Overall Loyalty Driver Score: 30.8
The REI Loyalty Marketing Program, the Co-op Membership, is well-known and well-traveled among outdoor enthusiasts, clocking in at over 17 million members. One of the keys to its success is in its clarity. It’s a one-time $20 fee to become a member, and as a member you get 10% cash back on all of your purchases at REI, what is known as their dividend (since they are a co-op). REI has its own line, plus is a retailer of all the major outdoor brands. They have their own credit card where you receive 5% cash back on REI platforms and 1% on other purchases. They rent outdoor gear. They train members on how to use equipment or do certain outdoor activities. You can buy online and pick up in store (BOPIS). They have created a brand that indistinguishable from the customers who use it. Their brand is no-nonsense, laid back, easy to use, with layer upon layer of additional benefits that even long-time members aren’t aware of.
Their trouble is the tensile strength of their ability to expand this product. While they certainly can and should adopt more features that will save their customers time in store and on their site via smart recognition of their customers, it is likely difficult given the size of their membership and the density with which their customer base is in store, not to mention their mission. It’s hard to treat members with an additional level of care and recognition when there could be 100 in the store at the same time. (If everyone gets priority boarding, we are just back to regular boarding.) But they could stand to use data from purchases to help shape their online and in-app shopping experiences, as well as using that data to draw customers into their content, events, and classes, which they have put a lot of effort behind.
Their final frontier, which is frankly surprising that they have not done much with this, is a higher level of access for their members. While the size of their membership base is limiting for some angles at this, they are missing a whole ocean of chances to provide their members (or next level members) exclusive access to outdoor events (races, VIP), talks with famous outdoor figures, lead time on tickets to outdoor festivals and product sales, you name it. They have opted not to integrate themselves too closely with the outdoor sports communities, which is such a mystery it makes us wonder if they were hurt before.
TIME – 16
Mainly, REI doesn’t save its customers a ton of time, and they may not be looking to. If you want a raincoat, there are 25 different brands, 20 different colors, 10 different weights, and 4 different cost tiers. Seemingly everything they offer, they have in spades for about every economic class, taste, and skill level. It makes decisions slow and the shopping experience not one that necessarily needs to be faster.
However, in those final moments, members don’t have a special line or have a credit card saved in store.
Members are only a little different at the register in that a cashier has access to some of your data. Here in Denver, where their flagship store is located, the lines are often long. They move fairly quickly, but members are treated the same as non-members.
We are constantly perplexed as to why more companies are not caching credit cards or other payment methods. It is the slowest part of any transaction, entering payment information. Many high-quality companies mastered this long ago, such as Amazon and Zappos. This is a pickup on their part. Maybe it is coming soon.
The app experience is great and gets high marks. Here, you can save payment information, connect Apple Pay and use your fingerprint. We are not convinced that they do a lot of volume for apparel on their app, but no matter. Whatever their customers are shopping for on the app, it transacts quickly.
Streamlined in-store/on location experience – 1
We believe REI is having a difficult time working in one of the two directions from which they have to choose, given their size. First, they can create additional levels of membership (gold, platinum, etc), but that doesn’t really fit with their style of a co-op, and is an unlikely thing their customer base will ever see. Two, there are so many people in these stores that it is likely difficult to conceive of a way of recognizing who people are in a way that is meaningful.
Perhaps, they will offer a faster line for members, which is the floor of an offering. We are sure this has been discussed, and dropped, correctly, as it isn’t their style and doesn’t add much if everyone in store is already a member and the actual checkout time is no quicker.
We do think they could instead look to create an in-app/in-store experience that could just be the touch of a button to check out and could possibly skip the standard checkout process altogether. Their app is slick enough that we hope this is, in some form, already underway.
Streamlined website/app shopping experience – 8
The REI app is strong with payment methods, preferred location, and a few other standard benefits of “app as loyalty program.”
The website is fine. No worse or better than any other retailer.
They do get by with a little too much leaning on reminding you that you are member, have been since 2012, and bought these things. It’s mostly for show as they don’t do anything with this information, which is the real miss here.
