Customerland

Redefining Loyalty Programs Through Purpose and Sustainability

• mike giambattista • Season 3 • Episode 3

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Can the evolving expectations of Gen Z redefine the way brands approach consumer loyalty and sustainability? This week, we're joined by Regan Plekenpol, co-founder of Rediem, who shares her pioneering journey from sustainable policy work to revolutionizing loyalty programs. You'll discover how Rediem's unique approach is turning traditional loyalty on its head by integrating value-driven incentives that resonate with the eco-conscious demands of today's consumers. As Regan explains, the intersection of ethical practices and consumer expectations is shaping a new era of brand-consumer relationships.

With Rediem's innovative concept of "purpose gating," brands are encouraged to align their loyalty programs with their core values, fostering community involvement and social impact. Regan discusses how this strategy addresses the surging interest in authenticity and ethical branding, particularly among Gen Z, who are known for their keen scrutiny of brand actions. By prioritizing partnerships with like-minded companies, Rediem is building an ecosystem centered around genuine social responsibility and transformative consumer engagement, reshaping how we perceive loyalty.

The conversation takes a turn as we explore Rediem's recent successes, highlighted by the remarkable response during Giving Tuesday, where consumers opted to donate loyalty points to charity. This unexpected trend underscores the potential for loyalty programs to do more than just offer discounts—it showcases a growing desire for meaningful contribution. With a successful $1.2 million pre-seed round and a long queue of eager brands, Redeem is poised to lead a significant shift in how loyalty programs can intertwine doing good with achieving financial goals. Join us for insights on how this innovative platform is set to change the future of brand loyalty.

Regan Plekenpol:

When you say, oh, sustainable business or conscious consumerism, you're often met with eye rolls. You're like, okay, well, you know, this is like greenwashing or it's a facade of impact, but really all we care about is making sales. That is going to end up being the goal. But I think increasingly, the modern consumer is demanding more of brands and they want to see ethical supply chains.

Regan Plekenpol:

They want to see attempts at being more thoughtful about end of life and circularity, and there's tons of research that show that Gen Z is opting for brands that are putting their values and they're walking the walk.

Mike Giambattista:

I met Reagan Plekkenpaul, who's co-founder of Redeem, which is a very cool loyalty platform we're going to talk more about maybe a month ago on an introduction, to talk about some of her and her co-founders' unique views on loyalty and what they're doing about it. So we finally got around to scheduling this conversation. I'm very excited. There's a lot to talk about, but first of all, thanks for joining me Really really appreciate this. I'm really looking forward to it.

Regan Plekenpol:

Fabulous, great to be here.

Mike Giambattista:

So your journey to loyalty is very different from a lot of people's, so maybe we start there and that'll add some context to the conversation Like how did it work? What does that circuitous route look like? Why and then? Why this now?

Regan Plekenpol:

Absolutely Securitist.

Regan Plekenpol:

Indeed, I worked in policy for about five years and I was really focused on the intersection of food systems and sustainability, which remains a super huge passion point for me to this day.

Regan Plekenpol:

A lot of my policy research was really around behavior change. How do we use policy to align incentives to create behavior change, whether that be on the part of a business or an institution or on the part of an end consumer, customer. And you know, you have this huge arsenal of tools in the policy landscape carrots and sticks and you're sort of looking at this suite of policy tools and you're saying how do we actually create policies that will meaningfully be implemented and then actually see the end goal that we want to see, which, in my case, was a more sustainable and equitable food system? Coincidentally, around this time I went to an MIT sustainability summit. I was based in Cambridge at the time and I met Sarah, my co-founder, and at this exact time where I was doing this policy work, she was ideating and piloting a very similar concept from a private sector lens. So she was also focused on aligning incentives and the sort of incentives reward mechanism, but she was looking at it from the perspective of, you know, consumers and brands.

Regan Plekenpol:

And so at the time, redeem which was not Redeem at the time it was actually a little cute app called Ripplefect. At the time it was really a consumer app and the premise was if we could get people to start taking do good for you, do good for planet actions like installing solar on your roof or composting your food scraps or starting to recycle, we could have them earning points and then redeeming those points for discounts at sustainable brands. So say you installed solar, maybe you get free socks from Allbirds.

