“Listen Loudly”: How the World's Largest Credit Union Thinks Like a Challenger Brand

0:00We have over 14.5 million members. We are about$190 billion in assets. We know that when you spend less than a category leader, you can't just follow them. If you just follow them and do what they do, there'll be a lot of misattribution for what you're doing to them. I'm Eric Fulweiler, and this is Scratch, bringing you marketing lessons from the leading brands and brains rewriting the rulebook from scratch for the world of today. Hey, Em, thank you so much for joining me again. I'm really excited to have this chat. Where are you calling in from today? Vienna, Virginia. So right outside of DC.

0:42Amazing. Do you have that heat wave that everybody else has in the Northeast right now? Yes, exactly. Yeah, not fun. All right. So before we get into the conversation, the icebreaker question that we ask every guest, can you please tell us about a challenger brand that you're particularly passionate about right now and why? You know, it's interesting for me, the one I, as a challenger brand, my first love is always our brand, Navy Federal, and we definitely try to punch in above our weight and have that challenger mentality every day and really just are trying to think about how we are always making the best of every situation and every dollar is an investment.

1:21That said, I have to admit, I am right now, I'm really impressed with what Rocket Mortgage is doing. And I think about them as maybe not as much of a challenger brand, but I love some of the work they're doing that really is just a gentle nudge on encouraging homeowners to, or want to be homeowners to get off the fence and into the market. And they're really doing it in a nice, soft way, despite the fact that they really are a tech company and do great at the technology. So just well done. I think that's a great one. Because I was going to say two things. One, knowing a bit about you, having had this conversation before, very much put you in the challenger camp, even though you're CMO of the largest credit union in America.

2:07But two, our definition of challenger is less the size and the stage of the company and more kind of the mindset and model that they take to growth. and actually I think the way that you prove whether or not a company has become a successful challenger brand is whether they truly change the convention of the category that they operate in and I would argue and for those especially on this side of the pond that don't know Rocky Mortgage that they have done that so we will link to them in the show notes I think that is a great example so let's get into the conversation for the people listening who may not have heard of Navy Federal or maybe don't know the scale and scope of what the business and brand is today, can you please give us a brief overview?

2:49I'd love to. We are the largest credit union in the United States. So thank you, Eric, for the comment there. We have over 14 and a half million members. And our members as a credit union, we are chartered to serve active duty, military, and their families. And active duty is really a, it's a small group, and we'll talk a little bit about some of the opportunities and challenges that come with that. But, you know, it's a small group, but then trying to scale to veterans, those that served in the past, as well as their families, which is what gives us the scope and ability to serve 14.5 million.

3:25We are about 190 billion in assets. So a big size, but definitely a challenger brand. I take that as a compliment when you said we're a challenger brand, because we definitely try to think that way. And I even have boxing gloves in my office to remind me, like, let's fight above our weight every single day. I love it. Is that a term that you use internally, like with your team? Like, is that, does that kind of factor into how you try to build the team around you and also the work that you put out for Navy Federal term challenger brand? It does. It does. And it's both an attitude as well as a strategy.

4:04We know that when you spend less than a category leader, you can't just follow them. If you just follow them and do what they do, there'll be a lot of misattribution for what you're doing to them. But also we know that we need to, like everybody else, apply best practices. So we try to look and learn from other brands in in the space that we compete, but just as importantly, look at the brands outside of our space. Because when you think about our members, rarely are they looking at us and comparing us versus 10 other banks. They're looking at us and comparing the experience with what they had at Navy Federal Credit Union with how they were treated at their local coffee shop or their drugstore or their grocery store or what it felt like online from Amazon when they purchased goods.

4:56So we try to be broad in that and we really encourage the team to think about it from the members perspective. And that does help us kind of ground ourselves and not just become the bank geeks. I love that. And I also think that there is something to what I call the healthy naivete of taking perspectives and ideas from outside of your category. And that comes up a lot, particularly with the challenger brands and CMOs that we talk to that come from startups, from category disruptors or category creators. They start doing things just because they didn't know that that's not the way that things have been done in the past.

