions that lead to such treatment. And the whole concept of intervention is controversial among insurers and health-care providers. AIR stands little chance of cracking the corporate market if it continues to position itself simply as a provider of interventions. "Unfortunately, there are questions about whether intervention really works," says Moeller-Roy. "Some still view it as a kind of exorcism."
But there is no reason for AIR to think of itself simply as an intervention company. Its professional staffers are mostly college-educated, certified drug and alcohol counselors with at least 4,000 hours of practice under a supervising mentor. Moeller-Roy suggests that Poznanovich leverage this deep expertise to expand AIR's business model. Instead of marketing itself mainly as an intervention service, AIR should consider providing services that insurers will cover, such as workplace reentry or long-term follow-up treatment.
Such services will appeal to companies struggling to curb runaway insurance costs. Even more, AIR's relationship with EAPs could have the effect of bolstering the firm's intervention business, since EAPs are often a resource for those seeking help for an addicted friend or family member. "EAPs could become a distributor of your product," Moeller-Roy says.
Bob Thacker is a marketing whiz whose claims to fame include Target's "Fun, fast, friendly" campaign. He sits patiently through Poznanovich's PowerPoint, nodding at times and scribbling on a pad. But the consultant's first comment stops the AIR team in their tracks. "Looking at all your market potential reminds me of the old joke about the mosquito in a nudist camp," says the nattily dressed adman. "So many opportunities. Where do we begin? I think focus will be essential to you."
Thacker praises AIR's website as a smart, cost-efficient way to reach customers who value privacy and the ability to conduct pressure-free research before deciding to purchase. He also encourages Poznanovich to tell his personal story of recovery in a book that will bolster his profile as an expert on addiction. Poznanovich lights up. "I've already got a great book idea," he says excitedly. "I've just got to block out time to write it."
Thacker adds that while some may suggest advertising on late-night television, AIR should resist the infomercial temptation because the time slot has become the preferred medium of too many shady doctors, lawyers, and spend-your-money-on-something-you-don't-need products. Thacker advises AIR to stay its course of nurturing relationships with well-known treatment centers such as Hazelden and Betty Ford, because their names lend AIR credibility as well as access to a pool of new customers.
In terms of overall marketing strategy, Thacker says AIR's immediate emphasis should be on defining its "brand essence"--an identity that the world connects to when it thinks of AIR. Poznanovich replies that AIR specializes in addiction-related family crises. After hearing him out, Thacker poses a difficult question about the name of the company. "What does the word 'intervention' get you?" he asks. "The concept of intervention is controversial. AIR is a perfectly good acronym, but at this point in your brand's life, it isn't too late to consider making the 'I' stand for something less confusing."
Poznanovich and Wainwright nod in unison. "We've thought about this a lot, but we can't come up with anything better." "Seriously," Thacker continues, "this is the biggest part of your brand that you need to address." Poznanovich sighs audibly. "Well, then, what do you think it could be?" Thacker resists going further on this. "That's not something we'll be able to resolve here," he says. "But, Vanna, we need a vowel."
Two months after the makeover, FSB checked in with Poznanovich and found that AIR had made several aggressive changes. While interventions for private clients remained his company's core business, Poznanovich was developing a "recovery monitoring" service for corporate clients as part of standard follow-up treatment for physicians, airline pilots, and other licensed professionals. The service will include drug testing as well as counseling.
In an effort to reach new markets for its core intervention business, AIR's call center operators had also started cold-calling family therapists and setting up meetings for them with AIR's interventionists. The firm was advertising its service in 30-second spots ($8,000 per show) aired during Intervention, a new weekly reality program on the A&E network. Poznanovich was working with a literary agent and a ghostwriter on a book proposal that he hopes will get him onto the public-speaking circuit in the next 18 months. The working title: It's Not OK to Be a Cannibal--How to Stop the Addict From Eating Your Family Alive.
Poznanovich recognizes that AIR can't continue to focus narrowly on interventions if it wants to grow. But he isn't quite ready to drop the word "intervention" from his firm's name. "That's not high on my list of all the things we need to do," he says. "For now, AIR will do just fine."
The emergency phone is ringing on a Thursday afternoon at Addiction Intervention Resources (AIR), a St. Paul firm that specializes in substance-abuse treatment. A counselor picks up. On the line is a woman, her voice soft, her accent Southern. She does not offer her name, only that she lives in Texas and that she is the mother of a 19-year-old whom she suspects is addicted to alcohol and possibly cocaine.
Her son is a college freshman, she says, but recently dropped out of school. He now spends most days sleeping and most nights hanging out with a new set of friends she suspects are stoners. When her son is not locked away in his room, he is grumpy and combative. He won't look for a job and shows no interest in returning to college.
The AIR counselor listens to the Texas woman's story, all the while putting together his own. He figures that the caller is middle-aged, educated, upper-middle-class--all of which translates to a positive "ability to pay." The counselor labels the case "hot," a notation reserved for callers who can probably afford to write a $6,000 check for AIR's services.