If you have been a member since 2012, it should be pretty easy to ascertain my size, my gender, which activities I prefer. We have all shopped for something before only to find out that color or that item isn’t in my size or in stock anymore. Since they already know my size, they should remove anything outside my range to help narrow my choices. We know what you’re thinking. What if I’m buying a gift for someone? Come on now. Very easy to show the full site if it is needed.
Or hey, perhaps there is another screen that shows all the things that are in my size that are out of stock, but coming back soon.
They have the tools in their possession (the app and customer data) to help save us time. They are not opting to.
Smooth BOPIS experience – 6
We give a little higher than average marks because it isn’t much of a hassle to buy online and pick up at REI. Everyone is friendly and knows which direct to point for BOPIS pickups. Unless they had a drive thru and you called ahead, this is about the only way this could be a faster experience, but with their locations…until their BOPIS product gets more users, it is likely to stay this way for some time.
Proactive communications and management – 1
This bleeds into the recognition driver quite a bit, but since they know my purchase behavior, they should know when things expire or need regular maintenance or have likely worn out. A little nudge to remind customers of certain dates and things to remember is an easy base hit for them.
They don’t send many non-transactional emails anymore, so it could be that they listened to their customers and acted accordingly to not add more to their inbox. If so, we certainly respect this.
FINANCIAL – 52
The REI Co-op Membership was created on the foundation of getting cash back on purchases. While they have grown their loyalty in many ways over the years, the annual dividend is the core of this program and it is still smoking today. What’s truly great about the REI loyalty program is that it is clear: 10% cash back on (eligible) store purchases. There isn’t a currency swap or hidden values. It is just like their brand: simple, honest, and laid back.
Perceived or Actual Savings – 9
The pure math here is 10% off all purchases for members. However, as members, you typically get offers a few times a year for 20% off any one item. There are some restrictions, but not too many. Plus a rash of other garage sales and year-end clearance stuff that is marketed straight to members, but is essentially for everyone. But members hear about it first.
Select or members only pricing – 8
REI offers classes, events, and rentals where members get some very deep discounts that range from 20-40%. While these are pretty flashy, the reason we didn’t give them the highest mark here is that this seems to be a fairly underutilized feature of their company. We have seen deep discounts on products nobody wants before as a nice recruiting tool, but this isn’t exactly that. These rentals and classes and events are used, and thus the discounts are incredible, but it is not a primary driver of loyalty.
Reward/Loyalty points – 10
When you think about how much we claw all over ourselves for 2% cash back from credit cards, getting a clear 10% back is incredible in its amount and breathtaking in its transparency. Further still, if you get the REI credit card you can get an additional 5% back on REI purchases (1% elsewhere), which gets to be a pretty nice number for outdoor enthusiasts with a decent income.
Sign up Bonus – 5
REI does not have a sign up bonus. It is a $20 one-time fee to sign up, then you are a member for life. Here we think they are missing out on some revenue or rather they missed out on some revenue, as this reward program often pays for itself in one trip.
Longer lasting products – 10
The other way that REI creates loyalty through financial savings is that their products—both their own brand and the brands they carry—are very well made and last a long time. Some of them, such as Patagonia, have a return policy that is beyond generous. While you will likely spend more on these high quality products, they will also last longer. Paying an extra $150 for a better pair of boots is a lot at the register, but when they last years longer than cheaper boots, you are saving in the long run by purchasing things from REI.
Perceived personal value – 10
While the REI brand may not be the top brand they carry in their stores, most of the brands they do carry, such as Patagonia, Kuhl, Mammut, Marmot, The North Face, the list goes on, do carry a personal statement that you can not only afford this, but you are also smart enough to buy the top brands. While this isn’t value in your pocket, it has personal value as many, psychologically, like to align themselves with excellent and popular brands. No matter what you buy in REI, you are joining some club, like it or not.
CONTENT/LEARNING – 10
We cannot imagine a company being better at content than REI. They are the masters. They are blessed to be in an industry where it easily lends itself to content, but credit where it is due. All companies should pay attention to their content offering and try to emulate.