5:31And of course, you have to balance that with the reality, especially when you're working in financial services, of making sure that it works. But I definitely think there's something to that. And it's interesting, you know, obviously, we had this conversation at the Financial Brand Forum. And that's something having been involved with them for the last couple years, and luckily going to be involved again next year, that I've kind of been pushing is like, hey, it'd be great. It's great to hear from the speakers within the industry. It also would be really interesting to hear from some CMOs or some brands outside of banking, credit unions, et cetera, just to kind of get that healthy naivete and fresh perspective into the audience and into the category.

6:09So Pam, where we're going to start the conversation is around the topic of relevance, which as you know, is something that we have researched heavily and really factors into a lot of the strategy work that we do, particularly around cultural relevance. And one of the things that you said, you know, the prompt that I gave you in our briefing call originally was what makes up the mind map for you as CMO of Navy Federal. And the place that you went first was around this idea of quote, being precious to few, but relevant to many. Can you unpack that for us? Certainly. And I'm happy to, we think about our market in battlegrounds and our battleground one is active duty.

6:48And as I mentioned up front, that is a relatively small population. There's about 750 ,000 individuals that could be part of that universe and about 220 ,000 new people each year who show up to serve and become active duty. That said, there's about 250 ,000 that leave every year to become veterans. So we look at that, that battleground one where we win big and want to really have a lot of focus on is active duty and their families. Obviously, their families serve with them and are often stationed with them and definitely experience the same lifestyle that the active duty person is. So when you think about our membership of 14 million members, and I talked to you about this group of individuals that, you know, even counting spouses, you're less than a million individuals in that group.

7:38You kind of think, how does this work? And it works because we are really committed. We know that we are often and we love it when we are. We are often some of those active duty individuals, soldiers and sailors, we are their first financial institution. So we get to help them establish not only a relationship with us, but also establish their path on the journey from financial health to financial wealth. And we know that if we do that right, and we do that in a meaningful way that shows them that we trust them, we're here to help them, we're here to be their advocate, we're here to be their ally, we know that that will have dividends later when they transition out and are no longer active duty.

8:21Therefore, it's easy to build that bridge to relevancy. We are relevant to veterans. Now, granted, their product needs are different. Some of their banking needs are different, and we definitely meet those on the rational side. But hopefully, we're able to build on the relationship that we established early on in their careers. So that's the precious view, is that battleground one and two. We know that winning there really counts and counts big and has a lot of rewards. The third battleground for us is veterans and veterans are everybody who served from four to five years to those that served 40 years.

8:57So that's a diverse population. So there we're trying to make sure that we're focusing on the moments that matter to those individuals and how can we show up and be relevant to them and a provider that really earns and I say earns their trust. So you mentioned moments that matter. And that was kind of a question that was building as you were giving your answer was, you know, relevance has always driven growth, but relevance comes from not just what are the needs of the audience and what's the value of the product, but also that layer or the lens through which the communication travels, i.e. culture and the world around your audience.

9:38So how do you think about not just who these people are and kind of your segmentation, as it were, the products that you can offer? How do you think about kind of the cultural relevance of this, especially, you know, let's be honest, in a country where that is changing very quickly? It is changing, but we look at the things that bind them and what are those moments that matter. And I'll give you an example. Some of the sponsorships that we do are for the Marine Corps Marathon, the Army 10-Miler, the Air Force Marathon, the Coast Guard Marathon in half. And I mention those because not because they're the biggest events in the world and not because they've got big broadcast support, but they are big combining events for that active duty branch.

10:21So we're there and we've been a sponsor of those events for a long, long time. So we try to look at where does it make sense to be there for the home team. That said, when you listen to who we served, and I talked about the importance of veterans, you know, we had to think about what really matters to them and what are common things that they really care about. And we see that sports is a unifying factor. We advertise in a lot of sports because of that. We are the military appreciation partner for the National Hockey League. Hockey, we got involved in because of the veteran viewership and activation in it, as well as the geographic diversity of the teams.

