Wednesday, August 15, 2012

Progressive is Not Facing a Social Media Crisis

Much is being written about Progressive Insurance's "social media crisis." I will not go into great detail about the situation other than to say that a young woman, Kaitlynn Fisher, was tragically killed in an auto accident that was apparently another driver's fault. She carried insurance from Progressive that protected against the danger of an accident with an under-insured motorist. Because the driver who caused the accident was under-insured, the family sued, and Kaitlynn's own insurance company, Progressive, acted in the defense of the responsible driver.

The company says "To be very clear, Progressive did not serve as the attorney for the defendant in this case," but an article on the Mail Online states, "Court documents clearly show that Progressive filed as an 'interested party' and was 'allowed to intervene as a party defendant' and 'granted all rights to participate in this proceeding as if it were an original party to this case.'" Over on Consumerist, a Maryland attorney attempts to shed more light on Progressive's actions, and it is noted that "it's not unheard of for this to happen." And while some tweets and posts claim Progressive paid for the defense of the man responsible for Kaitlynn's death, this is not the case--the driver's attorney confirms Progressive did not do so.

Since I am not a lawyer and this is not a law blog, I am not going to weigh in on the legal merits of this situation one way or another. I do, however, wish to explore if this situation is really a "social media disaster." That term gets tossed around a lot, and it is beginning to irk me. It carries with it the implication that social media is responsible for brand and corporate reputation damage. Perhaps it is time that our view of social media matures and we begin to put the blame where it belongs--not on the medium where people discuss, share and criticize, but on the corporate actions that cause these discussions, shares and criticisms.

The evidence for this being a social media disaster may seem quite clear: This incident was instigated with a blog post by the victim's brother, Matt Fisher, and rode a wave of more blog posts and tweets until mass media paid attention. Now, thanks to articles on CNBC, CNN, Gawker, Huffington Post and others, this situation is garnering worldwide attention. To make matters worse, the company has responded to critical Twitterers with a single, identical response, and a blog on features a safe six-sentence response that reads like it was written by a lawyer (because it was). Progressive's social media actions have been called everything from robotic to soulless. (And many have pointed out the repeated cut-and-paste responses appearing next to Flo's smiling face hardly helps the company appear compassionate.)

Social media disaster: Case closed? Not so fast. While this is not exactly a case study for how to handle a sensitive PR crisis, did Progressive's tweets and blog post make matters worse? And while this situation was exacerbated by social media, was the problem truly created by social media? To use an analogy: If you jump off a cliff, do you blame gravity for your situation or trace the problem back to your decision to leap from the cliff in the first place?

No, this is not a social media disaster. Social media is not responsible for the tragic accident, did not create Maryland's liability laws, and did not decide on a legal course of action. Progressive is not suffering because of social media; it is suffering because its actions in this case seem contrary to the public persona presented by the company's ads and brand communications. If a mistake was made, it was not a social media error but a blunder of judgment and corporate culture.

Social media is not the cause, and neither is it the cure in this situation. Nothing Progressive tweets or posts to a blog is likely to change many minds, because actions always speak louder than words. Don't get me wrong, Progressive could accelerate the brand healing with a more human and candid response, but healing will happen in time anyway. Soon, this crisis will blow over, just as it is already doing for Chick-Fil-A and did for Nestle, Delta, United and many others before. Time heals all wounds, even social media ones.

The fact reputation problems shared in social media have a relatively short half-life does not mean companies should take them lightly--they come with real costs. Some sales are lost, costs for PR and marketing are increased, executives lose focus on other priorities to deal with reputation issues, expenses increase as changes are made to prevent recurrence of similar situations, and brands may suffer some long-term loss in trust and value. Look at BP: The BBC estimates that the Deepwater Horizon disaster will cost BP shareholders "some £40bn in lost income" in the long term, even though the actual costs of the disaster are estimated at £26bn. Since the disastrous oil spill (and BP's CEO's slightly less disastrous public relations missteps), BP stock is down 31% while the Dow is up 19%. A lot of that is obviously due to fines, cleanup costs and changes in safety procedures, but some of this loss in value is due to the fact BP today enjoys less trust among investors and consumers.

Progressive may face real costs as a result of this situation, and if it does, who is to blame? The social media team? No, it is stuck between a rock (the consumers) and a hard place (the demands of a sensitive legal situation). The real source of this PR crisis is, instead, the Legal Department at Progressive.

Matt Fisher and his sister, Katie
Source: Huffington Post
Again, I am not going to criticize the legal decision in this complicated situation, but I do think we can question whether this decision was made with full consideration of the social era in which we live. Today, it is very possible to make a decision that is the right one from a legal perspective but very much the wrong one from the social, brand and reputation perspective.

