Companies have tried various means to improve customer loyalty by effective customer engagement. But there is none too unique and remarkable as the Nike+. Two years ago Nike in a bid to enhance an existing customer behaviour launched the Nike+. What initially envisioned as a clever way to combine music and running has evolved to create a social network around running.
Nike took notice of the fact that more and more people are running with music and a good majority with i-Pod. So to combine music and running, to make it simpler and to make the experience more compelling, Nike collaborated with Apple. Nike developed a sensor that tucks into the shoe and worked with Apple to have the senor talk to i-Pod and reveal the running data while listening to music. And for people who do not like listening to music while running Nike created a Sport band. Both these devices track the runner’s performance in terms of distance covered, speed and calories burned. After the run the user can plug-in the i-pod or USB device on the sportsband to a computer to record the stats in the Nike+ web-site and compare with other runners.
Through the Nike+ community you can find other runners in your locality, set-up friendly challenges on the web and connect to any runner anywhere in the world through data and discussion forums. So what most of us used to do at a micro-scale with friends and people we train with are possible with anyone anywhere in the world regardless of proximity. It’s not just the data at the time of running but every run gives you a currency you keep building. You can use your miles and energy to challenge other people in the community and make the experience richer even after the run. To date the Nike+ community has registered more than 93 million running miles. The most active users in the online community are identified by Nike as community super users and Nike conducts special events for them. Top community members even get to feature in commercials for the brand.
This brings us to the important question “What are the tangible benefits to the company?” According to the market research firm SportsOneSource Nike accounted for 48% of all running-shoe sales in the U.S in 2006. Today, its share is 61%. A significant amount of the growth comes from Nike+. 40% of community members who didn’t own Nike+ ended up buying. Nike’s has improved its relative market share. So far Nike has sold 1.3 million Nike+ iPod Sport Kits and 500,000 Nike+ SportBands. There is also an opinion that Nike+ attracts only serious runners who account for a very small fraction of the entire customer base and that the revenues from Nike+ is diminutive in comparison to the $18.63 billion in sales the company posted in fiscal 2008.
Nike sees the community as an effective platform to communicate with its customers. People are using the social network to tell Nike about their experience. Nike gets feedback through blogs and other forums and gives real-time solutions. When a new product is launched or a new feature is added to the existing one, Nike can gather feedback immediately through the community. The community builds strong customer engagement and attachment. Nike feels that if they provide an indispensible service for athletes they will have better perception and preference for Nike.
Nike is looking through a longer term lens to further utilise digital technology and social networking to improve performance. Nike+ is planning to connect with other social networks like facebook to broaden the appeal. Nike is planning to replicate the success to other business areas. They have recently launched the ballers network for basketball enthusiasts.
Souces
I started research on the topic with an article on business week. Link is given below. It also has the video of an interview with Stefan Olander, Nike’s Global Director Digital and Content.
http://www.businessweek.com/magazine/content/08_46/b4108074443945.htm?chan=rss_topEmailedStories_ssi_5
The URL below contains text of an interview with Roberto Tagliabue, creative Director Nike Techlab, video of interview with Michael Tchao General Manager Nike Techlab, video of an event with Nike+ community super users and video of a Commercial featuring Nike’s top community member
http://gobigalways.com/nike/
Also the Nike plus web-site was a useful source of information.
http://nikeplus.nike.com/nikeplus/?locale=en_us
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3 comments:
OK, but a bit too much on Nike facts and figures. And you start a paragraph on tangible results by citing growth numbers yet saying "a significant amount" comes from Nike+. Are there elements of Nike+ that speak to a sustainable market-share increase?
I don't have exact figures for the same. The conclusion was based on a statement by an analyst at market research firm "SportsOneSource” in the article.
Great article that supports the premise that consumers need a strong sense of belonging and an ability to engage on a personal level with a brand. Most leading brands, such as Nike clearly understand that to build brand loyalty, they must meet a hidden need of their customers. Music and the ability to link this to performance is a great example. In addition, consumers are looking to brands to help them connect with other like minded (tribes). This supports the book I am writing: www.belongingexperiences.com
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