How to use products – 10
While a lot of the equipment is covered in different sections throughout their content library, they will also do personal outfittings. Here they will outfit you for a trip and provide you with what you need as well as suit you up with things that will fit and stay where they’re supposed to under the duress of earthen wear and tear. You can certainly watch videos on how to use products or you can get a special class—all for you.
How to get the most out of products – 10
While they don’t have a section or dedicated content for getting the most out of their products, it is embedded within their content, as many of these activities carry a degree of danger with them. So making gear and clothing last longer and perform best is just as much about personal safety and survival as it is about protecting your investment.
How professionals use these products/services – 10
Here is where REI really hits its sweet spot, with their Expert Advice section. It is largely for relative beginners, but not exclusively. However, if you are interested in getting into any outdoor sport, this is the resource for you. Crafted from the perspective, and often the hand, of professionals who really know what they are doing in their particular sphere of outdoor activities. Their experts help you see what they next level is like, even if you are nowhere near ready for it.
Instructional / advice / etc. – 10
Tucked into the expert advice are tons of pieces of content that give the kind of advice you are looking for that addresses your fears or weird questions that newbies tend to come up with. There is really a lot of content here and it is growing by the day.
Downstream/Iterations/Predictive – 5
Here they don’t do any worse than anyone else, but they could really stand to bring their data into play to deliver the right content. While this has some overlap with the Recognition Driver, the output is content. If you purchase a kayak from them or a tent or hiking boots, they should have some content that is helpful for you. As a person buys more and more gear than demonstrates that they are really getting into a certain activity, there should be content delivered to go along with their growth as outdoorspeople. This is really within their sweet spot of knowledge, content creation, and purchase behavior, but they haven’t yet taken this step.
ACCESS – 8
As far as loyalty through Access, REI is well behind the curve of traditional loyalty programs. This almost has to be deliberate, as there are just tons of opportunities staring them in the face. It’s hard to believe that they have missed them. Instead, they could be operating a-traditionally here in refusing to create a lot of exclusivity. Only they would know. We still believe that there are more loyal customers out there for them if they were to create some access to various things that don’t exist today.
To be fair, they are currently creating access for lots of events and classes with experts and professionals. And there is plenty that could be said for them creating access to events like this that is hard to learn otherwise. Many of these are paid events with limited seats. Members get a solid discount. Many of these are also free.
In-store/at location – 1
In some locations, there are classes and events. Members will have a discount, but the membership perks end here. Given that there is such a low barrier for entry, here again we are seeing REI turn down the chance to create something special for their members aside from a little pricing. It is great and special that they do this for the outdoor community, and we’re certain there is a strategy team at REI that is fully confident in this structure, but they aren’t treating loyal customers any differently than those who are picking up a class for free.
Exclusivity – Places – 1
The truest example in this sub-driver of Access loyalty are airport lounges. REI seems to be vehemently against exclusivity and certainly isn’t looking to create a special room for members to look at special things or the like. No added benefit here.
Exclusivity – Events/People – 1
Here we are seeing them with an unforced error. REI themselves can command all the access that they want in the cycling or paddling communities, to name a few. They can likely generate access to athletes, companies, designers, etc. They could create special events for members only or better yet, for members who spend more than $1000/year or have been members for at least 5-10 years. They could incentivize higher engagement, but they can’t incentivize longer commitment to the program because you are in it for life.
We would love to see a whole series of essentially Ted Talks by luminaries in each sport talking about the kinds of things that aren’t written about in blog posts.
Exclusivity – Product – 3
While they don’t have any exclusive products, they do market their 20% off any one item coupon to REI members in the mail. If they don’t know you, they can’t send you a coupon. This is a nice perk, one that is exclusive to members.
Yet, in this area, we are traditionally thinking more along the lines of first in line for limited products (like a limited edition Adidas sneaker) or products that are only available to loyal members.
Lead time – 1
REI doesn’t do much in the way of lead time on exclusive or limited events or sessions. Most of their classes are open and first come, first served, though, of course, with the member discount. There is plenty of room for them to grow here on hot items they know will go fast, even if they aren’t actually limited.
