SHIFTING INTO DRIVE

Rough Notes, Dec 2004 by Boone, Elisabeth

Progressive's new brand steers personal auto business toward independent agents

When you think of Progressive Insurance, three words likely come to mind: personal auto giant. Established in 1937, Progressive has employed multiple distribution channels to become the third largest U.S. private passenger auto insurer, with 2003 premium volume approaching $12 billion. Progressive is the country's largest writer of private passenger auto insurance through independent agents; they produce some two-thirds of the company's business.

Consumers who visit the Progressive Web site can choose to purchase coverage direct from the company or through one of its more than 30,000 independent agents. Many of those agents, though, believed that they were being relegated to second class status because not only could customers buy insurance on the Web site, they also could change coverages online with no agent involvement. What's more, agents pointed out, the company's print and broadcast advertising exhorted consumers to purchase coverage direct via toll-free phone numbers or the Internet. Where, these agents wanted to know, was Progressive's commitment to its largest distribution channel?

When agents spoke out, Progressive listened. In late September the company flew 1,200 of its top agents to Las Vegas-without telling them why. As agents arrived at the plush Hotel Paris on the fabled Strip, the suspense mounted as they speculated about why they'd been brought here and what was in store.

They didn't have to wait long to find out. On their first night, agents boarded buses for a secret destination that turned out to be the Las Vegas Motor Speedway. After dinner, engines roared to life for a demonstration stock car race. The winner? A mystery car that amid a burst of fireworks was unveiled to reveal Progressive's exclusive new brand for independent agents: Drive^sup SM^ Insurance from Progressive. The next morning, agents entered a hotel ballroom to the pulsing beat of classic car tunes like the Beach Boys' "409" and Bruce Springsteen's "Born to Run." As the agents took their seats, Progressive launched an elaborate presentation that featured its top executives, agency business managers, consultant Jeffrey Yates, and branding expert David Aaker.

Just for agents

Setting agents apart is what Drive is all about, said Jeff Yates, who served as a consultant during the development of the brand. "Progressive's agency business is now run separately from its direct business," he said. "The company is committed to building a separate agency brand, and tens of millions of dollars will be spent to promote the Drive brand. Referral programs will draw business into the agent's office. The brand is designed to fit in with the agent's brand and the Big I's Trusted Choice® brand." The new brand, Yates continued, "goes to the very core of the company. We hope it will convince you of Progressive's commitment to you and the independent agency system. Progressive is working very hard to earn your trust."

Independent agents are beginning to take back personal lines market share, Yates observed. Independent agents today write 35% of personal auto business in the United States. Representing $144 billion in volume, personal auto is 37% of the entire property/casualty market, Yates noted. "Each additional percentage point of personal auto business independent agents are able to write represents $1.5 billion," he said. "Progressive believes in you and your future; it's time for you to believe in yourselves and take back market share."

Explaining the importance of branding and describing the elements of a successful brand was David Aaker, vice chairman of Prophet Brand Strategy and professor emeritus of marketing at the University of California at Berkeley's Haas School of Business. Each attendee received a copy of Brand Leadership, written by Aaker and Erich Joachimsthaler, chief executive officer of The Brand Leadership Company.

"Brand building pays off," Aaker said. "If you add emotional or 'I feel' benefits to functional benefits, you get a higher response." Aaker shared a quote from brand strategist Scott Talgo: "A brand that captures your mind gains behavior. A brand that captures your heart gains commitment." Progressive's new tagline, Relax, Just Drive(TM), instills a feeling of comfort in consumers, he said, and that in turn can lead to commitment.

It doesn't matter how much a consumer may like and respect Allstate, State Farm, or another direct writer if he or she wants an independent agent, Aaker asserted. "Brand relevance is more important than brand preference. Our challenge is to make the direct writers not relevant to a growing subcategory of the market." Together, he said, the Drive brand and the agency brand "can differentiate and energize you, and help you be relevant. It can change consumers' perception of you and make the competition less relevant." To capitalize on the Drive and agency brands, Aaker said, it's essential that agency staff not only understand the brand but live the brand. The questions are: "Do you understand the brand?" and "Do you care?" The Drive brand, he said, "adds differentiation, energy, and relevance to your brand." The brand demonstrates Progressive's commitment to the independent agency channel, provides separation and clarity with respect to the carrier's direct business, serves as a vehicle to build up independent agencies, and incorporates Progressive's strengths as a market leader, Aaker noted. Coincident with the introduction of the Drive brand, Progressive is rebranding its direct business as Progressive Direct and will operate that segment of its business separately from the independent agent segment.