- Image via Wikipedia
Here’s another in my posts about how brands who don’t understand how empowered customers have become through social media are making big mistakes. The customer may not have VRM (Vendor Relationship Management) yet, but he has so many other tools at his disposal that he can create quite a firestorm for a brand. And SCRM tools won’t help, although good brand monitoring and management would have.
It all started when Larry Chiang, founder of Duck9, a site that helps college students hack the FICO score tyranny, was cut off on the freeway in his 7-series BMW. Of course he posted a video at the accident scene.
His insurance company, State Farm, was slow to respond, even though Larry was not at fault. On day 38 (there is a 40-day legal limit), they lowballed him with an offer to settle for $2875, the price of the tires, and declared his car a total wreck. And that’s because to the insurance company, the car had a certain Blue Book value, although to Larry, who had kept it in mint condition, it was a classic.
Larry is not a timid social media user. He blogs at BusinessWeek, and has written a book on what they don’t teach you at business school.
So he formulated a plan. Every since the accident last December, Larry has been hosting parties at events to draw attention to State Farm’s behavior. He pays for the parties himself, but calls them “afterparties” at which the pizza is paid for by State Farm (from the money they owe him).
Larry’s not without resources, he understands insurance and finance, and he also understands how to be a very public disgruntled customer. Here is the Tweet stream from one of his forays into public annihilation of State Farm.
When I talked to him last week, he was as animated and involved in the issue as ever, even though 8 months have passed since the accident. Larry believes insurance companies and car dealers carefully drive the values down on used cars so they don’t have to support them.
Since his entire business is built around knowing the intricacies of consumer credit, if I were State Farm, I wouldn’t tangle with customers like Larry Chiang. Eventually, incidents like this will erode the brand.