In this case, the costs Progressive faced were a mere $100,000. That is the amount Kaitlynn Fisher's policy covered in the event an uninsured driver caused injury or death, according to an attorney for the Fisher family. Was this worth $100,000 to Progressive? The company spends around half a billion dollars every year telling consumers it is fun, caring and trustworthy--just like Flo. This single $100,000 claim represents 0.02% of the company's annual ad spend, and now social media is speaking louder than Progressive's advertising. So, was it worth it to fight the claim in this case?

I cannot count the number of times I have said this, but in today's social era, every employee is a social media employee. Your delivery driver can become an overnight YouTube sensation. The employee who makes burgers in Ohio can become an inadvertent anti-hero. And an attorney who decides to deny a claim, forces a grieving family to pursue a lawsuit, and files papers in support of the person responsible for the death of the insured may, indirectly, become a social media influencer. We do not know who the man or woman is who made this decision, but today, he or she speaks louder than Flo on behalf of Progressive.

If every employee is a social media employee, then every decision is a social media decision. Watching this situation develop reminded me of another case from many years ago involving a Walmart employee, Debbie Shank. She was injured in an auto accident and left brain damaged. The family was awarded $1 million by the trucking company involved in the crash, and then Walmart chose to file a file a $470,000 lawsuit against the family to recover the expenses paid for Shank's medical care. Walmart won in the court of law but had to reverse its actions after online reaction threatened to harm the company's reputation. (When I share this story with audiences, I sometimes become choked up when I recount that Shank is unable to form new memories, so she frequently asks about her son and relives anew the anguish each time she is reminded her son was killed in Iraq.)

Like Walmart before, Progressive is dealing not with a social media problem but a legal, reputation and brand problem. Social media did not cause it, but now that the Fisher case is a cause célèbre, Progressive will perhaps be forced to handle the outcome differently. In addition, it is likely this situation will bring a change in how Progressive (and other insurance companies) deal with these sorts of claims.

So let's stop calling this a "social media disaster." This is not a result of social media but of corporate actions and culture. Once again, I am reminded of the words of Ralph Waldo Emerson--a quote I have shared more than once on this blog:

“Who you are speaks so loudly I can't hear what you're saying.”

Your tweets may help your brand's reputation, but they cannot speak louder than who your company is or what its actions are.


Unknown said...

Hey Augie - Great, thoughtful article, thank you. I 100% agree that our thinking, study and management of social media needs to evolve it can be most powerfully be utilized to course-correct customer experience issues that hurt a brand's bottom line. A couple of thoughts to add here - I do think Progressive will suffer significantly not only because of this one incident, but because they notoriously contest even the smallest of claims to get out of paying. Also, the tragic nature of this story will strike consumers personally in their decisions about who they want to pay for their insurance - a much heavier contemplation & purchase decision than a chicken sandwich. Certainly this case will be interesting to continue following and again - totally agree that it's not about the media at all. Cheers! Kathy

Augie Ray said...

Thanks, Kathy. Good to see we're on the same page.

I hate to sound like a social media skeptic (and I hope my many years in this space show otherwise), but it really does seem social media crises come and go, but brands survive. Did anyone stop buying Kit-Kat bars after the Nestle Greenpeace dustup? Is anyone still avoiding United because they broke guitars three years ago?

Maybe consumers are forgiving. Maybe they have short memories. Or maybe we just expect to be disappointed by brands. Whatever the case, for all the outcry over each "social media disaster," I'm still waiting for the one example of a company suffering permanent and serious business damage because of tweets, blog posts and Facebook comments.

Maybe this will be that example, but I'm not betting on it. :)

Dave Pehrson said...

Like many other, I too have written about this case. I do agree, it's not a social media crisis. What I consider this to be is a PR nightmare. Thanks for your article and insights! Much enjoyable.

Dave Pehrson said...

Like many other, I too have written about this case. I do agree, it's not a social media crisis. What I consider this to be is a PR nightmare. Thanks for your article and insights! Much enjoyable.

Unknown said...

Augie, certainly you are correct that social media didn't "cause" this disaster for Progressive -- anymore than it didn't "cause" revolutions in Libya, Egypt, or revolt in Syria. But would any of the latter have transpired in the way they have w/o social media? Would Flo be shaking in her Go-Go boots now about this case w/o social media?
I think that in real life the distinction you're making between social media causing a disaster & Progressive's Legal Dept. causing a disaster is a distinction w/o a difference -- b/c real life today includes social media, & all the good & bade that people can do w/ it.
So, will this cause Progressive "lasting" brand damage? -- more like BP than (say) Nestle or Delta? Depends on how lasting we think lasting needs to be before we agree that it's lasting... But if I were in the business of selling a product distinguished only by price & dependable claims-paying, I'd be a little worried.
One last point: This is hardly a disaster for Progressive alone. Yesterday's Gawker account of this included the memorable judgement:
"OK, insurance companies are evil. This is, sadly, nothing new."

Unknown said...

