State farm last year quietly opened a storefront in Chicago's trendy Lincoln Park. There's nothing about the location to suggest insurance; a peek inside reveals a coffee bar, comfy furniture and young java drinkers working on their laptops—just like any Starbucks.

But beneath the surface, Next Door is more than a bunch of baristas. Drop by the store's website (www.nextdoorchi.com), and you won't find a lot of overt references to insurance. Tabs highlight “Coaching,” “Classes” and “Community”; and the Gallery section urges visitors to “Snag a Seat” and to “Connect & Chillax.”

Dig deeper and you'll see that the location offers meeting space for people in the neighborhood, as well as free financial-education classes on subjects as diverse as writing a business plan, burglar-proofing an apartment or doing taxes.

What's the thinking behind this? I spoke with Brett Myers, Next Door's program director, about State Farm's strategy.

Myers made it clear that Next Door is emphatically not an insurance-sales location. Although the people who moderate the classes are trained financial coaches, they're not there to sell policies but to have conversations with young buyers—in groups or one on one—about what they need and want.

It's all about education, both for the Millennials and for State Farm. “This is a market that needs financial literacy and that struggles with some of the existing mediums to do that,” says Myers. “We created Next Door as a way for us to understand the consumer rather than to sell. It's a learning lab for us to find out how to address Gen Y consumers.”

Most of the people who use Next Door hear about it because they live in the neighborhood—and the neighborhood drives what Next Door does. Besides the State Farm-scheduled financial workshops, a recent event hosted volunteers collecting backpacks and school supplies for a local high school. Other events include a “business in the city” small-business mentoring program, a healthy-eating presentation and, yes, yoga classes—“all driven by the user base in the community,” Myers says.

The location is so robust that it hosts 20 events in a slow month, 35 if things are hopping.

Does all this community engagement translate into something as prosaic as insurance leads or sales? Myers says that if someone taking a class or seeking financial advice specifically asks about buying insurance, they steer him or her to a local State Farm agent.

So far, State Farm agents are “generally positive” about the project, Myers says. He meets regularly with agent groups, and the message he conveys is that Next Door reinforces person-to-person interaction for a demographic that primarily engages via technology.

“Next Door is proving that even with the younger generation, people want to talk to a person or connect with their peers in person,” Myers says. “There's a time, place and reason for a physical location and a person to help with certain questions.”

In spite of what appears to be success, State Farm is in no hurry to roll out the Next Door concept to other cities, Myers says: “Even though we've had a good first year, like any business, we're still trying to figure out how it works.”

Special Reports /

State Farm Goes &lsquo;Next Door&rsquo; in Search of Gen Y

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State Farm Goes ‘Next Door’ in Search of Gen Y