Another example of how businesses (large and small) are pivoting/adapting during COVID-19 in creative ways.
On April 6, Allstate did something the industry had never seen before – they announced they would be returning more than $600M to their customers over the next few months.
The Problem: Large auto insurance companies, such as Allstate, collect monthly insurance premiums from consumers to pay out claims on accidents. But with shelter-in-place orders across the country, there are far fewer drivers on the roads creating far fewer accidents – so insurance companies are finding themselves not paying anywhere near the number of claims they had forecast.
The Pivot: Allstate decided they would refund ~15% of the premiums in April and May for their auto insurance customers. Not only that, but they also announced they would set up payment plans for any of their customers who are struggling financially due to the pandemic without penalties, and they are offering their identity protection product for free for the remainder of 2020.
NOTE: Other auto companies quickly followed suit with their own programs – but I want to highlight Allstate since they took the lead.
Why this is awesome: This pivot works on four key levels:
1) RELEVANCE: Since car insurance is mandatory in 48 states, this isn’t a top-of-mind expense for many consumers – particularly when it’s set on autopay. So, the fact that Allstate’s customers are getting a nominal windfall they were not expecting creates immediate goodwill for the company and reminds people why they made the right choice in auto insurance providers. This is important because…
2) LOYALTY: As much as major industry players will argue their products are not commodities, most consumers probably think the top dozen or so carriers in the auto insurance space are fairly interchangeable (particularly if they’ve never filed a claim). So, with consumers finding themselves at home with some time on their hands, it’s the perfect opportunity to do some comparison shopping. Heck, I might even open some of the mail I receive from GEICO, Progressive, Farmers, etc. that seem to arrive daily.
By coming out early and coming out strong, Allstate proactively reminded consumers why they are the best choice for insurance – and potentially nipped a wave of cross-shopping in the bud. And even if a customer’s existing carrier quickly introduced their own program, Allstate’s move may have given people a reason to consider switching who might not have otherwise. Full disclosure – we’ve been a State Farm family for years, but I’m now wondering if the creators of the Mayhem commercials I love are worth another look.
3) FUTURE AND EXPANDED BUSINESS: By also offering free identity protection for the remainder of the year (as long as you sign up by May 31), Allstate is giving customers a chance to try out a new product – one that may feel more relevant as people spend even more time online over the next few months.
4) SECURING JOBS: Although $600M is a serious amount of money, Allstate clearly isn’t giving EVERYTHING back that they are saving on unfiled claims during the pandemic. But if some of that windfall is also helping to take care of their employees working during this downturn (which 78% of Americans said they want to see from the brands they trust), Allstate will strike another positive chord with American consumers. They haven’t said much about this, but it’s another angle they should be communicating about right now.
So congrats to Tom Wilson and the leadership team at Allstate Insurance for differentiating themselves as a leader in a hyper-competitive industry.
I have a great post planned for next week about a small family business. Do you have another example of a great pivot? Send it my way so I can share it in the future!
Stay safe. Stay healthy. Stay sane.