Latest / The Retention Marketing Podcast with Fexingo: Email, SMS, and Loyalty for Repeat Customers / How Allbirds Built a Loyalty Program Around Sustainability
Transcript
- Lucas: Allbirds built a loyalty program where the main reward is basically... giving shoes back. And it works. Luna: You mean the ReRun program? Where you ship your worn-out shoes back to them? Lucas: Exactly. You return any pair of Allbirds — worn, scuffed, whatever — and they refurbish them for resale or break them down into raw materials. In exchange, you get a $20 store credit. It's not huge, but it's not nothing. Luna: So the customer gets a discount on their next pair, and Allbirds gets a steady stream of used inventory and a sustainability story. Smart. Lucas: Right. And the numbers bear it out. According to their 2025 impact report, customers who used ReRun at least once had a repeat purchase rate twenty percent higher than those who hadn't. That's a significant lift for a program that costs them the $20 credit plus shipping. Luna: Twenty percent higher — that's pretty big. But is that correlation or causation? Maybe people who are already loyal are more likely to engage with the program. Lucas: Fair point. But Allbirds has internal data showing that new customers who opted into ReRun within their first ninety days had a repeat rate fifteen percent higher than similar customers who didn't. So there's a strong signal that the program itself drives retention. Luna: Interesting. So it's almost like the act of returning shoes becomes a touchpoint that deepens the relationship. It's not just a transaction — it's a ritual. Lucas: That's exactly how they frame it internally. They call it 'closing the loop.' Every time you send shoes back, you get an email explaining exactly how much material was diverted from landfill — in kilograms, with a comparison to something tangible, like 'this saved the equivalent of three plastic grocery bags.' Luna: That's clever. It turns the post-purchase email into a retention tool. The customer feels good, and then they have that $20 credit burning a hole in their inbox. Lucas: Exactly. And they don't just send one email. They send a series: first, a confirmation with the impact stats. Then, about a week later, a reminder that the credit is available. Then, a third email featuring a new colorway or a seasonal style — but always framed as 'your next pair, with your credit.' Luna: So the SMS component — do they use text for this too? Lucas: They do, but sparingly. For ReRun, SMS is used only for the credit reminder and the shipping confirmation. They explicitly avoid promotional SMS for this program. The idea is that text is for utility — the high-urgency channel — while email carries the emotional story. Luna: That's smart segmentation. A lot of brands blast SMS for every sale and then wonder why opt-out rates spike. Lucas: Right. Allbirds keeps their SMS list relatively small — about eight percent of their customer base — but the conversion rate on those utility texts is over forty percent. People actually click the link to redeem their credit. Luna: Forty percent click-through on a transactional SMS? That's exceptional. Most brands would kill for a tenth of that. Lucas: It works because the message is tied directly to something the customer already values — their credit. They're not asking for attention; they're delivering a benefit. Luna: So the whole retention system is built around an action that reinforces the brand's mission. It's not a points program where you earn for spending more. It's a program where you earn for being a good environmental citizen. Lucas: Exactly. And that's the key insight for today's episode. Most loyalty programs are designed to increase share of wallet. Allbirds' program is designed to increase shared values. The repeat purchase is a byproduct. Luna: I can see how that works for their audience — Allbirds buyers skew younger, more educated, more environmentally conscious. But does it scale? If they ever go mass market, would the same program resonate? Lucas: That's the million-dollar question. Their current customer base is about two point five million active buyers, and ReRun adoption is around twelve percent. That's about three hundred thousand people actively returning shoes. It's a niche within a niche. Luna: So if they want to grow to ten million customers, they might need a different loyalty approach for the other eight point seven million. Lucas: Right. And they're experimenting with that. They recently launched a paid tier called Allbirds Plus — fifteen dollars a year for free shipping, early access, and double credit on returns. That's more traditional. But ReRun remains the flagship because it's the most authentic to their mission. Luna: It's also a cost-effective retention tool. The $20 credit plus shipping probably costs them around twenty-eight dollars per return. But the average order value is about a hundred and ten dollars. So as long as that credit converts into a purchase, they come out ahead. Lucas: And the refurbished shoes sell at a lower price point — around sixty dollars — which attracts a more price-sensitive customer who might not buy new. So they're expanding their total addressable market while retaining existing customers. Luna: That's a double win. And speaking of wins — Lucas, you know how we keep this show ad-free and independent? Lucas: Yeah, that's a deliberate choice on our part. We don't run ads, we don't have sponsors, and we want to keep it that way. Luna: If these episodes have given you ideas you've actually used — maybe a loyalty program tweak or an email sequence — and you want to support the show staying ad-free, you can do that at buy me a coffee dot com slash fexingo. No pressure, just a way to keep it going. Lucas: And it genuinely helps. A listener buying a coffee is a signal that this work matters. So, back to Allbirds — there's one more thing I want to highlight about their retention engine. Luna: What's that? Lucas: They use the ReRun program to gather data on product durability. Every returned shoe is inspected and logged — which model, which size, which color, what kind of wear. Over time, they've built a database that tells them exactly which styles last longest and which fail fastest. Luna: So the program isn't just a loyalty play — it's also an R&D tool. That's a smart way to justify the cost internally. Lucas: Exactly. The VP of sustainability at Allbirds said in an interview that the data from ReRun directly influenced the design of their latest running shoe, the Dasher 3. They reinforced the heel counter and changed the outsole compound based on return patterns. Luna: So the customer who returns shoes is actually helping improve the product. That's a powerful retention narrative in itself. You're not just getting a discount — you're part of the design process. Lucas: Right. And that kind of narrative is hard for competitors to copy. Any brand can offer a twenty-dollar credit. But very few can credibly say 'your returned shoes will make our next product better.' Luna: So the moat here isn't the program mechanics — it's the mission alignment and the data flywheel. Lucas: Exactly. And that's the takeaway for listeners who aren't running a sustainable shoe brand. If you're a subscription box or a software company, ask yourself: what action can your customer take that simultaneously reinforces your brand values and generates useful data? That action, once identified, becomes the core of your retention program. Luna: Great point. Allbirds could have just done a standard points program. Instead, they built something that feels like a partnership. Lucas: And that partnership feeling is what drives that twenty percent lift in repeat rate. It's not the credit. It's the sense that you're part of something. Luna: Alright, I'm going to look into my closet and see if any of my Allbirds are ready for retirement. Lucas: I think mine are past ready. But I'll take the credit. Luna: That's the retention loop in action.