He takes her name and number and suggests a conference call with other family members and loved ones to discuss staging an AIR-led intervention, in which concerned family and friends would try to persuade the young addict to seek treatment. The counselor steps out of his office into the hallway, where he recaps the woman's case to his boss, AIR chief executive Bob Poznanovich, who sips a Diet Coke and listens intently.
"Yes, let's get on this one," says Poznanovich. "The kid's got all the symptoms. He needs some help."
Ironically, folks were saying the same thing about Bob Poznanovich just a few years ago. In the early 1990s Poznanovich, then in his mid-30s, was squandering what looked to be a bright future. Endowed with bravado and brains, the young man from Chicago's South Side was on the corporate fast track, pulling down $200,000 a year as a vice president of sales at Zenith and living at an upscale lakefront address on the city's Gold Coast.
His fortunes started to turn in the fall of 1992, he says, with his first snort of cocaine at a swank cocktail party. He really loved the stuff, and within months his penchant for the white powder was costing him as much as $1,000 a day. His performance at work started to lag, and his relationship with his fiancée began unraveling. Poznanovich's collapse came as a one-two punch: A corporate downsizing at Zenith cost him his job. Around the same time, his fiancée broke off the engagement after losing faith in his ability to beat his drug habit. "I had the world in my hands," he recalls. "I couldn't believe where I ended up."
Fearful that her son was slowly killing himself with drugs, Poznanovich's mother turned to a drug counselor who suggested she confront him. In February 1995, Poznanovich's mother called Hazelden, the renowned treatment center in Center City, Minn., and arranged for his admission. Then she and Poznanovich's brother staged an intervention in her living room. They demanded that he either move out of her home or go immediately into treatment.
Poznanovich checked himself into Hazelden the next day. There he found sobriety and met Andrew Wainwright, an Oxford graduate recovering from heroin addiction. A year later Poznanovich and Wainwright launched a national addiction-intervention company catering to relatives and friends of the estimated 16 million Americans who need--but are unwilling to seek--treatment for addictions ranging from substance abuse to overeating to gambling.
Launched in 2002 with $5,000 of Poznanovich's personal savings, AIR has grown steadily with a fairly simple business model. Customers pay AIR an average of $4,000 for a package of services that includes the intervention and some follow-up counseling after treatment. Clients find AIR through its website and via referrals from treatment centers such as Betty Ford, Hazelden, and Sierra Tucson (none of which offer interventions).
Last year AIR performed 180 interventions in 43 states and five countries. Its revenues rose from $600,000 in 2003 to $800,000 in 2004. This year the company projects sales in excess of $1 million.
In a recent letter to FSB, Poznanovich shared his wish list for AIR. He wants to raise capital to help fund a more aggressive marketing strategy. Family interventions, for example, currently account for 90% of AIR's revenue--60% of that business comes from treatment-center leads and the remainder from its website and word-of-mouth referrals. To expand its customer base, AIR wants to begin selling its services to corporate employee-assistance programs (EAPs) as well as sports teams and schools. The company would also like to start offering awareness programs about the dangers of overeating, steroid abuse, and other addictions.
FSB dispatched three experts to help ease AIR's growing pains. Nance Moeller-Roy is executive director for EAPs and disability services at Cigna Behavioral Health in Minneapolis. Bob Thacker, former president of the advertising agency BBDO Minneapolis, is an independent marketing specialist. Jonathan Webb is a managing partner with Duff & Phelps, a Chicago-based investment-banking firm.
Webb starts off by poring over AIR's financials. He applauds AIR's strong revenue growth--a 33% jump from 2003 to 2004--but questions why the firm's overhead rose 93.5% during the same period. Poznanovich explains that AIR's seven interventionists are paid on commission, which ranges from 25% to 40% of fees, depending on their seniority. "We've got a very experienced, effective staff," Poznanovich says. "We need to pay them what they're worth."
Webb balks at this reasoning. "You need to start looking at your variable costs," he says tersely. "There's no way your staff should be taking 40% of the revenue. I can understand that you needed to offer a really good deal to hire your first group of employees. But now you've got more credibility, more time in the market. Some people on staff are making six figures as part-time workers. You've got to stop letting them suck the money out of the business."
Poznanovich scratches his head. "I hear what you're saying, but cutting their commission would not go over well at all," he says. Webb nods. "I'm just saying that you'll never achieve any scale offering this kind of compensation," he insists. "You've been loyal to them. Now it's time for them to be loyal to you."
AIR's goal should be to move from its hugely expensive variable-compensation strategy to one that gives employees incentives to help the company grow. One obvious way to align the interests of the staff with those of AIR would be to make the most valuable employees shareholders in the company. The shares would not be liquid, given that AIR is a closely held company, but they could be valuable in the event of a sale or an IPO.
AIR might also make better use of its crisis call center. Poznanovich concedes that AIR's operators are working at about 50% of their capacity. But he isn't sure how to keep them busy when the phones aren't ringing. "Your growth strategy should include reaching out to schools, churches, and medical practices," Webb replies. "Use your call center folks to push these centers of influence during their downtime."
