REI drops mic on Black Friday. A free lesson on purpose and brand differentiation.
Wake up early to surf, not shop. REI will not participate in the Thanksgiving day sales event that seems to create a stampede of shoppers willing to do just about anything in order to hunt down low prices. Instead, the company is opting to give their employees the day off so they can enjoy the great outdoors and encouraging you to #OptOutside as well. Brilliant.
People will pay more if you do good.
Peter Drucker says that the role of business is to create a customer. Extreme sales incentives as part of your marketing mix can certainly work, but what about removing them altogether? As a paying member of Kinokuniya Bookstores, I can tell you that people who are willing to spend more and frequently on premium products do so because they align their values with the business. Plain and simple. Branding is all about establishing a relationship between you and your audience and engaging in activities that reinforce that relationship. Whether it’s the millennial generation or the transparency and speed of social media, companies are looking for ways to appear as the “good guys.” Further, competing on price is a hard place to be if you are looking for customer loyalty. Does anyone really feel passion for Walmart? Stand for something and sell a high quality product, offer sales incentives to people who invest in your business. Make your customers feel damn good about spending their hard earned cash with you.
“Lessons we have learned from the rise of consumerism, or from the attacks on industry for the destruction of the environment, are expensive ways for us to realize that business needs to think through its impacts and its responsibilities and to test objectives for both.” – Peter Drucker
Be different. Be a hero.
All too often business leaders follow the herd, playing it safe because being different is sometimes seen as a type of negative uncertainty. Similar to what I tell high school students, I challenge you to be bold and stand for something you believe in even if it’s different than what everyone else is doing. Who knows? Perhaps your actions will inspire change in your industry or allow others to join you. Leaders are constantly beating the thought leadership drum. Well, how about doing the right things and getting recognition for it? True thought leadership doesn’t come from a PR company. True thought leadership comes from doing the right things and making awesome content to prove it.
“A visionary company doesn’t simply balance between idealism and profitability: it seeks to be highly idealistic and highly profitable. A visionary company doesn’t simply balance between preserving a tightly held core ideology and stimulating vigorous change and movement; it does both to an extreme…” – Jim Collins
But how does this affect KPI’s?
With a 10% growth in revenue and a 20% surge in membership last year, REI is being crowned as one of the “hottest retailers in the country,” as Bloomberg noted recently. To add to the differentiation of their brand, they have a very unique business model – a cooperative. And not only does it perform, it creates value most companies can only dream of: trust. Each of REI’s 5.5 million members pay $20 to join and receive a 10% dividend back from the purchase of any full price item for life.
If we consider that shopping decisions are largely the result of gut instincts, trust would definitely be a higher aspiration than merely a cost savings. Remember that REI’s products are not the lowest priced on the market as shown in my receipt from this year’s Coachella Festival expenses. This balance of purpose and profit is something that would surely get a nod from both investors as well as the likes of Buckminster Fuller.
Best of all, it’s recession-proof. Not only has REI outperformed the S&P 500 for most of the past decade, it crushed it in 2009. My hope is that this trend toward sustainable and socially responsible business continues. As my years of working in nonprofit organizations has taught me, a better world can exist when private industry understands it’s role in society and nonprofits understand their role as a business.