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REI proves digital strategy and values-based business is a winning combination

Published December 10, 2020

Similar to the idea that not everyone is your customer, not every customer will identify with your company’s values. For Recreational Equipment Inc.—better known as REI—a risky “aggressive commitment” to its values helps it soar.

As we progress into a values-based purchasing future, brands that take a stance will rise above the competition, and REI sits comfortably at the intersection of strong company values + effective digital strategies. As a company, it wants more people to get away from their screens and go outside—so, then, how do digital sales continue to skyrocket?

REI heightened its sales and member base not by courting every consumer that exists, but by unwaveringly standing for a value.

REI Co-op was founded on a value: outdoor accessibility and sustainability

REI’s founding value was to put purpose over profits. It did that by building a business around a life outside.

From the start, REI has lived that value by giving the majority of its sales back to members and outdoors-based philanthropic endeavors. It all started in 1938, when a group of climbing buddies, fueled by the fact that they “loved mountains more than money,” formed a cooperative rather than a corporation. A cooperative, or co-op for short, is defined as “a farm, business, or other organization which is owned and run jointly by its members, who share the profits or benefits,” and “involving mutual assistance in working toward a common goal.” In short, REI is owned by its members.

REI’s 19 million lifetime members—an achievement unlocked by a one-time $20 buy-in—share in the company’s profits. Members receive once-yearly “dividends” based on how much they spent at the retailer in the previous year, as well as benefits like exclusive events and discounts on rental gear.

REI cares for the environment—and they’re not afraid to show it

Consumers trust brands to tell them the truth more than they trust the government, believe it or not. REI captures that trust and turns it into fuel for sustainability—or what they call stewardship. And REI customers love supporting a company that takes a stand.

As a brand, “being neutral is no longer an option.” And it’s true—a Forrester study showed that “70 percent of the most empowered consumers believe a company’s social responsibility is important.” And while younger generations typically get the credit, that sentiment covers generations, with 52% of U.S. consumers over the age of 60 believing it’s important for brands to take social responsibility, compared with 60% of those ages 34 and under.

"REI would rather forfeit some sales than forfeit its values."

When it comes to politics, REI “maintains a nonpartisan stance,” but it’s very clear about where they stand on (traditionally more) bipartisan issues like climate changepublic lands, and equality. REI also partners with brands like Patagonia and North Face on taking a stance for nature. For example, when Utah’s Bears Ears size was reduced by 85% in 2018 by President Trump, all three brands boycotted the Outdoor Retailer trade show, which is “a major source of revenue for Salt Lake City,” according to Business Insider. In other words, REI would rather forfeit some sales than forfeit its values.

REI reinvests more than 70% of its profits into the great outdoors

REI surpassed $100 million in give-back to outdoors-focused philanthropies last year, yet they still hit record-breaking revenue, with $3.1 billion in revenue. Maybe it’s good karma—or maybe it’s the perfect example of how a values-based business can give back and still be successful.

REI reinvests a majority of its profits in things like building trails, enhancing campsites, connecting minority groups to resources that get them outside, and “rewilding.” In 2019, REI invested $8.1 million in 427 nonprofits, creating and stewarding 6,232 outdoor places and “more than 9,000 miles of trails.” The co-op also has a 501c3 nonprofit, The REI Foundation, that gives annual grants to various local philanthropies that are rooted in the company’s core values.

REI steps up sustainability with online used gear sales and rentals

One of REI’s core values is sustainability, and many consumers are starting to reject fast fashion, opting for used instead. That value paired with that trend results in a vast expansion of REI’s (even more) sustainable online and in-store offerings: used products and rentals.

The value-based strategy is also a smart business move. “Over a third of Millennials would rather rent than own a product,” according to REI. The resale market is gaining much more traction, too. In a 2020 ThredUp study, 70% of women have shopped secondhand or are open to it, compared with just 45% in 2016. That data is true for REI customers. Forbes reported that the co-op is “on track to resell nearly a million used items this year and about double its online used business.”

