There’s no better way to build customer loyalty than to identify a set group of underserved individuals and create an experience that’s tailored to them.
That’s the major takeaway from this episode of Often Imitated, which explores the foundation of the United Services Automobile Association (USAA), an insurance provider that consistently sets the standard for great customer experience (CX).
Find out how USAA began by identifying and addressing the needs of a specific, often-overlooked customer base.
Then, learn how Alex Lofton, co-founder of Landed, is applying the same principles to help a whole new generation of homebuyers.
Listen to the episode or read the transcript below:
Ian Faison, Host: Can you remember the first check that you deposited? What a thrill going to the bank with a huge smile on your face, flashing the $15 check that your grandma gave you for graduation.
Nowadays, that thrill might be gone. You might even groan to receive a physical check rather than getting paid via Venmo, Cash App, Apple Pay or something else. It feels almost inconvenient to cash a check. Luckily, we can do a quick signature on the back, open a banking app on our phone, take a picture, and call it a day.
But it wasn’t that long ago we were having to go all the way to the bank to deposit our birthday checks.
Up until recently, we had to go to a bank or ATM, deposit grandma’s check, wait three days for it to clear, and then we’d get the $20 that we wanted to spend on dinner three days ago.
Pretty crazy, right? When your grandma writes you the check, she’s giving you the money. So why can’t you use it right now?
Well, one company agreed with that sentiment: USAA.
Back in 2009, USAA was uniquely positioned to test out mobile deposits. USAA members are predominantly members of the armed forces and their families, so their customers were always on the move—sometimes so far away and remote that getting a check was more of a logistical headache than a gift. And USAA has virtually no ATMs where you could deposit checks in person, which means that members would have to mail them in.
The first innovation was USAA moving to scanners instead of mail.
Then, enter the smartphone.
You can imagine what the executive meeting at USAA was like when this idea was pitched. People could take a picture of their checks with their phone and submit it. Then the check would get cleared by the bank behind the scenes in the next three days. The USAA member would get access to the money immediately, and everybody was happy.
Sounds great, right?
Except everyone wasn’t happy. I assume the lawyers and fraud prevention departments were less than thrilled. The ease with which members could upload a counterfeit check sent up an immediate bat signal.
So, the USAA leadership team had a very difficult question to answer: If we trust our customers, how can we help them do something that was previously thought impossible?
Being part of an organization that highly valued social accountability, members of USAA were the perfect customers to trust.
Lawyers be darned, they rolled out mobile deposits, and the idea was so out there that it made the news. On August 9, 2009, Susan Stellin of the New York Times reported that “about half a million of USAA’s 7.2 million customers use their cellphones to access their accounts, either via text message, a mobile browser, or an iPhone application. The deposit feature, which USAA previewed in an online video, puts the bank in the vanguard of the effort to turn cellphones into portable branches.”
This was a big deal, and it took an immense amount of trust that pretty much no other bank had with their customers. It was obviously successful, and other banks soon followed suit. Eleven years later, it’s not considered a revolutionary idea at all.
The question for today is: Can we help our customers do something that they previously thought was impossible?
Welcome to Often Imitated, a podcast about remarkable experiences from the past, and how they inspire people to create great customer experiences today.
This episode is all about helping your customer do something they didn’t think was possible, how the USAA has done that for military personnel for almost 100 years, and how CX leaders can do that for their customers today. In this episode, we talk to Alex Lofton, co-founder of Landed, about how they’re helping teachers and essential workers become homeowners.
Ian: Getting a new insurance policy, no matter the type, is often a pretty involved event. It takes a lot of double-checking, second-guessing, and ultimately wondering if it’s worth paying an immense amount of money for something that hopefully you’ll never need.
But it turns out that, like most things, this problem isn’t new. Getting insurance has been a tedious task since arguably the dawn of humanity. With all the debate on which job was the first ever created, I’d argue that some sort of insurance adjuster might be up there with farmer, carpenter, and tool maker.
However, no one started specifically catering to the insurance needs of soldiers and veterans until 1922. In the Gunter Hotel in San Antonio, Texas, Major William Henry Garrison brought 24 of his army officer buddies in for a meeting. There was a problem they were all having. Since they tended to move around a lot, car insurance policies tended to be either extremely expensive or prone to cancellation.
So, the 25 of them decided to form a mutual company so they could insure each other. The first client was Major Walker Moore, and he was charged $114.47 to insure his 1922 Elcar. They named their company the United States Army Automobile Association, which they would later rename the United Services Automobile Association (or USAA) when they broadened their coverage to the Navy and Marine Corps.
