Progressive’s Social Media Blunder is So Much More Than A PR Problem

My article, Progressive’s Social Media Response Failure Impacts their Share of Voice discusses the failure of the company to really develop a customer-centric business model, while spending millions on ads saying that they have. The problem that their PR debacle exposes is a conflict between corporate irresponsibility and a growing social media consumer voice that are on a collision course.

But Progressive’s social media blunder is more than just a PR problem. It’s symptomatic of the arrogance of capital that runs corporations. If history is any indication, consumers don’t stand much of a chance. This is a shame because corporations employ people.  People want to give brands their loyalty, but are becoming increasingly fed up with slick marketing used to obfuscate the fact that companies aren’t really as responsive to their customers as they should be.

“Corporations are (More Equal Than) People”

It’s a now all too familiar story – big retailers’ lobbying efforts will likely make them exempt from regulation. A Huffington Post article reveals that Walmart, Target And Other Big Retailers Lobbied Successfully For Exemption From SEC Conflict Mineral Rule. As a result, these and other major retailers “may be able to keep the connection between their products and a war-torn African country under wraps.”A rule, finalized by the Securities and Exchange Commission this week requires public companies to disclose whether their products contain “conflict minerals” from the Democratic Republic of Congo.  As part of the 2010 Dodd-Frank financial reform law, the original proposal would have mandated that retailers selling products under their own brand name disclose this. Somehow, they found a loophole for companies that don’t directly manufacture their products!  Jonathan Gold, National Retail Federation vice president for supply chain and customs policy wrote:

It’s very important that a distinction be made between a retailer who is acting as a manufacturer and has control over what is in a product and the vast majority who do not. While retailers abhor the violence in the Congo, compliance with these regulations could still be extremely difficult and there is considerable debate on whether filing reports with the SEC will make any difference.

How about bringing production back to the US? Not likely, since Walmart and other retailers are also spending millions in lobbying efforts to make it easier to expand into India and and to make changes to Indian tax laws.

As discussed elsewhere in this blog, lobbyist organizations recently pressured the Federal Reserve to reduce by half the maximum fee that retailers have to pay to banks on debit card transactions, and that didn’t stop dissatisfied retailers from filing a lawsuit to try to further lower the fee.

So What Should Progressive Have Done?

Progressive was  ill-prepared to respond toMatt Fisher’s viral post ““My Sister Paid Progressive Insurance to Defend Her Killer In Court” in which she wrote that “at the trial, the guy who killed my sister was defended by Progressive’s legal team. If you are insured by Progressive, and they owe you money, they will defend your killer in court in order to not pay you your policy.“

Progressive’s perfunctory social media response (using their advertising mascot Flo’s image) was followed by ironic, untruthful denials essentially calling the blogger a liar. The lies were easily enough exposed when internet users Googled the facts of the case. This episode raises important questions about how an insurer needs to respond to public concerns. Here are some suggestions:

1. Be Transparent: Offer up the full transcripts with a plausible explanation or apology. Instead of relying on word games over the question of whether the Progressive witness was “defending” the guy, Progressive should have been forthcoming about the facts of the testimony. Why did they testify? Were they compelled to do so? Was the testimony damning?

2. Take Personal Responsibility: Rather than provide a faceless response (or in this case, hide behind an advertising character) have the guts to personalize the response with your own name and photo. Provide a human response.

3. Don’t Talk – Demonstrate: Whether or not there was wrongdoing, there was an understandable perception of wrongdoing.  Rather than just express verbal sympathy in a manner that seems perfunctory, actually demonstrate empathy by assuring the public that you are taking immediate corrective action to what may be a problem, and keep the channels open.

4. Implement Systems and Solutions: Progressive lost the suit anyway, so why compound the loss with a loss of brand equity? Every employee today is a brand ambassador. At every touch point, the brand needs to reinforce the brand promise by demonstrating superior service. Everyone needs to be on the same page, and, further, there must be ownership of the customer experience somewhere in the organization. This owner needs to drive better outcomes at every touch point. The organization needs to be introspective and more customer focused. Third party organizations like Gallup can provide metrics that the company can use to improve their customer service at every point of contact.

Today, corporations are increasingly out of touch with consumer needs. Problems of corporate ethics and governance are overwhelming. Marketing plays a crucial role in conveying the service value propositions, but, unless there is organizational commitment to follow through, we are at best selling dreams.  Americans are increasingly sensitive to the facts that show that corporations have failed them, and, even as individuals are increasingly powerless in the face of corporate personhood, consumers can now leverage the power social media to fight back. In a phrase, if you want to increase your share of voice, share of market and profits, don’t just make halfhearted efforts to be customer-centric. Go all in.

Snap! principle of customer-centricity:

don’t just make halfhearted efforts to be customer-centric. Go all in.

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