Regan Plekenpol:

It's a pretty cool model. But to keep a long story short, we had an aha moment about a year ago where we took this consumer app model, which was growing slow and steady as consumer apps tend to do, or they kind of mushroom and balloon overnight and we had this aha pivot where we decided that we could actually create impact at scale much more quickly if we actually partnered with brands that already had these beloved communities of fans that love the brand, so we could go direct to the source. Instead of building an audience and community on our own. We could actually just help brands that already have a community have the velocity and scale of impact that we wanted to see. So we white labeled the tech tool and, in fact, many of the brands that were in our rewards marketplace like I said, sort of the Allbirds socks game.

Regan Plekenpol:

These brands were also asking us hey, can you white label this? Because we want to do something similar for our customer base, where we could put our values front and center and say, hey, we want to reward you for getting outside and going on a hike, or we want to reward you for composing your food scraps after you're done eating your pizza that you bought from us, or whatever that may be. So it was sort of a perfect storm of us having this realization that we could really maximize and amplify our impact at the same time of brands, sort of saying, huh, there's something really interesting here that we could leverage for our communities. So very interesting pathway into e-commerce. Sarah, my co-founder, comes from a marketing background. Obviously, I come from the policy background, so we're an unlikely duo to be founding a software.

Regan Plekenpol:

But, in a way it gives us this interesting perspective that I think is pretty refreshing in the space, which is usually just about ROI.

Mike Giambattista:

Hey, let's not badmouth ROI here, come on now.

Regan Plekenpol:

Yeah, no, we love ROI. Hey, let's not bad mouth ROI here.

Mike Giambattista:

Come on now.

Regan Plekenpol:

Yeah, no, we love ROI, but we're coming at it really from this angle of you can do well by doing good, which this is a thesis that we are very committed to proving, and so far, so good.

Mike Giambattista:

Well, you know, yeah, I know that was a lame attempt at being sarcastic and funny.

Regan Plekenpol:

No, I hear you.

Mike Giambattista:

The truth is that, of all the loyalty, not just the platforms but the brands that are no, I hear you is, you know let's, you know ROI first and then, and then you know we can make this align with our brand values. And you've started it from the other side of that, of that of that equation, which is really, really interesting.

Regan Plekenpol:

It is interesting though, because I will say to your point on we love ROI. We've had enterprise size brands jump in and build out a loyalty community with redeem and they've verbatim said you know what? Roi is not our focus here. We want to create impact. These are your B Corp like super do good brands that we're talking about. We know that there'll probably be some returns on this, but mostly we really just want to have a tool to help mobilize our customers for good and make an impact. These are the same brands that have actually returned their investment in our software within three months because we've had a huge direct impact on their bottom line, because we've seen increases in average order value. We've seen increases in repeat purchase rate, referral rate. So it's kind of funny. You say we came at it from this impact lens, but the result is actually showing you know this this huge business case for this as well.

Mike Giambattista:

You know it's likely that I'm not privy to this kind of stuff, but the use cases and the effects of those case studies are are a big story. They're a huge story because you know what you're saying in effect is and and I was one of the first people to kind of go oh, I really just said that but is you know that values and authenticity can actually, you know, produce profits to the bottom line, when you know everybody's been saying that, everybody wants that to be true, yeah, but it's rare that it really is. It's a rare thing when that really actually happens. And I feel like you guys have created a tool set here that, um, I mean, I think that you know the tool set in and of itself does some really neat things for a really neat purpose, but honestly, I wonder if the real magic isn't what it inspires, you know, among the brands just to say, hey, we can actually make this happen now.

Regan Plekenpol:

Absolutely. I mean, the types of brands we work with are already doing amazing work. This is making their life easier and amplifying that impact. But I think to your point, like when you say, oh, sustainable business or conscious consumerism, you're often met with eye rolls. You're like, okay, well, you know, this is like greenwashing or it's a facade of impact, but really all we care about is making sales, which I think to an extent, sadly, is the truth. We still live in a very, you know, entrenched capitalist system where that is going to end up being the goal.

