Progressive auto insurance, recently released a new usage-based device called Snapshot®. The device plugs into your vehicle and records certain key metrics such as: how hard you break, your mileage, and how often you drive between midnight and 4 AM. Progressive claims drivers who use Snapshot® can save up to 30% on their insurance policies. So why did Progressive come up with this proprietary device and what’s in it for them?
Innovation and Differentiation
Car insurance agencies have seemingly used the same tactics for decades. Despite, mobile apps and web sites, very little progress has been made in terms of innovative policies. Usage-based policies have been discussed for years and some agencies have tried to promote them. Sadly, usage-based policies never stuck and consumers were left to the same ole things.
What this means to for Progressive is a chance to differentiate itself from competitors. If you haven’t noticed many of the major insurance agencies have rolled out “accident forgiveness”, “bundling”, “vanishing deductions”, and a host of other marketing ploys. The Snapshot® device is Progressive’s attempt to capitalize on consumers hurting in a poor economy. If you can save up to 30% on your policy, why not try it? Oh, and Progressive claims you can’t be penalized by the device based on its records.
What’s in it for Progressive is a way to differentiate itself from competition and increase its costumer base through curiosity and innovation. One caution to remember is the snapshot my night be as good of deal as it seems. When savings and discounts linger forefront in the eyes of consumers it can be blinding to the overall scheme. What if Progressive tweaked it policies prices to be slightly higher than normal to compensate for the savings, would anyone notice? I don’t claim that Progressive extorts its prices but what I’m trying to say is large discounts can sometimes averts our attention from what’s really happening.
Give consumers what they “need”
Unemployment has lingered at 8.3% for months. Many consumers are feeling the heat of debt and bills. In the insurance world, writers and agencies are encouraging consumers to buy the “bare” minimums. Why have extensive coverage, right? Progressive is offering a chance for consumers to keep a well-rounded policy while paying less. If that doesn’t tug at your financial string, I don’t know what will.
While you’re getting what you “need”, what is it that Progressive “needs”? Well, first and foremost, consumers. The Snapshot® device is a tactic used to get a larger consumer base. I’ll admit that even I was curious to try the device out for myself. Secondly they needs statistics. By installing the device on your car you are giving Progressive free data. The way they use the data is completely up to their discretion but you can bet they’ll use it for other products, services, and calculations for policy prices. The data could even result in future policy increases. Lastly Progressive needs loyal consumers.
Did you know that it costs a firm 6 to 7 times more to acquire a new consumer than retain an existing customer? In the world of marketing their is a norm referred to as the “norm of reciprocity”. Basically this norm describes the emotion or need we feel to give back when someone has done something or given something to us for “free”. In this case Progressive is giving you a free Snapshot® device and a “free” chance to save 30%. Subconsciously you’ll feel the need to return the favor through loyalty to the company for giving you the chance to save 30%.
As you can see Progressive is receiving a lot more than it is “losing” through 30% discounts. While it’s nice to think a company is innovating for its consumers. The truth is, most companies have an agenda beyond cheap car insurance. In Progressive’s case it comes in the form of a small device called the Snapshot®.