How Progressive insurance lost what made it progressive

"They pretty much rule with an iron fist," he explains. "They want you out, they'll get you out."

A former local manager, who was earning more than $100,000 a year, learned of his impending layoff at a hastily convened meeting in November. Progressive's call-center chief actually read from a script. The manager's position was being eliminated, they told him. There just wasn't a place for him.

He might have mistaken this for a scene from Office Space, if not for the extra security guards outside the door. He grabbed his coat, turned in his key card, and walked out.

The days of Peter B.'s swaggering honesty and fearless innovation were officially over.

Some trace the decline to Progressive's dubious decision, four years ago, to split the company into two brands. Drive would sell policies the traditional way, through agents in neighborhood offices. Progressive Direct would sell via the phone and the internet.

For reasons no one can seem to explain, the company believed the split would help them win favor with independent agents, who hawked the policies of multiple companies. Progressive invested heavily in the idea, wining and dining agents in Vegas, and renting out a racetrack so they could see the Drive car compete, one veteran employee recalls.

The execs didn't seem to realize that diluting their name recognition by splitting into two lesser-known brands was asking for trouble.

The decision didn't sit well with many independent agents. They were already peeved about Progressive's low commissions and worried that its online and phone sales would put them out of business. Trying to get them to sell an unknown brand wasn't going to help.

"Everybody saw that it was ridiculous," one Cleveland manager says.

Yet the split remained in place until last September, when the company folded back under the single Progressive banner. But by that time, agents had already taken to placing their business elsewhere, says Brian Sullivan, editor of the trade newsletter Auto Insurance Report.

Meanwhile, competitors began to target Progressive's greatest strengths. Other companies jumped into online sales and sought high-risk drivers. And Progressive continued to get pummeled in the area that's always been its weakness: marketing.

According to TNS Media Intelligence, nationwide spending on car insurance ads exploded from $600 million in 2003 to $1.6 billion in 2006. GEICO alone spent at least $500 million that year.

Progressive had long believed that customers would automatically recognize its superior service, Sullivan says, though it might not offer the cheapest policies. But that's not a message that sells well in a sound bite. Slogans such as "Think easier; think Progressive" and "Relax. Just drive" weren't the kind of catchphrases you could hum in a carpool.

Nine years ago, the company ran a Super Bowl ad featuring E.T. as a spokesman for safe driving. It was supposed to be part of a larger branding campaign, complete with propaganda in drivers' ed courses and an E.T. Safety Club for kids. But it all had the feel of a public service announcement. When new customers failed to arrive, Lewis fired the ad company.

"They really don't understand advertising and marketing," Sullivan says. "That's what's playing the game right now."

GEICO is just the opposite. With its faintly British gecko mascot and Caveman commercials — so popular they spawned a sitcom — it offers a counterpoint as a friendly, likable company with a healthy sense of humor.

Allstate, meanwhile, portrays itself as a reliable, comforting hand you can depend on during a disaster. Its spokesman, naturally, is the cello-voiced Dennis Haysbert, who played the president on 24.

By comparison, Progressive's ads seem more like software commercials. They are sleek and tech-savvy, but hardly distinguishable from thousands of others. The current slogan, "It's about you. And it's about time," is as bland as its predecessors. Its latest commercial features a nondescript guy in a checkout line. The cashier claims he just saved $350, then touts the company's "concierge claims service" and 24/7 help online.

Within the blizzard of ads that pound consumers daily, it has all the ingredients to be eminently forgettable.

"Progressive has consistently proven that it doesn't know what funny is," Sullivan says. "It's just bad."

Progressive seems to be aware of the problem. It recently moved its brand development division under CEO Renwick's direct supervision. One of its biggest moves was to buy the naming rights to Jacobs Field. The question is whether displaying its logo at Tribe games will be enough to make a difference.