REI: Game-changing membership program

Another week is here, and I am back with another newsletter covering one of my favorite brands to discuss their #promotional and #loyalty strategies.?

Today, I stay on the outdoor theme to cover the year-round adventure retailer REI .

Inspired by last week's post on Road Runner Sports , my love for REI shines through due to my thirst for 365 days of being active and outdoors. After all, I do have to keep up with all the transplants moving to Colorado.?

With my passion for cycling, snowboarding, hiking, and camping, REI is my mecca of adventure equipment, apparel, gadgets, and more. Carrying brands from the likes of The North Face , Patagonia , Osprey Packs, Inc. , Salomon , Thule Group , Cotopaxi , Cannondale , Burton Snowboards , and more, there is always something that I like when I check out REI online or head into a store.

Before diving into REI's loyalty program, I believe it is helpful context to evaluate REI and its competitive landscape. Years before e-commerce came to fruition, if you wanted to purchase sports equipment or athletic apparel, you would get into your car, drive to the suburbs, and end up at Sports Authority (now out of business), DICK'S Sporting Goods , Big 5 Sporting Goods , or another smaller sporting goods brand, in a strip mall or shopping center. The selection at these stores was decent, and prices were moderate, but my honest interpretation was that the experience of shopping in-store was lackluster. The store locations were often expansive and bright, but it felt like a hodge podge of un-curated products jammed onto shelves with limited thought or reason. If you were coming to the store for a specific purchase, you could go in, find your item, and check out, but the retailers failed to draw you in and convince you that you needed more. And loyalty with these retailers? Typical run-of-the-mill, earn-and-burn programs with points going towards discounts on future purchases. Boring!

Then came the e-commerce giants. In what felt like an overnight shift, 亚马逊 , 沃尔玛 , and 塔吉特百货 took over the sports equipment and athletic apparel market in a flash. Without needing to keep products in stock in physical locations, these companies could offer consumers an unlimited selection, great prices, and fast shipping. However, the online-only environment was missing something crucial when purchasing sports equipment and athletic apparel: trying on items, getting the fit right, and feeling the materials. Imagine spending hundreds of dollars on a new sleeping bag online, only to find that the bag is too short and the material is itchy.?You probably needed it for an upcoming camping trip and now it is too late to return it and get a new one in time (this may or may not have happened to me).

Enter REI: A curated, local-feeling store with top-tier brands across several categories. Primarily starting in hiking and camping, the retailer focused on sourcing and offering high-quality sport-specific items that spoke to an audience passionate about outdoor adventure. REI began with brick-and-mortar stores like its competitors but took a different angle from its competition by paying attention to customer experience. Through unique retail spaces, innovative product displays, and even rock climbing walls in some of their stores, REI created an engaging and whimsical buying experience, bringing the products to life. Head inside to an REI location, and you will see that the buying experience guides customers to different outdoor scenes, telling a story and helping one envision how the products function in the wild.?

REI has invested heavily in digital in the past few years, building an omni-channel strategy to remain competitive with other sporting goods stores and online retailers. The glue connecting all of these experiences is their loyalty program. But, the brand does not call it a loyalty program. Instead, it is called the REI Co-op Membership. Membership makes you feel connected. A loyalty program makes you feel like you are part of a database. For those brand nerds out there, REI is killing it.?

The REI Co-op Membership is a pay-to-play model that requires a one-time $30 payment. Here is how the company explains it on the website:?

One membership, a lifetime of boundless discovery -

Whether new to the co-op or already a member (thanks!), your benefits are the best way to experience REI Co-op. Your membership never expires—pay just once, enjoy forever, no renewal, no extra fees, no kidding.