Regan Plekenpol:

But I think increasingly, the modern consumer is demanding more of brands and they want to see ethical supply chains, they want to see attempts at being more thoughtful about end of life and circularity, and there's tons of research that show that Gen Z is opting for brands that are putting their values and they're walking the walk and they're putting their values front and center. So 82% of customers recent study was that said that they would opt for a brand that they'd feel aligns with their ethos. So I think we're seeing an increasing. There's been a trend, and I was at a panel the other day and a woman said the trains left the station on the consumer demand for sustainability and and product safety, um, and ethical, like human rights, uh, considerations in the supply chain we're, but now we're seeing that amplify and then I think in this generation my generation it's going to become an absolute necessity for brands to be able to really show that they're not just empty platitudes.

Mike Giambattista:

Right, a handful of things there that are worth kind of pulling apart. I want to kind of put a pin in the Gen Z comments because there's so much to talk about there and I'll just I'll just prompt the conversation. I hope we get to today to say that there are a lot of brands who recognize the importance of Gen Z to their, their sales, but are really struggling with how to engage them, really struggling and I've spoken of a handful of these people directly. Even the consumer researchers, who are dialed into and strictly focused on Gen Z, are kind of going. Well, this is different. You know they don't look like or act like or feel like or, you know, process things like any of their previous generations. So I want to, I want to talk to you maybe in a moment about that, but I kind of feel like we've we've spoken about the why and even the how of redeem, but I think it's only fair to the people who are listening to talk about the what, yes, we do need to take a step back.

Regan Plekenpol:

I tend to get so heady into the thesis of, you know, the second quality of what we're doing, but absolutely so.

Regan Plekenpol:

Our core thesis, like I said, we're really trying to prove that there is an opportunity here to rehumanize the brand customer relationships and truthfully, and I think Mike and many of your guests you'd probably agree, there hasn't been a heck of a lot of innovation in the loyalty space in the last decade. We've still seen this very cookie cutter grid of limited customization and sort of this like us on Facebook for 10 points, or you know this solely transactional mechanism of points for dollars spent, of points for dollars spent. And we saw an opportunity to sort of innovate that part of the tech stack with this concept of these non-transactional rewards. So what Redeem does is it allows brands to, almost in a Canva-like way, really create a menu of different actions that can be rewarded and a menu of different rewards, and those are all typically very brand aligned. So rather than just saying, you know, like us on Facebook, you could reward customers.

Regan Plekenpol:

If, let's say, you're a, you're a Patagonia, you could reward folks for getting out on a hike and taking a photo of them and all their friends wearing their Patagonia gear. Or you could reward them for signing a climate petition or planting a tree on Arbor Day or referring a friend to come join a brand-sponsored in-person volunteering day, or a random act of kindness Really, the list goes on, and there's a suite of tech tools in our back end that allow you to seamlessly track and verify that these actions are being taken. And then on the flip side, on the reward side, equally customizable. So instead of just offering your classic discount code for an e-commerce purchase, you could offer gift cards. You could offer limited edition merch that's only available to members of the loyalty community. Maybe it's an in-person educational event that you get invited to as a VIP loyalist. So really just giving brands this total customization and ability to really let their creativity and brand values shine through into how they're creating these loyalty communities.

Mike Giambattista:

And in some of your materials you use this phrase. I love it, but I'm going to ask you to define it for us, which is purpose gating? Ah yes, I kind of wish I had come up with it. I didn't, but it's. I mean, it says all kinds of things, but what are you? You know? What are you pointing at when you say that?

Regan Plekenpol:

Absolutely so. First of all, I've been told by many people we should coin this, so maybe we figure out what we what we need to trademark that term.

Regan Plekenpol:

But really the core of what I what I mean when I say purpose gating is it's us staying in our own integrity. So our we are a team of climate passionate folks with you know social impact backgrounds and for us we've built a really cool tool and we don't want to see it be used for ill. So for the same reason that Patagonia could reward you or Cotopaxi or any of these really cool do-good brands that really are walking the walk, for the same reasons they could reward you for going out on a hike or doing a random act of kindness. A fast fashion brand could easily reward someone and say let's use our AI image recognition to count how many things in your mindless haul you've done that you don't need to buy. Or you know there's a lot of ways we can see this being used for greenwash or or just not to promote the values that we really embody. So this is our way of sort of having our own internal um, like our own internal metric of uh, what type of brand and what type of values that we want to, that we want to work with. So for that reason, you won't see us live on the Shopify app store and we do screen brands before we decide to move forward with launching a program with them.