11:00I think if someone had said to you that hockey is going to do really well in places like Vegas and Tampa and Arizona, you would have said, no, you're crazy. But it has, and it's really done really well. I also think the speed of the game helps bring in new viewers. And the thing that was nice for us is when we looked at different sponsorships that mattered, the league teams often were already doing things with active duty. So we knew because of that, it was already a community and an environment that valued those that we value. So it was easy to determine where to show up. So that's always an analysis of thinking about what are the moments that matter.

11:39And yes, they are financial relative to moving, having a child, expanding a family, buying a home, etc. But they're also the things that matter relative to your community and that camaraderie of the things that you get together and do, whether it's watching hockey, running events, as we mentioned, that people are training for. And we try to make that a little bit of the analysis on where we show up. It's interesting the hearing about the sporting events, the moments that matter, as you call it. I know that I talked to you before about kind of our research and framework around microcultures and hearing you discuss that, I think, you know, you do do the bigger kind of sports stadium sponsorships and things like that.

12:25But I think a lot of where we're seeing the arbitrage, let's say, to drive cultural relevance, particularly challenger brands that want to punch above their weight, maybe don't have the budget, is in finding these pockets of cultures and communities that are more passionate, more vocal, and can advocate for a brand that is authentically contributing to what they stand for and what they care about in a meaningful way. And I know we're going to talk a little bit more about authenticity in a second, because I think those two things really go hand in hand, right? If you don't show up authentically, you're not going to earn the relevance.

12:57And actually, I think particularly for today's modern consumer, modern member, there's the risk that it backfires as well. But before we go into the authenticity piece, you know, one of the things that you talked about that's a little bit different for your business, but I think a lot of people can relate maybe in different ways, is that your kind of primary target audience, the main battleground, as you called it, of active duty members is not growing. So how do you think about that reality? And then how do you think about, you mentioned kind of these different segments that you go after. How do you make sure that you are most relevant to the primary audience, but still relevant to the secondary audiences as well?

13:40Well, it starts with planning. And I know that's not a sexy answer, but it starts with planning is like battleground one becomes priority one. So thinking about how do you show up there? What does it look like? Like what are the types of connection opportunities, both in terms of media planning, events, placements, et cetera. And going from there, then how do you scale out? So we try to make sure, probably like a lot of other brands that are challengers, we're not operating with all the money in the world. So we try to make sure that we're using our dollars from a strategic orientation to reach those audiences.

14:19and we know that it's more than just television and radio and broadcast that can be very efficient but it is these events and these connections into the community. One of the things you mentioned and yes we're involved in sports in a big way because that gives us a scale particularly for this Battleground 3 which is veterans and their families but if you look at what we do we're involved in these sports but we're not the owner. So the military appreciation partner for the league very community, very inclusive, lots of teams, lots of communities, lots of markets. We do not see us pursue naming rights.

14:55And because of that, we think that we're part of the community, but we're not the owner of the community. We're there to facilitate and help, not to be the owner and the big brother. So we look at that a little bit different than some other brands who will look at those naming rights as a higher priority in their list. So, you know, it is about the reach. It is about the infrequency, but it's also more about the relevance and the importance of that particular market and person. So I think that's probably a good segue into chapter two, talking about authenticity. And one of the things that is very clear to me, both in how we structured this brief, but also just to be honest in everything that you say and how you answer any of the questions I ask is this idea of being a value oriented business.

15:43um so i'm i feel and i hear the authenticity from you and i think organizations always take on the dna and the disposition of their leaders so i'd imagine your team is very much the same way but can you talk to us a little bit about authenticity what that means for you for navy federal and just this idea of being a value-oriented business and how that might be different than kind of the classical or cliche values that a lot of companies try to strive for happy to and i will tell you The authenticity is part of our brand, and that's because it's part of the membership. It's part of who we serve, who are very authentic.

