State Farm is Where??? A customer service disaster.

by John Furgurson on August 12, 2008

By John Furgurson

A couple years ago, when my kids were just 9 and ll years old, the subject of insurance came up at the dinner table. God only knows why.

My kids could recite — and often sing — the slogans of every major insurance company in the country. They had been exposed to so many commercials, they knew ‘em all…

“Nationwide is on your side.”

“Like a good neighbor, State Farm is there.”

“You’re in good hands, with Allstate.”

Prudential. “ Like a rock.”

As a parent, I was aghast. As a branding professional, I was amused, and a bit curious. Why would the insurance companies spend millions advertising on the Disney Channel and on ABC Family? At first glance, it seemed like a lot of wasted exposure.

Then I think about my own experience, and it sort of makes sense.

My parents were insured by State Farm. My wife had a State Farm agent when we got married. It never occurred to me to look anywhere else, and we’ve never had a compelling reason to change.

Insurance is one of those low-interest, out-of-sight-out-of-mind service categories that no one really wants to think about. I’d rather have a root canal than deal with insurance of any kind. And that’s why those early branding efforts are so important… once they have ya, they have ya.

We’ve stayed with the same insurance company for almost 20 years not because State Farm has good service or great rates. Not because we’re loyal to our agent, who lives 120 miles away and never speaks to us. It’s because we absolutely hate the thought of switching.

It’s like brand loyalty by default. Life, auto, home, boat, cabin… We’re all in, and the hassle factor of changing insurance carriers is just too much to even contemplate.

But that was before we ever filed a major claim. Before our little winter disaster.

It always snows a lot in the Oregon Cascades, but January 2008 was crazy. The garage/shop at our mountain cabin eventually collapsed under the weight of 10 feet of heavy, wind-packed snow. It was a total loss, to the tune of about $60,000.

Naturally, we called our agent. Her assistant put us in touch in contact with a claims adjuster, and for the first time, we realize that State Farm is like two separate companies. The independent agents who set up the policies and collect the money have nothing to do with the claims adjusters who pay money out.

For 80 years, State Farm has branded itself as a neighborly, down-home sort of company that would be there for us, if we really needed ‘em. That’s the perception they’ve spent millions to maintain.

The reality, however, is quite different indeed.

The lady who’s supposed to be handling our claim definitely didn’t get the memo about being a good neighbor. In fact, any goodwill that State Farm has built up with us over the years went right out the window with just one claim.

It’s been seven months, and they haven’t even finished cleaning up the disaster area. Our neighbors are not happy. State Farm is going to cover the loss, eventually, but the process has been painful at best. When we called our devoted agent to complain, we got nothing but excuses and second guessing.

I can’t even imagine what the Hurricane Katrina victims must have gone through. The State of Mississippi finally had to sue State Farm to get them to pay the claims due.

Talk about a PR debacle. Instead of looking like a good neighbor, State Farm came out of that storm looking like an evil, corporate giant that could care less about the little people. I’d love to know how much market share they’ve lost since then.

There are two important morals to this saga:

1. When it comes to branding, actions speak louder than words. You have to be very, very careful about promising something in a slogan or ad campaign that you can’t deliver day in and day out. Fifty years ago, State Farm probably could deliver on their promise. But not anymore. Today, State Farm is country’s largest home insurer and in the top 30 on the Fortune 500 list, It’s too big to be a good neighbor.

2. Branding is not just a function of the marketing department. It’s also an operational issue.

State Farm’s operation is totally out of alignment with their brand. The sales side and the claims side are not operating from the same playbook, and State Farm can’t fix their problem by changing their tried and true slogan. They have to change the way their claims division works in order to live up to that slogan. They need to align the experience with the brand promise.

A tall order, no doubt.

Brands have always been about trust, and promises kept. For me, State Farm betrayed that trust. The behavior of one claims adjuster was so “off brand,” I’m ready to start the long and painful process of changing insurance companies.

I think.

If anyone knows of an insurance company that doesn’t operate like two separate entities, let me know. And if there’s anyone out there who works for State Farm and would like to expand on this, please do!)

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