Profitable Player: Progressive

With such innovations as on-the-spot claims handling, Progressive is practically insuring customer loyalty and profitability.

Imagine walking into a Circuit City prepared to buy an expensive digital camera and being told you could get it cheaper at Best Buy. Sound crazy? If a customer shopping for car insurance calls Progressive, that’s pretty much what happens. For years the company has handed out rivals’ rates to potential customers. In 2002 it began scrolling competitors’ rates — along with its own, even when they were higher — across its home page.


It’s a bold piece of Progressive’s plan to foster long-term customer loyalty. Progressive may lose some customers who opt for lower rates, but CEO Glenn Renwick thinks transparency will keep the rest around. “We hope it establishes a feeling of trust for the company,” he says.

He seems to be getting his wish. The third-largest auto insurer in the United States, Progressive has averaged an awe-inducing 75% annual profit growth since 2001. Still, that growth has been cooling recently. So is Progressive responding by cutting back and battening down? Hardly. It’s rolling out still more customer-focused services, including a test program that lets drivers exchange a totaled vehicle for another of the same or better make, year, and mileage (Progressive does the shopping).

Progressive has long emphasized innovations that transform the customer experience and the efficiency of its operations. Its 2,900-plus immediate response vehicles (IRVs), which the company pioneered 10 years ago, are sent out to accident sites or customers’ homes to assess damage and in some cases pay claims immediately. Renwick says the IRVs — mobile offices for Progressive’s claim representatives — were designed in part to help the customer’s “emotional EKG.” Reps arrive in the IRVs and quickly take care of the details so the accident victim can get back on the road as soon as possible. But the IRVs are more than just reassuring perks for stressed-out drivers. They save Progressive money by reducing costs of vehicle storage and rental cars on the 10,000 or so claims it handles in a typical day.

The result? Happier customers like Dave Meisburger, whose wife was in a car accident a few years ago. Within four hours of her initial call to Progressive, an adjuster had been to their Mobile, Alabama, home, assessed the damage, and cut them a check, right in the driveway. Now Meisburger says he will never leave Progressive. “They could double their rate, and I wouldn’t care. Their customer service means more to me than anything.”

More recently, Progressive has launched and expanded its Concierge Level claims-service facilities, now available in 18 metropolitan areas. Clients bring in their damaged cars, get a beeper and a rental car, and are notified when repairs are done. In addition to saving the customer time and energy, the centers help streamline communications among Progressive, the customer, and the body shop, increasing productivity of inspections and repairs.

“We’re a company that has thought about claims continuously,” says Renwick. “Rather than believing that there’s one breakthrough that gets you to a new utopia of customer service, we’re continuously trying to improve.”


Runner-Up: Walgreens

When you’re dealing with sick customers, flexibility is key. That’s why Walgreens has made healthy investments in customer service over the past 30 years, originating the drive-through pharmacy and pioneering a network for refilling prescriptions at any location. So it comes as little surprise that Walgreens credited much of its 17% second-quarter profit surge to an increased investment in customer service. What’s new? Software that prints prescription labels in 14 different languages, and large-type labels for older patrons. Besides investing in customer-friendly technology, the 103-year-old chain isn’t forgetting the human touch. Walgreens pours more into payroll in stores where performance isn’t peak, increasing the clerk-to-customer ratio; and it recently launched an online training program for all employees. With 19 straight quarters of double-digit earnings growth, the prescription appears to be working. — Danielle Sacks