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State Farm Insurance Collides with Customer Loyalty


There are far too many people in business who like to rant about how today’s fickle customers will turn their backs on companies the second they get offered a better deal. Customer loyalty is dead, they’ll tell you.
Really? Customer loyalty is dead? Then how do you explain Harley Davidson, Apple, Lululemon, Starbucks, Porsche, Callaway and so on?
No, customer loyalty isn’t dead – but there are a lot of companies that reallyjust don’t get it. One of them, I’ve just discovered, is State Farm Insurance. Here’s the story:
My wife and I and our three childrenhave been insured with State Farm for close to 30 years. We all have good driving records, and there have been very few claims. By every definition of the words, we would be classified as ‘loyal customers,’ and ‘profitable customers.’
You can imagineour shock, then, whenour23 year-old accident and ticket-free driver of 7 years wentto buya new car, andwasquoted a rate 30-40% higher thanthe dozen other competitiveinsurance companies we looked into.
Seriously? That, apparently, is how State Farm responds to 30 years ofloyalty.
My daughter wasn’t looking for the cheapest rate, but she was looking for a fair rate. (In fact, we didn’t even consider looking at other companies until the quote came in so ridiculously high.) And ‘fair’ should be the least one should expect from a 30-year-old relationship. After all, who in their right mind would reward that kind of loyalty by sending the very clear message, “we don’t want you.”
But the bean counters and actuaries at State Farm don’t get it. They don’tmake the connection between abusing a young driver, and the ripple effect to that driver’s friends and family. When my wife and I switch to anew providernext week because of how disappointed we are, they will never connect the dots. Like most insurance companies, they choose algorithms over common sense. And they have no realalgorithm for assessing the cost of being disloyal to customers.
The payoff to customer loyalty can’t be understated. But if you want loyalty from your customers, you need to demonstrate your willingness to be loyal to your customers. It’s really not that complicated. But the concept seems to have eluded the grasp of the people at State Farm.

State Farm Insurance Collides with Customer Loyalty
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