Yup - agree and for that matter, United's sales for the year of that crisis were only temporarily impacted and actually grew year over year I believe.

Augie Ray said...

Would this have happened without social media? No, I agree it would not have. But social media today is like air--we live in it but rarely note it. If someone shoots you with a gun, you do not blame the air for allowing the bullet passage, and today we ought no longer "blame" social media when a company's mistake is broadcast widely. In the case of both the bullet or the PR problem, it isn't the medium that matters but the actions of the parties involved.

Social media is a reality of business today. It's time we start calling business problems "business problems," not "social media disasters."

I appreciate the dialog. Thanks!

Will Kriski (Potato Strong) said...

Ridiculous argument - social media crisis means a crisis occuring via/on social media sites. No one blames social media for the incident with Progressive.

Augie Ray said...

Will, I cannot tell if you are agreeing with me or disagreeing with me. You say "s. No one blames social media for the incident with Progressive," but if you search Google for "Fisher," "Progressive" and "social media crisis," you get over 3,000 results. Adweek's headline reads, "Flo Suddenly a Problem for Progressive in Its Social-Media Crisis" ( Mashable says "Progressive Insurance has a social media crisis on its hands" ( And CNN's headline reads, "Progressive robo-tweets spark social media crisis" (

LOTS of people are calling this a social media crisis, and I think it's time we stop blaming the medium when the problem is the company's own poor decisions. Progressive has a brand and reputation crisis, not a social media crisis!

Unknown said...

The reason it's called a social media crisis is because the entire situation was spread, yes, by social media. Family member wrote a blog post. Post was shared on twitter and in the media. So the word about the situation was spread via social media. But the crisis occurred in the incredibly poorly managed response (within social media) to the situation. Progressive needs to use social media to correctly respond. Not canned robotic replies on twitter or a generic statement from the CEO. Use twitter, use a blog post, use facebook. Use anything. Just be human and caring. Progressive created the "social media crisis" by utterly failing at its reaction.

Augie Ray said...

Eric, I agree and disagree.

Yes, it spread in social media. And yes, Progressive's response has a lot to be desired.

But Progressive did not "create the 'social media crisis' by utterly failing at its reaction." The crisis was fully blown before Progressive did anything in social channels. The media picked up on it thanks to the brother's blog post, not because of Progressive's poor responses. Progressive hasn't helped itself with its social media response, but I don't think it's made it worse either.

When you look at why mass media is interested, it's the story about an insurance company who defended (maybe) the person who killed their insured. CNN isn't covering this because Progressive tweeted poorly. Furthermore, no social media magic will change people's minds about this (short of an amazing, transparent, believable and logical reason that explains Progressive's actions.)

Yes, this played out in social media, but in my opinion the cause and solution lie with Progressive's business actions, not its tweets.

Thanks for the dialog. I've learned a lot from the responses I've received!

Unknown said...


Love the article and I agree with you and some of the posters that in this case, like some others, Social Media was the gasoline and not the fire itself.

In fact, there appear to be two other cases, albeit far less tragic, where the problem as Kathy S. said is the customer experience. The first is when Virgin re-seated a man away from two minors travelling alone (#VirginDiscrimination)and the other of course is the NBC cut-away from the closing ceremonies for a sitcom (#NBCfail).

Your point about the short half-life of these types of things makes me wonder if the inverse has some benefit. In other words, even though these dust ups don't seem to impact the companies screwing up, are there measurable benefits to those companies that combine great customer experiences with great social media management? Is there tangible reputational and/or brand value in doing that?

Thanks again!

Terry said...

I agree that "business as usual" was the primary cause and this is is much more difficult to fix. But it is a social media crisis, not because of the actions responding to this situation, it goes deeper. Brands are recruiting weak social media connections by various marketing techniques - the fan count race. These are not advocates, not customers, they do not support you but are connected. Well in a crisis, this works against you, they have no loyalty and feel free to jump into the debate - there has been almost no defense. If you live by the sword, you die by the sword. I refer you to your own blog blog - about USAA success - and the points you made there are spot on. In social media, you need to develop a community of people that will defend you, or at least point out your good points. It is impossible to fight a wave alone, this is when you see the value of the relationships developed.

Unknown said...

The only shameful behavior here is on the part of the jury. The police report, Katie's passenger, and other eyewitnesses all claim Katie ran the red light. This means she was at fault. It was her own doing that got her killed. The jury also went as far as making the settlement $760,000. Nationwide just paid out the $25,000 and Progressive their $75,000, but now an innocent man is stuck with the other $660,000! You want something to bark about! JURY COMMITS INSURANCE FRAUD BECAUSE PEOPLE CAN'T TAKE RESPONSIBILITY FOR THEIR OWN ACTIONS!!! Fact is the Fisher family should have never gotten a dime. The other driver is the one who should have received money if anyone. He was the innocent party!

- James from

Abir said...

how to do