As the country’s largest consumer cooperative, REI’s job is to serve its members, according to Clay Walton-House, VP of member and customer growth at REI.
“Our job is to serve our members, and certainly that does create your purpose and a mission that gives us some meaningful cultural equity with driving customer focus,” Walton-House said during a panel at Qualtrics X4 in Seattle last week. “But we also really had to grapple with some pretty brutal truths about how the competitive landscape has changed throughout this over the last decade.”
That truth is REI no longer has a stronghold on outdoor retail. Outdoor specialty brands like the North Face, Patagonia and Arc'teryx are selling directly to consumers, and even active lifestyle brands like Nike or Adidas have jumped on the outdoor retail bandwagon in some form or another.
“And so we really had to go grapple with: What has that meant for the depth of our relationships with our co-op members? What does that mean for lifetime value of our co-op members? Where is their share of wallet going?” Walton-House said.
In short: What do co-op members need most from REI?
The outdoor retailer committed to Peak 28, a strategic plan released in September, to guide the co-op over the next three years. The plan is centered around offering a connected, focused and trailblazing culture; authentic, culturally leading assortment; elevated service and experience; and reinvented membership.
REI is focused on doubling down on its differentiators, Walton-House said. That means investing in its elevated services experience.
“Anyone who's ever been to an REI before, I hope you would say that your experience working with what we call our green vest was far and away better than what you likely experienced in other retail stores, especially in the outdoor space,” he said. “And then membership was the other area that we continue to invest in as a cooperative. Part of our business model is literally giving value back to our members.”
Notably, not all staff feel invested in. The REI Union says the outdoor retailer cut compensation, retirement, health care, vacation days, and personal and unpaid time after talks between REI and the union broke down earlier this month.
Peak 28 also elevates customer experience as a strategic mission. The outdoor retailer brought together its different customer-focused functions to supercharge what it already knew about its customers in disparate insights across the organization. It brought together its voice of the customer, primary research, customer analytics, and data science teams with a new customer-planning team.
The new customer-planning function “is deeply embedded in all of the member data, around the health of our member base” and “understanding where the pressure is financially in the business, from the customer lens,” Walton-House said.
Most significantly, the customer-planning team participates in budgeting and the enterprise planning community.
“They pressure test our demand plan every year from the lens of the customer and say, ‘We think that there's risk in that demand plan, CFO,’ or, ‘We think actually we can do more, CFO.’”
CX teams often don't have profit and loss charges, in comparison to other business functions.
“That creates a real issue. At the end of the day when the CFO cares about driving those sales, driving the margin, driving the profit, and if you're a publicly traded company, that's what you're being held accountable to, the organization tends to optimize for those outcomes,” Walton-House said. “And if you're not someone who has declared P&L accountability and the bottom line, you have less influence.”
“Where the opportunity really sits is to help organizations move toward managing what I would call the customer P&L with the same level of rigor and discipline that other P&Ls are managed inside large organizations,” he said.
Customer experience does impact the bottom line after all. In tracking CX leaders and laggards for over 16 years, a consultant found that CX leaders gained the S&P 500 Index by over 260 points on average, according to Virginia Bryant, VP of global customer marketing at Qualtrics. “That's a capital markets verdict.”
Companies that are investing in the customer first are reaping the rewards of it, Bryant said.