The transparency in the program description helps make the membership benefits an easy sell. Here is what you get for a one-time $30 fee:

• Members get 10% back annually on eligible REI Co-op (REI's private label brand) items
• You get one full year from your purchase date to return the item for a replacement or refund (some exclusions apply)
• Free US standard shipping (no minimum order)
• Trade-in gently used gear for discounts on new items
• Early access to curated products and limited-edition gear
• 20% off bike & snow shop services
• Up to 33% off gear rentals
• Free flat tire repair for bicycles (labor only, parts excluded, certain types of equipment excluded) and machine wax for skis or boards
• Special pricing and discounts on REI Co-op classes, day trips, and nationwide adventures
• $5 of the $30 membership fee is donated to REI Cooperative Action Fund, a 501(c)(3) public charity
• Access to unique local events, hosted live in your neighborhood and virtually around the country
• Members can vote on candidates for the co-op board who represent and guide the co-op forward

That is an impressive list of benefits for only $30. Good job, REI!

What I like about the REI Co-op Membership

• Members see the program's transparency, and you do not feel that the purchases add up to line the pockets of C-suite execs.?The membership "dues" grant access to financial rewards, but more importantly, members feel a sense of belonging. This feeling extends not only to the other community members of REI but also to the planet and the future success of the company. Try to find another company that has a pay-to-play loyalty program like this. I will wait for you to come back with a similar program.
• Effective loyalty programs offer exclusivity.?REI members flock for the chance to have limited-edition apparel, water bottles, and more. The items become a badge worn proudly and help foster connectivity and brand loyalty. Members scream REI's praises, increasing referrals and turning new customers and non-members into brand activists. Consumers want to feel connected with a brand through more than transactions. Again, here is another nod to those REI brand nerds putting on a masterclass.
• The financial benefits alone pay for themselves within the first year of membership.?Take the free flat tire bike repair and ski/board wax as an example. A typical repair shop charges roughly $15 for a flat tire repair each time. In Colorado, where demand is high for an annual ski or snowboard wax, the service can be $85 or more. Talk about an incredible benefit to the adventure seekers who regularly use outdoor sports equipment.
• REI goes beyond product-based discounts with access to experiential rewards.?This further cements brand affinity and connects REI members through unique and immersive experiences. Although not always quantifiable, this connection to the brand pays for itself almost immediately. Please find me a loyalty program that unlocks experiences and connectivity to nature like REI does. Again, I will wait.?

Why the membership program is a winner for REI

• Financially, any time you can create another predictable revenue stream outside your main economic driver, you, as the company, win.?According to REI's membership page, in 2022, the company added 1.28 million new lifetime members. Some back-of-the-napkin math tells me they made a cool $38.4 million from the membership program. On top of this, the company donated $5.4m to the REI Cooperative Action Fund, "a community-driven nonprofit that exists to provide support for nonprofit organizations across the country doing the deep and essential work to create a more equitable outdoors for everyone." One simple pay-to-play model creates a new revenue stream and yields positive remarks for the brand's social responsibility. Win-win.
• With millions of members, REI is crushing the data collection game.?The best thing about the program is that people pay the brand to give them their information. REI can use this valuable information to drive product recommendations, personalize the online journey, and enhance the in-person experience with access to events, yielding a better overall customer experience. Activating zero and first-party customer data will help REI remain engaged with its member base for years. It will be interesting to see what REI comes out with next to deliver an even better customer experience using the valuable insights it collects from every member across every brand interaction.
• While every brand wants a loyalty program to be a revenue driver, sometimes, there is more at stake than profits.?For REI, the membership is an opportunity to do good for members and the planet. The trade-in program is an example of this. Last year, REI Co-op members traded in over 96,000 items. The trade-in initiative helps give new life to lightly used products and keeps production of net new items at minimal levels for lower carbon emissions. Programs that financially benefit consumers and protect the planet lead to more members each year for REI.

Overall, I admire REI for creating a unique membership program that drives value for members in various ways. The company thinks beyond simple earn-and-burn and takes meaningful incentives to a new level. All of what REI offers as benefits and more is available leveraging Talon.One . With a flexible, un-opinionated, API-first promotions and loyalty platform, the possibilities are endless. I am excited to see how REI and other brands continue on the path toward meaningful loyalty programs and incentives that their customers care about.

If you have thoughts about this post, I would love to hear them. If you have suggestions of companies I should check out, please pass them along.

Stay tuned for my post next week on another brand that I spend too much money on :)?