Regan Plekenpol:

A couple really cool outcomes of that beyond just us feeling like our tool is being used to make the world a better place. One thing is we end up becoming a seal of approval for customers. We really respect and admire the B Corps of the world. Seal of approval for customers. We really respect and admire the B Corps of the world and I think by having these sort of communities and seals, you're really able to differentiate and distinguish yourself as a brand. That is making the harder decisions to do it right, not cutting corners and really prioritizing people on the planet.

Regan Plekenpol:

And in the same way, we also have a lot of facility in our back end to create collaborations between brands. So we see ourselves in the same way. We also have a lot of facility in our back end to create collaborations between brands. So we see ourselves in the future becoming an ecosystem of these do-good brands and then really being able to amplify their impact by cross-collaborating between brands, sharing audiences, really amplifying impact through collaborative challenges and the like. So by being very intentional about who we let into that community, we're really going to be able to have the tide rise all of those ships and really help the brands that are doing such amazing work. Give them that extra bonus and ability and that tool to stand out even further.

Mike Giambattista:

By shaping and designing it yourself as you go Brilliant, brilliant. It's not just a rush to market, which I happen to love. It's intentional, it's purposeful. It's slow in some cases. I guess, if we could. I think that it's evident in your materials, it's evident talking to you, it's evident in the way and reasons you've structured Radium that you are going after the younger generations as participants in these programs, and we talked about this a moment ago.

Mike Giambattista:

Gen Z is a full-on conundrum to most brand marketers.

Mike Giambattista:

It's just all it is is a question mark with a bunch of ideas, and I'm not lying when I say I've.

Mike Giambattista:

I've been to, I have been to events where brands who are smart people these are just really and they've been at this a while they get it, all the nuances, all the things you can and can't do, but they're literally at the throat against the wall and hope it sticks kind of thing with.

Mike Giambattista:

With gen z in particular, because I think you know earlier generations you could kind of define certain core themes and you could leverage those, you could play with those, you could engage with those. But in Gen Z it's kind of like they'll tell you what they want. If you can get them to do that They'll tell you what they want if you can get them to do that. As soon as you meet those criteria and think that you're locked in, they find a better price and they're done. They're out brand marketers who are spending millions and millions of dollars to engage and bond with people who just aren't going to do it under traditional means. Can you talk a little bit about how Gen Z at least the you know, the cohort that you've engaged with interact with your platform? I mean, do these values tend to resonate in ways that you know other values may not?

Regan Plekenpol:

Sure, I would question to your point you just shared about how these marketers are using all these tools and resources to bond with Gen Z. I would question how authentic and intentional that bond is, because I do think that over-reliance on sort of social media trends like that's not actually bonding with your customer, that's just getting their attention, which is really different. And so I think that there's sort of this deeper level of connection that Gen Z really demands and expects from brands that I think bringing your hands and sort of saying, well, we have a lot of Instagram followers and we're getting a lot of engagement on social media or TikTok, it's actually a step further, but the good news is I think it's not as much of a conundrum as it may seem. I think the core for Gen Z and I obviously can't speak to the entire generation, but I could probably distill it into a couple of words and that's community and co-creation. So for the community piece, and that's community and co-creation. So for the community piece, like, let me count the ways.

Regan Plekenpol:

Obviously, we've got a generation whose really critical parts of their life were disrupted by the pandemic. They're online, they're chronically online and, despite being connected more than ever, there's definitely a loneliness epidemic, and even I think the Surgeon General was writing recently about the loneliness epidemic among young people. Think the Surgeon General was writing recently about the loneliness epidemic among young people. So feeling like they're part of a community, feeling like they're part of something that's bigger than just themselves, is super important. And then the co-creation part. I think there's a huge opportunity for brands to seek input from Gen Z and not to your point you say, well, we asked you what you wanted and then you didn't want it anymore. But if they're feeling like they're actually got, if they're invested in the process of developing a product, if that's you asking for new colorways or what's the new flavor that you that you want to see us launch, and then when you launch it, does that person get early access? Or do you send them a surprise gift in the mail and say thank you so much for your feedback. We've actually made what you've asked us to make. So the idea of feeling like it's this high fidelity relationship, is really important for Gen Z.