Two months into their business, there were 142 members enrolled in USAA. Unfortunately, they weren’t that great at estimating the right costs for insurance policies, and by the end of the first year, they were about the 2020 equivalent of $47,000 in debt.
Once they included the Navy and Marines, they switched to charging the industry standard for insurance premiums, but then took out a 20% discount for their customers. By the end of 1924, there were over 3,000 customers with assets exceeding $85,000. Flash forward to today, USAA has over 13 million members.
Now, I know that’s a lot of numbers floating around, but here are the most important ones.
USAA is routinely at the very top of customer Net Promoter Scores (NPS) in any industry, usually hovering in the high 70s, with net customer retention of 96%.
USAA’s NPS has been as high as four times the average for banking and financial services companies.
Ian: If you’re looking for a CX to imitate, USAA would be a good one to start with. In fact, USAA is one of the companies that Alex Lofton is emulating himself.
Alex Lofton, Co-founder of Landed: Specifically, USAA’s focus on the military and their families is fascinating to me and to our team at Landed. We think a lot about how to replicate the level of trust and connection that the customers that use USAA have to their products.
USAA started off as an automobile insurance company that went to a bunch of investors and said, “Hey, you should be giving a much better discount and rates to the military. Compared to the average person who gets auto insurance, this group is a part of a closed network that has a lot of social accountability.”
What came out of that focus on that one specific community was that they were always thinking one step ahead, anticipating what someone in the military would really need to feel like a financial company has their interests at heart.
Being able to anticipate what the real-life, lived experiences are going to be for that group gives you the edge on what really is going to provide value—not just some sort of generalized customer value, but value specific to those customers.
Ian: While USAA supports veterans and military families, Alex and the team at Landed are helping essential workers find homes.
And that starts with believing it’s possible in the first place.
Alex: I think for a lot of people there's a social myth out there that, “I've chosen this profession to be a teacher and support my community. That means I won’t ever be a homeowner or be financially secure. I just have to sacrifice that sense.”
For a lot of people, that’s less true than you think. If nothing else, we always encourage people to just reach out to us and talk to one of our teammates about what it takes to be a homebuyer, because I think people end up being a lot closer to it than they would ever expect.
And just a little bit of motivation or perspective goes a long way to being able to do that, either next month or in a few years. But it's worth recognizing that you may be closer than you than you realize.
Ian: Buying a home is extremely difficult. You want to get the right square footage, the right floor plan, the right school district.
You learn all kinds of crazy terms like curb appeal, crawl space, main-level laundry, and sewer lateral.
You have to learn different types of plants, which direction the sun faces, shingle versus tile roofs—the list is endless.
Oh, and you have to have the down payment, which for most of us, feels almost impossible.
Alex: We help essential professionals buy homes, basically. What does that exactly mean? We like to think of essential professionals as the people who are supporting us every day in our communities. We want to support them for what they do.
I'm thinking the person who's teaching your kid or the janitor helping clean the school.
It’s the people who will help us when we're sick—our nurses and folks who work in hospital systems—the ones who help us in emergencies. It’s the people who help run our local and state governments. These are essential professionals who are upholding our communities every day.
Our focus is helping them navigate a pathway to feeling financially secure, recognizing that home ownership is most central to that because it's such a large purchase and has a huge impact on people's finances.
If they want to use that tool to build wealth, we're there to help them figure that out. Ultimately, people come to us because they hear about our down payment program. They come for the money. We have a shared equity down payment program that basically acts as the bank of mom and dad, which a lot of people don't have, to cover down payment, upfront costs, and become a co-investor in the home. That's what people know us for.
They come for the money, but most of the time they stay because of the people that they meet—the people that are on their home-buying team that we put them in contact with—because of the craziness that goes into buying a home.
Feeling like you're not alone in that process and that somebody actually has your back and is helping you navigate that entire experience—that ends up being extremely valuable. It’s why people really enjoy their experience with us and end up sharing it with their friends and colleagues.
Ian: Come for the money and stay for the people! I love it! It’s like the Faison Family Christmas party.
Ian: For Landed, the money is a key part of their product offering. But it speaks to the biggest pain point for their customers. They can’t even think about buying a house without some help on the down payment.
Alex: The people we end up working with are being paid enough to afford rent where they live. But they’re not paid enough to afford rent and the cost of living and be able to save fast enough to get to a full down payment on a home. So, our down payment program is particularly interesting to folks.
We’ve basically said, instead of either feeling like you’ll never save enough or you’ll have to wait for years to buy a home, you can speed up that process by partnering with Landed. We’ll help cover part of the down payment, so you can buy a home now and pay the same amount that you pay in rent per month, but on a mortgage instead of to some landlord.
