Two contrasting stories demonstrate good – and bad – customer care. Mallen Baker explains

Despite all the feelgood community programmes in the world, people still distrust corporations as a species. And to understand why, you only have to look towards those sectors where companies can see a business case for abusing their customers.

Case in point: Progressive Insurance in the US. It has become the recent focus for a social media backlash, and deservedly so.

Progressive Insurance provided accident insurance to one Kaitlynn Fisher, including insurance in the event of being in an accident with an uninsured, or underinsured third party. Unfortunately, this came to pass when Fisher was in a collision with a driver who ran red lights at a junction. Fisher was tragically killed.

It turned out that the other driver was underinsured. His insurance company took one look at the circumstances and paid up to the Fisher family, who then looked towards Progressive to fulfil its policy promise and make up the difference.

Progressive refused, forcing the family to take the offending driver to court to prove that he had been negligent. Reluctantly, since they didn’t mean to persecute the other driver for what had been an accident, they did so. When they got to court, what should they find but Progressive’s own lawyers conferring with the other driver, and arguing against the Fisher family’s claim. In other words, the family’s insurance company was in court defending her killer in order to avoid paying out $75,000.

Matt Fisher, Kaitlynn’s brother, blogged about the case, which led to a wave of publicity and protest. The company put forward weak statements justifying its position, but couldn’t avoid the basic truth – it had utterly broken the bounds of trust with its customers.

…and the good

Compare and contrast this with the case of Northwestern Mutual, as reported by Frederick Reicheld in his book Loyalty Rules. In this case, a family sought to take out insurance relating to their newly born daughter, but the paperwork needed from the doctors was being held up. The company chased it up, but with no result, and the underwriter advised that the application would have to be dropped.

The very next day the client called in with the tragic news that the baby had died – a case of sudden infant death syndrome.

In this case, the policy hadn’t been ratified. The family had no leg to stand on, and the company could have expressed regret and moved on. Instead, after very rapid internal discussions, the company said that if the paperwork from the doctor subsequently showed that they would have approved the policy, then it would honour it. It did, and Northwestern did.

The chief executive of the firm, Jim Ericson, said he was proud this was the way his company had responded. And, in particular, he was proud because nobody had felt they needed to come up the line to him to ask for permission. The values of the company to do right by the customer were clear enough to affect the way decisions were made on the ground.

Both companies ended up paying out. One got goodwill for its money, which was widely communicated through the media because its quick action and fairness towards the customer were remarkable by the standard of the industry.

The other got catastrophically bad publicity for its money, because what was widely communicated was how, in an industry where people have cynical and low expectations, it managed to astonish over the depths to which it would stoop.

In the interests of perverse satisfaction, I looked at the Progressive website and located its statement of values. These include “integrity” and a reference to “high ethical standards”. There is a section dedicated to “excellence” that includes the aim to “exceed the highest expectations of our customers”. It has a whole social responsibility site, and plenty of environmental policies.

Interestingly, Northwestern Mutual does not have a section on values, or corporate responsibility, with the exception of a mild reference to those values of “doing what’s best for our clients since 1857”. I would have urged it to say more on the subject, but ultimately values are best communicated through how you behave rather than what you say.

Do I think Northwestern Mutual is staffed by angels, while Progressive is in the sway of demons? No, but I certainly know which organisation I would trust to make a long-term promise and then keep it.

Mallen Baker is managing director of Daisywheel Interactive and a contributing editor to Ethical Corporation.