Regan Plekenpol:

I always say Gen Z wants brands to be their coach, their therapist, their best friend, but also give them a discount. So they are a complicated bunch, but I don't think it's too difficult to really crack that problem. And another piece of it really is that they are so inundated with ads and acquisitive moments that if you can stand out and give them something experiential, specifically if it's something that feels exclusive or maybe VIP, that is a really a huge way for brands to stand out rather than just saying here's a promo code, 25% off, promo code culture is. This is my prediction. Promo code, promo code culture is is no more like this is. You can just Google how do I get 10% off a brand and it's not special. If you think you're making people feel special by giving them 25% off, you're missing the point. So you can really make Gen Z feel special by bringing them into a community where they feel really seen and heard and you're seeking input from them and then you're personalizing your comms with them moving forward. So it really shows that you didn't just, you really listened and that you're really taking to heart what they have to say. They're values-based, they're experiential Like most research is pointing to Gen Z spending a lot more money on concerts and travel and sort of these experiences rather than items, and like just this acquisitive nature that was very millennial and they're also sustainable.

Regan Plekenpol:

I think I mean not every single Gen Z would agree with this, but I think, for the most part, we see the world that we are being bequeathed by the previous generation and there's a lot of ills in the world that we're being handed. And I think we're more aware than ever and we have the tools at our disposal to be sleuths and look into the supply chain and look into the ingredients on a, on a back of a, of a product that we're considering purchasing, and really understand what the brand is doing and and can we really trust that they are, that they're a safe bet.

Mike Giambattista:

Two points there. One you just echoed beautifully talking to another market researcher who said like Gen Z are like amazing product spies, like, literally, you know, are you greenwashing? I can know the answer to that in seconds, seconds or they can take me minutes, but you're right, it's, it's really easy to do that nowadays. The other point I wanted to make is that there's something unique about the way you have conceived your platform that, I think, goes beyond even the aspects of bond branding, or even brand bonding, for that matter, and that is that you're requiring participation. You're requiring some action upfront, that is not just a purchase, and I think that you know, look at behavioral psychology, look at, you know, behavioral design and and you know just that act of participating in something is already a bond that most approaches to, to brand loyalty. They can't do it. You know. I'm just asking you to buy something.

Regan Plekenpol:

Yeah.

Mike Giambattista:

And your approach is no, first do something and then we'll give you the ability to buy something. If that's what the reward is, I think that's really, really powerful.

Regan Plekenpol:

Yeah, it's interesting too because it takes away this transactional, superficial relationship structure where it's like I kind of just know that the brand is wooing me a little bit to then just ask me to open my pocketbook, right when you're like you know what.

Regan Plekenpol:

You can be really meaningfully involved with this brand. You can even advance in your tier to a top tier customer and a loyalist without buying anything. Right, you can participate in every challenge the brand puts together. You can line up around the block to go to every pop-up they put on and you can be rewarded and loved on by the brand. And it just goes to show that that relationship doesn't have to just be solely transactional and there is a real space for this rehumanized relationship where people can look to their favorite brands for advice and education. And it doesn't just have to feel salesy. But of course, those people like the classic example of Patagonia when they shut down their website on Black Friday and said don't buy this sweater the next day, right, they had record sales right, it was like that proof point of like wow, they're willing to do something completely outlandish because they truly are audaciously believing in what they.

Regan Plekenpol:

You know what they stand for.

Mike Giambattista:

Yeah, let's have another couple of conversations about Patagonia and how they've modeled so much of this. Before it was even modelable. But that's probably another conversation. A few conversations down the line.

Mike Giambattista:

Yeah, part two Let me ask you this Radium is fairly new in market Super impressively new in the market, by the way, some of the great brands you've got on board already. But where do you see this in two to three years, in in five years? What do you? You've alluded to some of this already, but what is redeem going to look like? What are your, your customer client relationships going to look like and what? What do you think those you know, uh kind of customer slash consumer relationships are going to look like and what? What do you think those you know, uh kind of customer slash consumer relationships are going to look like?

Regan Plekenpol:

It's a very multifaceted question. I hope I hit all Sorry.

Mike Giambattista:

No, I tend to do that it's a compound question. That may not even be one.