And that's really appealing to folks.
This is intended for people who have jobs with enough stability to have a pretty good income, but not enough to enter the housing market all on their own.
Ian: When it came to the founding of USAA, Major William Henry Garrison and his friends needed insurance that specifically addressed their unique needs as active military members. What they had was a mutual trust in each other to pay their premiums and hold each other accountable.
There was a level of respect that they had, not just because they were friends, but because there was a deep understanding between the company and the client.
USAA is great at anticipating real-life experiences. That’s the benefit of having a company founded by veterans for veterans.
For Landed, the approach of anticipating real-life experiences is similar. They have created their own special ways of making their experience attractive to teachers and essential workers.
Alex: Our team is really able to seemingly predict what's going to be next at every moment in the process and eliminate the number of bad surprises, while entering a bunch of good surprises into the equation.
For anybody who's tried to buy a home, you know that it often takes a long time—much longer than you want. You fall in love with a house, you put in a bid, you get outbid, and you have to let go of that dream of living in that place. It's hard. It's a lot of constant loss that you have to deal with, and having someone insert delightful surprises along the way and provide that general sense of support is key.
At the end of the day, being with a team that empathizes with you is what makes the difference.
Ian: Having a team that empathizes with your customer, especially when your customer is from a group of people that is generally underserved, is valuable. Our Pony Express episode talked about serving the underserved. Landed has been doing it since the beginning and is acutely aware of how diverse groups are often going against the odds when it comes to homeownership.
Alex: What's been really interesting in our journey is that our focus has been and remains helping individuals who are in these essential professions build financial security.
What's also interesting is to track some of the additional impacts of this work, including one that we hypothesized would be the case and seems to be bearing out in the data as we look into who we serve.
You need to have money up front to buy a home, and that often comes from intergenerational wealth. It limits the number of people who can enter the home-buying process. In America, that limit tends to be starkly along racial lines. If you're from a Black family, it's been really difficult, if not impossible, to build wealth intergenerationally.
One of the things we predicted is that, by having our primary product be a down payment program that helps address this challenge, we'd have a disproportionate number of applicants who don't look like your average homebuyer.
And it seems to be panning out that the people who use our down payment program tend to come from Brown or Black families, or recent immigrants, because they just haven't been able to build up the wealth that's required to enter the home-buying game.
So, while we don't talk about ourselves strictly as a social impact business, it is interesting to look at the other social impacts that can arise from building a good, solid, scalable business. We’re going to continue to monitor and report on those things on a yearly basis.
Ian: Alex is explaining a prime example of helping his customers do something that they didn’t think was possible at all. For certain races, classes, and career standpoints, home ownership seems unreachable. So, when you’re trying to help your customers obtain the seemingly unattainable, a big amount of trust is involved.
Alex: To really find and build trust with a group that's going to manage your money and help guide your pathway to a sense of security, you need to have a ton of trust, and you need to reinforce that trust over and over again.
You need to build relationships with the people that employ you and have validation from the people whose whole job is to promote your wellbeing, to retain you, to support you as a member of that institution—the HR department, or management, or whatever.
So it’s imperative that a lot of the messaging, communications, and anecdotes about Landed are coming from trusted channels so people know that someone's checked them out and they seem like they're a good group.
And then we look for people who have been former teachers, who formerly worked in healthcare, people who would just get the lives of the individual people we work with.
We're sourcing them as partner agents, or as loan officers at the banks if they've had that background, so they can just talk shop when they're on the phone. They may understand that this might be the right time or the wrong time to buy a home because of the nuances of an industry’s yearly cycle or career cycle in the long run.
Ian: Having that mutual understanding of the nuances of a shared industry is important to Landed. It was integral in the founding of the USAA and continues to be a main selling point today. Every employee at USAA is a member. On their first day on the job, they get their orientation packet as well as a membership card. This makes them even more invested in their customer’s experiences. It takes an extra step away from training your CX employees when they’ve already been where their customers are now.
Alex: I think the piece that often delights the folks we work with the most is that so many members of our team have been where they are before. Many members of our team have been teachers or worked in education, so they can start from a place of understanding how frustrating it can be to work so hard and not feel like you're getting the respect you deserve.
That's why we often say, and support teacher unions in saying, that the best thing that we can do to improve education is pay our educators more. But even if we pay our teachers more, given how expensive things are in cities, there still need to be additional resources and options. Things like our down payment program can be really helpful to them.
So, we start off by being able to have that real-world conversation and understand how messed up it is to be dedicated to this work, yet be struggling to live in the communities that you serve. I think that is a breath of fresh air that people don't experience or expect from the institution that they’re going to try to buy a home with.