Webb closes by posing a question to Poznanovich: "If you had an unlimited checkbook, what companies would you buy?" Poznanovich shakes his head and glances over at Wainwright, who shrugs his shoulders. Webb looks surprised. "Look, I know you have been focusing on organic growth, but you'd be a lot more interesting to a company like ours if you were operating from a larger platform. Continuing care for addicts is the market you're in. Intervention is one of your products, but not the whole company."
Health-care expertnance Moeller-Roy is quick to interrupt Poznanovich's lengthy PowerPoint presentation on AIR's growth opportunities. "I think I get it," she says politely. The biggest challenge for AIR, she continues, is reaching those who want to help an addict recover and can pay for treatment. Waiting for hotline calls and referrals is too chancy, she says. Instead, AIR should tap the large and more dependable market of corporations that offer EAPs for workers with substance-abuse and other personal problems.
Poznanovich agrees. "It's hard going after families who are struggling financially themselves," he says. "Companies are the golden egg for us."
"The catch is that most EAPs don't reimburse for in-patient substance-abuse treatment or for interventions that lead to such treatment. And the whole concept of intervention is controversial among insurers and health-care providers. AIR stands little chance of cracking the corporate market if it continues to position itself simply as a provider of interventions. "Unfortunately, there are questions about whether intervention really works," says Moeller-Roy. "Some still view it as a kind of exorcism."
But there is no reason for AIR to think of itself simply as an intervention company. Its professional staffers are mostly college-educated, certified drug and alcohol counselors with at least 4,000 hours of practice under a supervising mentor. Moeller-Roy suggests that Poznanovich leverage this deep expertise to expand AIR's business model. Instead of marketing itself mainly as an intervention service, AIR should consider providing services that insurers will cover, such as workplace reentry or long-term follow-up treatment.
Such services will appeal to companies struggling to curb runaway insurance costs. Even more, AIR's relationship with EAPs could have the effect of bolstering the firm's intervention business, since EAPs are often a resource for those seeking help for an addicted friend or family member. "EAPs could become a distributor of your product," Moeller-Roy says.
Bob Thacker is a marketing whiz whose claims to fame include Target's "Fun, fast, friendly" campaign. He sits patiently through Poznanovich's PowerPoint, nodding at times and scribbling on a pad. But the consultant's first comment stops the AIR team in their tracks. "Looking at all your market potential reminds me of the old joke about the mosquito in a nudist camp," says the nattily dressed adman. "So many opportunities. Where do we begin? I think focus will be essential to you."
Thacker praises AIR's website as a smart, cost-efficient way to reach customers who value privacy and the ability to conduct pressure-free research before deciding to purchase. He also encourages Poznanovich to tell his personal story of recovery in a book that will bolster his profile as an expert on addiction. Poznanovich lights up. "I've already got a great book idea," he says excitedly. "I've just got to block out time to write it."
Thacker adds that while some may suggest advertising on late-night television, AIR should resist the infomercial temptation because the time slot has become the preferred medium of too many shady doctors, lawyers, and spend-your-money-on-something-you-don't-need products. Thacker advises AIR to stay its course of nurturing relationships with well-known treatment centers such as Hazelden and Betty Ford, because their names lend AIR credibility as well as access to a pool of new customers.
In terms of overall marketing strategy, Thacker says AIR's immediate emphasis should be on defining its "brand essence"--an identity that the world connects to when it thinks of AIR. Poznanovich replies that AIR specializes in addiction-related family crises. After hearing him out, Thacker poses a difficult question about the name of the company. "What does the word 'intervention' get you?" he asks. "The concept of intervention is controversial. AIR is a perfectly good acronym, but at this point in your brand's life, it isn't too late to consider making the 'I' stand for something less confusing."
Poznanovich and Wainwright nod in unison. "We've thought about this a lot, but we can't come up with anything better." "Seriously," Thacker continues, "this is the biggest part of your brand that you need to address." Poznanovich sighs audibly. "Well, then, what do you think it could be?" Thacker resists going further on this. "That's not something we'll be able to resolve here," he says. "But, Vanna, we need a vowel."
Two months after the makeover, FSB checked in with Poznanovich and found that AIR had made several aggressive changes. While interventions for private clients remained his company's core business, Poznanovich was developing a "recovery monitoring" service for corporate clients as part of standard follow-up treatment for physicians, airline pilots, and other licensed professionals. The service will include drug testing as well as counseling.
In an effort to reach new markets for its core intervention business, AIR's call center operators had also started cold-calling family therapists and setting up meetings for them with AIR's interventionists. The firm was advertising its service in 30-second spots ($8,000 per show) aired during Intervention, a new weekly reality program on the A&E network. Poznanovich was working with a literary agent and a ghostwriter on a book proposal that he hopes will get him onto the public-speaking circuit in the next 18 months. The working title: It's Not OK to Be a Cannibal--How to Stop the Addict From Eating Your Family Alive.
Poznanovich recognizes that AIR can't continue to focus narrowly on interventions if it wants to grow. But he isn't quite ready to drop the word "intervention" from his firm's name. "That's not high on my list of all the things we need to do," he says. "For now, AIR will do just fine." 
