TOMS was founded in 2006 by serial entrepreneur Blake Mycoskie with a unique business model that combined both non-profit and for-profit philosophies. The concept was to give away a shoe to a child in need for every pair the company sold. Riding on the wings of this philanthropic gesture, the brand was able to build a loyal following of buyers who felt good about the knowledge that their purchase was helping a poor child get a free shoe.
TOMS has continued to retain its massive customer base with its loyalty program known as TOMS Rewards. Customers who join the loyalty program are offered numerous perks such as bonus discounts, free shipping, returns, birthday gifts and points which can be redeemed for TOMS stuff, and other additional rewards.
This post will examine the brand’s loyalty program entirely while considering the factors that have led to its success, and its major drawbacks.
How does the program work?
TOMS Rewards is the official loyalty program of the footwear-producing company. The rewards program is based on a points system. For every purchase made on TOMS.com, customers earn points and gain access to certain exclusive perks.
When a person joins the rewards program, they receive a welcome bonus discount of $20 after making their first purchase of at least $75 through a referral link. The program uses a referral system that encourages each member to promote it to their friends and family. Every member is entitled to a unique referral link they can share with their friends and family. For each new person that joins the rewards program through your link, you earn an additional $20 store credit.
Customers can join TOMS rewards for free by signing up with their name and e-mail address on toms.com. Whenever a member shops on the online store, they earn points that can be redeemed for Toms stuff or given back to any of their grassroots partners.
Members can collect points in other ways by simply logging in to their account, shopping, joining a mailing list, connecting with the brand on their social media platforms, celebrating their birthday, and updating their profile.
Members of the rewards program are also entitled to free shipping when they shop for products worth over $59 and enjoy free returns.
Apart from being able to accumulate points, reward program members can earn more benefits as they advance through the “Good, Gooder, and Goodest” stages. The stages are determined by the number of points one accumulates, and members can increase the rate at which they gain points by moving to a higher level.
People within the “good” tier have earned between 0 and 124 points and can quicken their point-getting rate 1x. Members within the Gooder tier have accumulated between 125 to 349 points, increasing their chances of earning points by 1.25x or 25% faster, while members at the Goodest stage have earned more than 350 points and can multiply points by 1.5x or 50% faster.
All members can redeem their points for TOMs stuff, discounts among other perks. They enjoy access to sales and exclusive offers and can enter any sweepstakes organized by TOMS. Members who reach the Goodest stage enjoy free shipping, every single time they shop on the company’s website.
TOMS also uses its ethical rewards approach by reminding customers that they donate one-third of every profit they earn to support equity-building causes at the grassroots level.
What are the good things about the program?
One of the most profound aspects of the TOMS rewards program is its referral system. The company has succeeded in building an active social media community that acts as brand storytellers, promoting the company’s products and causes. Once a person joins the rewards program, they are gifted with a $20 bonus discount after making their first purchase of at least $75. They are also given a referral link that they can share with their friends. When one of their friends joins through their unique referral link they earn a $20 store credit. This reward encourages members to promote the program to the people they know via their social media platforms.
Another great thing about the TOMS rewards programs is how easy it is for customers to gain points. A visit to the rewards explainer page reveals all the activities one can participate in to earn points and enjoy perks. Most of the tasks they require members to complete to gain points are quite simple, straightforward, and natural for any loyal member to fulfill.
TOMS rewards program also displays all the benefits members can expect to gain when they join their rewards program. The company highlights its point-earning activities on its explainer page, making it easy for new customers to understand how the program works. Apart from listing the rewards in-store, the company also emphasizes ethical rewards such as supporting their charitable initiatives. Millennials are moved by these causes and tend to engage more with the brand at the community level.
How could they have made their rewards program more attractive?
There are a number of things TOMS could have done to make their rewards program more attractive.
The clarity in the Tier-based system
One of TOMS Rewards’ major drawbacks is its “Good, Gooder and Goodest” approach. Apart from the fact that the names may come off as absurd, there isn’t much clarity about whether the program has adopted the typical tier-based approach with these levels. Considering the information on the rewards explainer page, members can move from one level to another by earning more points, however, the majority of the benefits cuts across all tiers. The only sense of exclusivity and VIP treatment is that members at the Goodest stage enjoy free shipping on all products and a few additional perks. High-value customers will not feel appreciated and exclusive enough, and new customers might not be motivated enough to accumulate more points because the margin between the tiers is too slim. TOMS can make this more attractive by either adding a few more exclusive perks to the Goodest tier or by limiting the number of benefits the lower tiers enjoy.
Allocation of points
Another issue with the Toms Rewards program is that the number of points that can be earned for each activity is not clearly stated. While the explainer page does a good job at highlighting all the point-earning activities, customers do not have a clear calculation of the number of points allocated to each task. For instance, members know they can earn points for logging in to their loyalty account, or for following a social media page. However, the number of points they can get for those actions is not stated. This lack of transparency is not a great attribute for a rewards program because most members would love to see and calculate their progress. TOMS can do better by being more transparent about the number of points one can earn for doing each task.
That said, TOMS seems to have succeeded massively in building a community of shoe-lovers who are not only interested in looking good but doing good in the world as well. Their loyalty program appears to cement this relationship adequately and contribute to increasing their CLV.
This article is part of our series of case studies of loyalty programs implemented by the world's most famous brands.