In an interview with SGB Media, REI spokesperson Halley Knigge said REI had turned its focus to reinvesting in the company, including “vastly expanding our rentals and used gear offerings and adding eight new stores.” Knigge added, “[W]e believe these investments are setting the co-op up for success in our next 80 years as our customers begin to demand more rentals, used gear and experiences offerings.”

REI’s digital strategy garners expansion and loyalty

Aside from mobile apps that create a seamless physical-digital experience for its members, REI digs in its values-based heels with Opt Outside, a digital campaign that clearly displays REI’s relentless commitment to the outdoors.

What started as a one-time PR play, REI’s Opt Outside campaign has turned into a movement. Opt Outside is arguably REI’s biggest digital display of their values: Every year, on Black Friday, as many stores are clocking their highest revenue day of the year, REI closes its doors and urges its customers to go outside instead.

You’d be hard-pressed to find Black Friday revenue numbers for the outdoor company, since, technically, they don’t participate. But in its first year alone, #OptOutside warranted a “23% uptick in digital sales,” according to Retail Touchpoints. And in 2019, REI saw an overall 8% increase in digital sales.

When REI introduced Opt Outside in 2015, it garnered a “7,000% increase in social impressions and more than 2.7 billion media impressions in the first 24 hours, not to mention an absurd 9 Cannes Lions for REI’s PR agency, Edelman,” according to data gathered by Sprout Social. Not to mention that the use of the #OptOutside hashtag shows a trend in increased customer loyalty and referrals. Sprout Social found that the hashtag went from “338K engagements in 2015 to 11.6 million in 2019.”

Everything the co-op has done over its 82 years has intended to do one thing: get people outside. And not only do people get outside, but they buy from REI to do so. According to REI’s CIO, Julie Averill, in a New Relic case study, technology aids in their mission of getting people outdoors. “[Technology] can help them find great gear, help them have a great experience in our stores. It can help them find a great trail, help them get access to expertise, and it can help them find community.”

Consumers buy from brands that take a stand

When you choose REI, you choose a lifestyle. And that’s exactly the feeling 41% of consumers want—and that number is only growing.

According to Forrester, “Companies that put their values into action grow faster than other companies.” Sixty-eight percent of U.S. consumer purchases are influenced by a company’s commitment to social responsibility, and 41% want to buy from companies that are up front about their social, environmental, and political values. If you don’t believe us, take it from REI: An unwavering commitment to its values has resulted in a loyal and intentional member-base that’s carried them for more than 80 years.

Find out why 90 percent of Gen Zs say companies must act to help social and environmental issues.

Brands and businesses alike who are shifting to values-based can do three things:

1. Identify the values of your customers. Especially in today’s climate, customers want to be heard. Value identification can be as simple as surveying current customers about what they value and what they’d like to see you speak up about.

2. Communicate your values in human-speak. Getting your values out there for consumers in ways that feel true to your brand is a given, but doing so in an authentic way is more important. More than ever, customers want to be treated like people, not dollars, and values-based positioning is the perfect way to help them feel supported.

3. Work your values into every initiative. If your new product launch or line isn’t aligned with a value, why not? And if not, how can you get it there? The reason for REI’s ultra-dedicated customer base is because every product, experience, and offering is completely aligned with one of its core values. To be a true values-based business, each initiative should have a clear tie.

REI’s digital strategy starts and ends with its values

REI’s commitment to its values and its members isn’t time wasted. Aside from its members being responsible for a heaping 90% of its sales, its commitment also aids in the company’s digital transformation.

Being values-based allows REI to center the customer experience, working backward from the experience into the technology that supports it. With a strong member base, REI has even stronger data prowess that allows REI to implement digital transformation strategies that support its members (and its values as a business.)

The data is clear: Customers are more loyal to brands that align with their values. And, by now, we know that loyalty increases sales—especially through digital-first touchpoints. So, moving forward, brands that make their values clear will find themselves in a better spot not only with loyalty but also with sales.

Loyalty points are only the tip of the iceberg.

See 6 little-known factors keeping today's consumers loyal.

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