They also get a lot of delight from knowing that they don't have to use our down payment program to be in partnership with Landed. At the end of the day, we supply this home-buying team that includes an experienced agent who has worked with people in your school district and a lender with connections to other local programs that may be a better fit than our down payment program. And if so, we're going to connect you to that.
Ian: So how do we find that breath of fresh air moment? When it comes down to delighting your customer, deeply understanding your customer is a must.
Alex: The best piece of advice I can give you on the customer experience side is hire a damn good team. Hire people who want to live and breathe the process of building trust and ultimately building your brand.
I think the best decision our team could have ever made is hiring our Head of Customer Experience, Jess Zao, who is just a force of nature and incredibly talented at balancing multiple perspectives—the interests of our customers and the interests of our investor set.
From her perspective, what has made her team successful is first, hiring great people, and then deeply understanding and building an experience for a really specific customer segment, as opposed to everybody at the same time.
Being really specific to a customer group, while it might feel a counter to your future aspirations, really helps you develop an actionable, customizable set of insights about what it means to provide a deeply valuable customer experience to that group.
Ultimately, you'll be surprised how generalizable the things that you're doing for that group can be as you expand to other customer segments. There's a concept called the 1 million person rule (or something similar) that if you build something highly useful for, say, a thousand people, it will make it so much easier for you to build your appeal for 4 million people.
So, starting with that thousand instead of starting with a million is the way to go.
Ian: When it comes to developing actionable insights to help your customers, like Alex mentioned, it helps when you have a dedicated and passionate team who’ll drive your customer experience. The earlier we invest in CX, the better off our customers will be.
Alex: One of the reasons you invest in creating a CX team from the beginning is, philosophically, our team believed that business should be about creating real, tangible value for people and getting paid fairly for providing that real, tangible value.
It's not about tricking people into getting their money. It's not about telling them that what you provide has X value when it's really a much smaller Y value. It's about finding that balance between providing real value and getting compensated for it, and then scaling that.
And if you deeply believe that—if you think that that's what actual enterprise should be about— then you need to orient your business around finding deep value and improving on it. To provide that real value, you need your company to be oriented toward the customer's experience. You also need to hire people and have a leadership team that understands that.
That's not the same as saying the customer is always right, or that you have to do everything to make every single customer as happy as can be. Sometimes, you have to evaluate the trade-offs between the price and structure of your product versus the other players who supply your product.
Having a customer experience focus is not just about the customer journey, but also what's going to make it sustainable, and what's going to make it scalable. How do I hold all the different interests in mind at the same time?
Ian: When it comes to sustainability in the customer experience, we’ve explored a lot of different companies on this podcast. And the USAA ranks near the top. With almost 100 years of laser focus on an underserved demographic who couldn’t find insurance and banking anywhere else, the USAA has created a new market and continued innovating—which I’m sure is beyond what Major Garrison and his 24 friends had envisioned.
But it turns out, when you zero in on your audience, both of you can go places you never thought you could. Landed is expecting the same.
Alex: I'm really excited to see what happens in the long run. Will we, as a society, recognize that tools like shared equity can really be game-changing for a whole new generation of people who otherwise may not be able to buy a home?
That is something that I would love and I believe will be the norm in due time. People don't just have to jump from being renter to owner. They can graduate into it through a financial partnership. And I can't wait to see Landed be a part of making that possible.
But in the meantime, we’ve already seen people purchase with Landed and, in a couple of years, end up being able to buy out the partnership with our down payment program and become sole homebuyers.
And we've recently expanded from education to helping people who work in the healthcare system. Expanding to new industries is really, really exciting, and we’re expanding to new geographies as well.
It takes time to build, to get the product right, to focus on the people you want to serve, to create real value, and then figure out how to operationalize and scale that. But once you get to that point, the fruits of your labor really are there for you to gather.
That's where we are and what we’re very well-positioned to do in the coming months.
Ian: As Landed expands, so does the number of teachers and essential workers who are able to do what they thought they couldn’t—own a home. And if anyone deserves that after 2020, it’s them.
This is your host, Ian Faison. Thank you for listening to another episode of Often Imitated. This podcast was narrated by me, Ian Faison, and produced by Mackey Wilson, Ezra Bakker Trupiano, and Ben Wilson.
This podcast is brought to you by the generous support of our friends at Oracle, creating data-powered, seamless marketing experiences that delight your customers. To learn more, go to Oracle.com/cx.
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This is a transcript of Often Imitated, episode 13: “I Want You...to be a Homeowner with Alex Lofton, Co-founder at Landed.” It has been edited for clarity.