16:20And if we ever appear that we're not authentic, believe me, they'll call us on it. And so we kind of hold each other to a high list of standards. The way that that manifests itself is in a couple of ways, one of which is it starts with the team. If you are a service brand, your team really has to be engaged and happy to be able to deliver. So that starts with our front line, which is call center and branch employees who meet with and talk to members day in, day out. We answer about a million calls every week. We operate call centers across the United States, all stateside, all 24-7 support with live individuals.

17:00And we know that that, as I mentioned, that front line and the branches that we've got, 367 branches, about 180 of those are either on a base or near a base. If we weren't authentic about that being Battleground 1, believe me, those locations would be different. Those locations are there in some very tiny bases. So that authenticity starts with kind of your delivery model. And then it goes to things, and I'll give an example, even with AI, the way we've implemented some AI applications is that they all have a path to a human. We're making sure that service is a point of difference for us and that we keep that front and center and that we enable it.

17:40The way that we also inform the team on what's important, it comes from research with the target, great, great, great, but it also comes from a daily integration of what we call voice of the member. And that's capturing what members tell us and questions they ask, whether it's in social media or whether it's to the call center or in the branch. And we look at those and then each one of the leaders in their regular team meetings is bringing that voice of the member to the meeting. Here's what we're hearing. Here's the most frequently asked questions. Here's an area that's troubling our members.

18:13Here's a point of happiness. I feel like sometimes for brands, we can over, I don't know what the right word is. We can over drill down on some of the problems without stopping to think about our role in amplifying the happy. Amplifying the happy is just as important. And I would argue in this climate, maybe more important than ever. So how do we hear what people are saying? We talk about that here at our places, listen loudly. How do we listen loudly to what our members are saying and experiencing? Show them that we're there to support them, but also help them celebrate those moments that matter.

18:50So we will amplify some of the good as well as help them in terms of remedy problems and solutions. So another way authenticity will show up, which is a small way, is, you know, when I tell you this about who can speak for our brand and how we speak for our brand. And, you know, when you think about programs like DJ endorsements, a lot of brands use those to have a local voice of authority and authenticity in those markets. We do that as well, but we also felt like we cannot do that with DJs who aren't eligible to join. I don't want somebody speaking for my brand who isn't a member or couldn't be a member.

19:27I feel like then it's just a paid ad. And so, you know, it will manifest itself in small ways like that. So we'll have a DJ that gets promoted, leaves a market, moves up, and somebody's like, oh, so do you want Eric, the new, you know, fabulous guy in drive time? And my first question is, can he join? Talk to me about his connection to veterans and their families. Has anyone in his family ever served? And I said, then we'll decide on Eric. And we do that in each one of our markets. And it's a small thing, but it's really important in how we keep our authenticity. We also see it in our influencer program.

20:01We started our influencers and for many years only did military spouses as our influencers. They're micro influencers. They're small, but they're very credible and trusted with those other spouses that are also experiencing similar life journeys. So small ways, but we try to look at every program we do via that same lens. How are we showing up in a way that's authentic and transparent to our members? Yeah, I think small things add up. but also oftentimes there's the size of the thing. And then there's the size of the headline about the thing, if you know what I mean, right? Like you're on a 30 minute podcast and you mentioned the DJ gut check, the DJ kind of threshold for sponsoring one of them.

20:50And I think that I always think about that, I think with marketing and, and I do want to come on to kind of the internal side of this, because I think that's just as important. And I know you do as well, but internally that's a headline you can hold up externally to people like me in our audience it's a headline you can hold up and oftentimes with marketing whether it's internal or external it is the string of headlines that you share that people remember that really leaves a mark about what you want them to know about you so on the internal side i i guess the question i where my mind went is obviously talking to you you're the cmo you've been there for a while you clearly live, breathe, the authenticity is clear.

