Progressive Insurance - Progressive updated [Read-Only] · Title: Progressive updated [Read-Only]...
Transcript of Progressive Insurance - Progressive updated [Read-Only] · Title: Progressive updated [Read-Only]...
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
1
Do Not Distribute
Progressive Insurance
Paul Farris & Phil Pfeifer
Progressive Insurance
• How did they become the fifth largest auto insurance company nobody ever heard of?
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
2
Do Not Distribute
Paul Farris & Phil Pfeifer
The Auto Insurance Report 9/6/99
• “Progressive has the most innovative pricing schemes in the auto insurance business. Not through the wizardry of one clever executive, but rather because an army of people are all rowing in the same direction - seeking new ways to differentiate risk.”
Paul Farris & Phil Pfeifer
Progressive Insurance
• Triggers that bring Progressive to mind?• Given the success, why does Progressive
want to change?
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
3
Do Not Distribute
Paul Farris & Phil Pfeifer
Pressures to Change
• Lifetime value of customers (standard versus non-preferred, churn versus margins)
• Pricing edge may be eroding? Others are entering this segment?
• Regulatory climate
Paul Farris & Phil Pfeifer
The Auto Insurance Report 9/6/99
• “Progressive is ahead of the pack in looking for new ways to differentiate its claim product. It will take a long time to match State Farm and Allstate’s ubiquity and customer passion, but Progressive is innovating more and selling its ideas better than anyone else.”
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
4
Do Not Distribute
Paul Farris & Phil Pfeifer
Which are e-business changes? Which help the most?
• Information transparency: Express Quote • Claims processing technology.• Immediate Response: 24 X 7 claims, fast
service, accurate,• Symbols: Progressive Gold Card, other
branding through on- and off-line advertising.
• Multiple channels: Web, 1-800, agents.
Paul Farris & Phil Pfeifer
What are Challenges
• Channel conflict? Can you make multiple channels work?
• Role of advertising, branding and positioning to make new moves successful?
• Competition: new and established?Infomediaries? Is Insweb an opportunity?
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
5
Do Not Distribute
Paul Farris & Phil Pfeifer
Paul Farris & Phil Pfeifer
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
6
Do Not Distribute
Paul Farris & Phil Pfeifer
Paul Farris & Phil Pfeifer
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
7
Do Not Distribute
Paul Farris & Phil Pfeifer
Managing the Transition
• Which steps makes sense to go first? Which are last?
• How (can, should, will) you talk out of both sides of your mouth?
• Take the opportunity to prune less productive retailers, make existing feel better.
• Give them SuperBowl tickets. Step up adv!
Paul Farris & Phil Pfeifer
“Parading on Both Sides of Street”
• Marc Zeitlin faces task of promoting Progressive’s 38,000 agents as ads feature 800 number and Internet site.
• “It’s not secret that agents are not fond of the 800 number” (F. Hammond) “This is an attempt to say we do business both ways.”
• “We’ve got our work cut out..we have to convince agents that our direct channels do not mean less business.
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
8
Do Not Distribute
Paul Farris & Phil Pfeifer
The Auto Insurance Report 9/6/99
• “We listen politely..but the fact remains that many independent agents continue to look warily upon Progressive and its multi-channel distribution strategy. Talk to agents every day, as we do, and you will find a continued undercurrent of concern about what Progressive really plans to do.”
Paul Farris & Phil Pfeifer
Pursuing Web & Existing Channels
• Limit online sales to certain products or markets (Waterford Wedgewood sells special products on the web such as crystal chandeliers).
• Give traditional channel commissions on web sales in their territory. Variations: Clinquesells through Macy’s virtual cosmetics counter and own Web site, certain promotions available only at retail!
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
9
Do Not Distribute
Paul Farris & Phil Pfeifer
Different Strokes
• Use web to provide leads to existing channels, Toyota provides product information, then points to a dealer
• Save web for yourself, Levi tried to keep the cybermarket to itself
• Do your own thing: Nike features button to buy online (full price and shipping)
Paul Farris & Phil Pfeifer
The Auto Insurance Report 9/6/99
• “Progressive is ahead of the pack in looking for new ways to differentiate its claim product. It will take a long time to match State Farm and Allstate’s ubiquity and customer passion, but Progressive is innovating more and selling its ideas better than anyone else.”
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
10
Do Not Distribute
Paul Farris & Phil Pfeifer
CEO of Mid-size Insurance Company
• “The industry is so dominated today by distribution that every time management tries to change something, the system of independent agents promptly kicks management in the groin. “
• “We feel under siege, and yet we think there is real opportunity here.”
• “It’s a great time to be schizophrenic.”
Paul Farris & Phil Pfeifer
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
11
Do Not Distribute
Paul Farris & Phil Pfeifer
• Allstate 1/17/00 announced $1B initiative to build a direct-response sales and service 24 x & capability.
• First “big 4” to do so• Captive agents will be converted to
independent contactor status and 4,000 nonagent position will be eliminated.
• Products will be repriced to compete with GEICO and Progressive.
Paul Farris & Phil Pfeifer
How Fast?• Cannibalize your distribution channels in
stores too quickly and sales are lost.• Move over to the Net too slowly - and sales
are lost.• “This industry is the laggard.” 40% of
insurance companies were “unsure” of Internet plans or didn’t view as important.
• 50% want to buy auto insurance direct.Insweb - as intermediate, low-risk step to going direct ?
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
12
Do Not Distribute
Paul Farris & Phil Pfeifer
Build a Brand
• “ You should have your brand’s message architecture and communications strategy in place before you launch your e-commerce strategy?”
Product Attributes
Product Benefits
Emotional Benefits
Personality
CoreEssence
Success In the Internet Economy,USWeb /CKS white paper, MC1-0006-1, March, 1999: 8.
Paul Farris & Phil Pfeifer
Update: Brand Building
• Progressive chooses “Innovative” positioning.
• $20 million Super Bowl halftime.• They Said it:
Video
Video
Peter Lewis when asked about Progressive spending $20 million on ET Super Bowl advertising:“It was an act of hubris and egomania in which I was very much involved.”
Video
Video
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
13
Do Not Distribute
Paul Farris & Phil Pfeifer
Update: Channel Conflict
• Agents complain about 1-800• Progressive’s Philosophy• Pricing Plans
• Agents sell three policies• Classic (15% commission)• Advantage (10% commission)• Supersaver (7% commission)
• 1-800 priced as Supersaver• Web priced $25 under supersaver.
• New Commercials
Video
Video
Video
Paul Farris & Phil Pfeifer
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
14
Do Not Distribute
Paul Farris & Phil Pfeifer
Paul Farris & Phil Pfeifer
Update: Channel Control
• As many as 50 “mistypes” such as GEIGO.com and ALLSTATES.com send surfers to Progressive’s Express Quote page.
Do Not Distribute
Copyright 2000 Paul Farris and the Darden School
15
Do Not Distribute
Paul Farris & Phil Pfeifer
Update: New Initiatives
• Polaroid to digital
• Personalized Progressive
• Immediate Resolution
• Autograph
Video
Video
Video
Video
Paul Farris & Phil Pfeifer
Progressive Insurance and the Role of the Technology
• Technology-enabled process improvements that add customer value
• Disruptive technologies force reaction from entrenched competitors
• Channel disintermediation, reintermediation, syndication, (communication and distribution)
• Strong brand needed to ensure success of the channel changes.