progressive case analysis

Topics: Insurance, State Farm Insurance, Progressive Corporation Pages: 5 (1974 words) Published: April 15, 2014
Progressive case analysis

I. Introduction and strategy analysis
Over decades operating in a highly competitive environment, the key strategy that makes Progressive the top three in the $165 billion US private passenger auto insurance industry is focusing on innovations and customer satisfaction. Established in 1937, from the beginning, Progressive approached the market with an innovative method by providing customers drive-in claims service and the ability to make monthly installment payments. That, on one hand, appealed more opportunities for people who could not afford paying insurance in lump sum to have their vehicles protected. Besides, it helped Progressive enter the market with competitive advantage to approach more potential customers. In 1957, by positioning the market correctly and understanding all market segments’ potential benefits that had not been realized by competitors, Progressive was willing to take risk to enter the nonstandard segment, which includes drivers with poor driving records or high risk profiles. This strategy, in turn, increased the company’s sales significantly and turned Progressive into a major brand in the insurance industry. The fierce competition of Allstate in the nonstandard market in 1985 and the approval of the Preposition 103 mandating insurance rate cuts of 20% in 1989 caused a crisis at Progressive. The company attempted to reduce cost by firing 1,300 employees. In addition, the efforts in understanding consumers’ perception and behaviors facilitated the company to launch its new strategy called Immediate Response in 1990 with the attempt to build trust in consumers. The main advantage of this strategy was that it speed claims process and increased customer satisfaction when accidents occurred. Immediate Response could be considered as one of the major improvements and transitions of Progressive that could help the company improve customer retention. Facing the intense competition, along with launching Immediate Response, in 1990, Progressive also focused on diversifying its product line by running experiment to write standard policies. The investment in training agents and changing their selling behaviors raised considerably consumers’ awareness of the company’s products in the preferred and standard segments, which consequently increased the company’s revenues significantly. In addition, the introduction of Express Quote in 1993, which provided quotes from the top eight local competitors, turned Progressive into a full line supplier. This approach also helped the company have more chance to sell its products directly to consumers. The invention of Internet in 1995 facilitated Progressive to be the first company in the insurance industry selling its products online. This created competitive advantage for Progressive to compete when the company launched its website to help customers manage their policies as well as increase quoting and policy application processes. Progressive has never stopped innovating in its products. The application of GPS (Global Positioning Satellite) devices in 1998 to track customers’ driving behaviors and the introduction of the new program called TripSense in 2000 helped the company implement usage based charging method. By offering discounts to drivers who got involved into these programs, the company tried to raise consumers’ awareness of the correlation between driving behaviors and risk of accidents. Customer satisfaction has always been the key metric driving Progressive’s strategy over time. In 2000, Concierge Service was launched to serve customers better in case of accidents. Instead of waiting for their damaged cars fixed, customers were now provided an instant replacement car while the repair was done. That way, Progressive could save time for customers and save storage and rental car cost for the company. Not only that, Progressive continued to introduce Total Loss Concierge service, which replaced cars that had been totaled....
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