Information/Intelligence/Data – 1
Nobody is really very good at this, but REI has the ability in the aggregate to know and send along intelligence and data about any number of things in their sphere. Whether this is when to buy backpacking or river permits, which places to avoid or seek out for various insider reasons, or even when certain products that we have purchased are likely losing their steam, such as a special wash for waterproof gear that’s not so waterproof anymore.
As we have mentioned in other sections, they have this data. They already produce a lot of content. Their app is very sharp. They have all the tools they need to deliver better data to their customers, but they aren’t doing it.
RECOGNITION – 33
Overall, the REI Co-op Membership does okay at knowing who their customers are. They really push your inception date and dividend at you, and that’s nice, but it’s about the easiest and most static thing they deliver, given all the things they could deliver to you.
In our world of loyalty programs, the Recognition Driver is intertwined with the Time driver. To know me is often to save me time. In the area of knowing its customers, REI does about what everyone else does. They aren’t bleeding edge. They aren’t cash only. This is a place where they could really turn out a lot of what they know about their customers, algorithmically, and help them have a better and smoother experience, which will save them time.
In-App – 7
The app does a nice job of knowing where you are and saving your payment information as well as your purchase history, which we discuss in full below. These things help the app to seemingly help make some predictive decisions, but in essence they are fairly static pieces of information—that you manually enter. They have a ways to go to get beyond a 7 score here, but storing payment information and using Apple ID is a nice touch.
Individual Emails – 5
REI sends very few individual emails that are not based in transactions initiated by the customer. God bless them. They send over the normal retailer stuff of shipping tracking or arrivals for BOPIS. There is a big opportunity here for REI to inquire on their transactional emails about the reason for the purchase and try to wiggle their way into the adventure so they can provide content or classes or additional products.
While we all respect a company that is respecting our privacy and our inbox, they have created this giant (and expensive) system of classes, events, rentals, expert advice, and they are not taking many of the natural opportunities to get this in front of their customers. There is a place between their current laissez faire approach and the standard, automated email aggression we see everywhere that could be very beneficial for them.
Newsletters/Blasts – 1
We’re not even clear that they do this anymore. We have not received a newsletter or blast from REI in going on three years. While this is certainly not going to be a cash cow or a significant driver of loyalty, given that they are experts in a large field and also how an expert position, AND they already create a lot of content, it seems that there is a card here they aren’t playing.
As to the above, you’ll get more applauds from customers—if you ask them—if you send fewer emails rather than more. However, we all have certain newsletters or content that we open, religiously. REI has the ability to do this in lots of ways. They can ask permission if they are truly trying to be nice guys about this.
In-Store – 5
Aside from cashiers pulling up your membership number and telling you if you have discounts and dividends, there isn’t any in store recognition. There aren’t special lines or nods from staff or secret tents that open up rooms dedicated to upper middle class 42 year old, 5’9” flat water paddlers/ moderate hikers. Shame. I mean, I have a friend. I bet he would like it.
On-Website – 5
Same as in store, they aren’t fumbling the ball, but not scoring any touchdowns either. This remains pretty crushing for a company of their size and a brand of this stature. Especially for members who have made a lot of purchases and/or been around a long time, they should be able to curate and elevate content that would be most interesting, segment clothing by my gender and size, and even make some attempts to address my situation, such as having a dog, living in a city, having allergies, or the like.
Truly size is befuddling in this era. We are a little frustrated that Zappos doesn’t have this as their stock default, but you are able to segment down to your size once you are on the site. Retailers who don’t do this is akin to AirBnB showing properties that aren’t available for your dates. It adds clutter, increases friction, and time on site. Someone will be the first to do it, and they will win retail for a time.
Stored Memory – 10
We actually created a new sub-driver because of REI, which has stored memory. From either their app or website, you can pull up your entire purchase history. We think this is a valuable contribution to ecommerce shopping behavior, as it allows us to find things in the past that either were or were not good purchases, and we can do it quickly with REI. We don’t need to remember this, search through tons of emails, or rifle through our closets and drawers. It is a fairly easy data pull for them, but it creates tremendous downstream value for customers. This is something, like the frictionless purchase experience with Amazon, that will become a standard. Customers will expect this from all retailers and experience great friction where this does not exist.