21:29And I'm sure it is for people that have been working with you for a while. And I would imagine people don't come to work at Navy Federal if they don't have some either connection or aspiration to your values. How do you get people up to speed with this first 90 days, first 100 days? I wanted to say indoctrinate, but that has a negative connotation. How do you onboard people to the culture to ensure that they are as authentic as you are. Well, thank you for that compliment. I love, there are a lot of things I'd love to think about myself being named and called and verbs and adjectives, but I love that you see that authenticity because I really do feel, we talk about our tagline, our members of the mission.

22:11And I really, really feel that. So I'm glad that you can see that. And we've tried really hard to operationalize it. We do call it onboarding and we do an onboarding both for our members as well as our new employees. Every new employee goes through an onboarding, which includes a section on military life. Often our members, just like our employees, will have some kind of connection to military, but it may not be in their immediate family. So it may be a grandparent, it may be an aunt and uncle. They know of it, they respect it, but they don't really understand a lot of the unique aspects of it.

22:45So we do include as part of our onboarding for every employee that military life and help them walk through a day in the life of that individual's onboarding, which often starts at a boot camp or a training facility. Or in a veteran case, it starts as they transitioned out and they're thinking about what's next in this new phase of life and how do they find their new community, which we think we can definitely be a part of and a meaningful part of. So for every employee, we do that for the onboarding. And then we have found that it's probably like every other thing, too. You need to make sure that it has a steady drumbeat.

23:22And it's not just something you talk about in day one. You talk about it day one. You talk about it day two. We talk about it day 100. We try to make sure that we get our employees out. Everybody on management council spends some time listening to calls from our members. So that's how we keep that alive, too, in terms of hearing from them. We also spend time in our branches so that we see and hear the individuals that we serve. And we do ask our employees to do the same thing. And it's really not to just add to their list, but it's making sure that they feel connected to the mission and those that we serve.

23:57And the reminders. I have to tell you, Eric, I've been here eight years now, and I'm continuing to learn just how unique a lot of our members are because of their service. And so understanding that is important, but it is an ongoing journey of learning and growing because it's always changing. Culture is one of those jobs that's never done, right? Especially at the scale that you operate at. But I'd argue for any company, it's really, I love that idea of part of the onboarding being a segment about learning about a day in the life or a week in the life of your customer, your member. And I was actually even thinking like, you know, we're hiring a bunch of people right now at Rival.

24:38We should be doing that. There should be a segment of our onboarding that's like, here's what it's like to be CMO of Navy Federal or be CMO at either a challenger brand or an incumbent, the ones who adopt the challenger playbook. I really like that. In a world of conventional marketing, doing what everyone else is doing is the fastest way to become invisible. That's why there's Zag, the fortnightly newsletter from Rival. We don't just report on trends. We dissect the challenger mindset that helps brands like Google, F1, and Monzo win. Every two weeks, we deliver breakthrough ideas and actionable insights straight to your inbox, helping you outmaneuver the giants and drive outsized impact.

25:15Join over 5 ,000 marketing leaders who have stopped following and started leading. Subscribe to Zag at wearrival.com. I do want to come back to one of the anecdotes that you shared with me that I love about the bonus pool. And I'll preface this question by saying, you know, I think there's so many books and so many podcast episodes about values. But at the end of the day, for me, it's what behavior is encouraged and discouraged. And the ultimate encouragement and discouragement is, for better or for worse, financial oftentimes when it comes to human beings. I love that example of the branches being in the places that make the most sense for your value, not necessarily the places where Navy Federal can make the most money.

26:02But also you shared with me that the bonus pool is tied to member satisfaction. So maybe you could just elaborate on that briefly. And if there's anything else within this bucket of the behavior that you want to encourage and discourage is actually tied to financial incentives for employees as well. Thank you, Eric, for asking about that. I came from an agency background. I had spent all of my career agency side until coming to Navy Federal. And so on the agency side, when you hear that somebody's on a PIP, it's a performance plan because they're struggling in their current role. That said, PIP has a whole new definition at Navy Federal, and that's our performance incentive of plan.