Regan Plekenpol:

Remind me if I miss any of the points. But yeah, it's a great question. It's something. Obviously, being a new team, we think about our roadmap a lot and what is the next level for us. I think we're in such an interesting time for commerce. I think we're at a tipping point of the way that we shop. With all the technologies that are just advancing at lightning speed, we will not recognize the shopper economy in even three years, two years, one year, next year. It's Super interesting.

Regan Plekenpol:

We're in this spot where we have brands moving to third-party retailers like Amazon and Walmartcom because they've got this economy of scale, but at the same time, gen Z, as we just talked about, wants high touch, high fidelity, high personalization. So we see ourselves really at this tension point of how do we grow and match the speed and scale of the velocity of the consumer market, but also not at the expense of those personal relationships and that huge arsenal of zero-party data where you can really know your customer and love on them. So I think we're really excited for where we are and the time and space and the why now of what we're doing. I think there is a definite case to be made and this is a whole other conversation around the direction of climate regulation for brands. I think Europe's a great example. We look to Europe for supply chain traceability and extended producer responsibility laws, where brands are going to increasingly need to know how consumers are using and disposing their products. So I think, in a way, having this high touch relationship with consumers throughout the whole life cycle, especially post-purchase, because use and disposal is a key part of scope three, I think we're actually preempting a lot of where the direction of commerce is going to go from a climate perspective, which is really exciting. So it's to be seen how that all shapes out.

Regan Plekenpol:

But I think having this high touch you know contact with your customer and really understanding and educating them on end of life and what to do with the product and how to use the product and maybe recycle it at the end or donate it to a thrift store and give them points for doing that, of course that'll be really interesting.

Regan Plekenpol:

And then, on a very, very large sort of 10 year scope, we see this tool and this mechanism of aligned incentives and behavior change being vertical agnostic. So we're starting with commerce and we're starting with CPG and retail, but I really see a world where we can democratize this impact-oriented community building, and the city of New York could mobilize Verdeum to really inspire their population to bike to work and maybe reward them with a plant-based meal, or you could see musicians using it on tour to mobilize their audience to make more sustainable, to do good for, do good for you, do good for the planet decisions and choices. So we really see this, notionifying it, if you will, and really making this a tool that anyone with a community to mobilize can use to make the world a better place.

Mike Giambattista:

You heard it here. I'm saying this with no sarcasm at all. I mean this those are big, bold, gnarly ideas that are super audacious, but I have a feeling you're just the people to pull it off.

Regan Plekenpol:

Thank you. I appreciate that it's early days. We're just pressing go on a lot of these features and learning so much from our early customers. But it's exciting and I think one thing I'll share. Just as like a a a win we had this week or this past week, it was Giving Tuesday and we had plenty of people early days say no one's going to want to do anything impactful with loyalty points. People just want discounts, they just want to have extra cash in their pocket. But we saw a 2,000% increase in redemptions on Giving Tuesday alone across all of our merchants and that was all people donating their rewards points to charity partners. So we saw thousands of dollars of donations run through the Redeem platform vis-a-vis people actually donating their rewards points. So if that doesn't prove to you that people are willing to do good and are willing to be mobilized when the incentive structure is correct and when they have a trusted brand to inspire them to do so, I don't know what could prove it.

Mike Giambattista:

Yeah, yeah, so people can still be good. There are good people out there and they happen to be customers.

Regan Plekenpol:

Yep, everyone's a customer.

Mike Giambattista:

This is true. They are Well, reagan. Thank you so much for this. I'm really hoping this is the first of several conversations on these and related even spirally related topics, because there's just so much to talk about here. But I really think that, um and this is obvious I mean you close the $1.2 million pre-seed round. You've got more than 500 companies on your uh, on your waiting list. Some of them are really big brands. You're not just at the starting gate, you're well beyond, with an incredible amount of momentum there. So finding out where Radium is in six months or a year is going to be interesting unto itself, but I think maybe even more interesting are going to be your learnings as the person who, or one of two people who are championing this approach, who are developing the tool sets to actually pull it off, and how you see people responding out there. So, with all that, I'm really looking forward to it.

Regan Plekenpol:

Yeah, well, we will do. Let's do a six-month check-in, part two, and I will report back how it is going. But early signs of a BMF and an awesome group of customers to be working with, so we're extremely grateful and humbled but really, you know, seeing a huge impact and that's all we wanted from the very get go.

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