Customer Lifetime Value – Mastering Loyalty.
The NikePlus Review
One of our client’s key metrics is Customer Lifetime Value, so we are going to work our way through a few of the best techniques we see being utilised. We wanted to remind everyone it isn’t a passive metric. CLV development should be ever-evolving.
Our role is to support client’s with perfectly performing technology that supports the business and their ambitions for growth.
The core types of CLV activity:
- Omnichannel: Maximise the ways customers can engage with the brand – use a omnichannel strategies
- Personalised product recommendations on the website
- Personalised newsletters & reengagement campaigns
- Triggered relevant product recommendations
- Abandoned cart email campaign with product recommendations using historical data
- Discount bundles – ideally recommend the bundle directly on the site
- A customer loyalty program – the focus for this blog
So in this blog we kick off with a look at Loyalty Programmes focused on two leading brands, Nike and we will follow up with H&M shortly.
Customer loyalty programmes are great for significant levels of engagement with customers throughout their journey, which also provides our client’s with significant data.
It is crucial to note loyalty isn’t just about CLV and growth of sales, it’s also the richest source of data a brand can build and allows for tech trial and innovation before large scale rollouts.
A Reminder of the 5 Revenues CLV needs to drive:
- Original– encourage purchase
- Renewal– coming back for more
- Upsell– maximizing revenue opportunities
- Cross-Sell – buying unplanned new ranges
- Referral – current customer recommendations
Nike Brand Loyalty Campaign Overview
Nike already has more than 100 million members, who they say spend around three times more than regular customers on Nike.com. The company has said it plans to triple membership over the next five years.
Nike never waits for competitors to disrupt their business. They are constantly disrupting themselves, which is a great lesson for all retailers. Their loyalty programme is an example of this by constantly growing and trialling new initiatives, with an attitude of ‘fail fast’ and innovate. A practice we wholly support.
Nike customers may join any of the four programmes that sit under NikePlus, which include:
- Nike Run Club,
- Nike App,
- Nike Training Club.
All that said, here’s our round-up of Nike’s loyalty scheme, NikePlus.
A Summary of NikePlus
Nike describes its membership scheme as “a global community dedicated to bringing out the best in one another”. Here’s the list of what customers get:
Core benefits: Overall members can access customised footwear and football jerseys, special member offers and promotions, free shipping, and a 60-day wear-and-return policy with no receipt required…but also:
- Brand Exclusives: A dedicated members shop. Member-only benefits like audio-guided runs or workouts, designed by Nike’s trainers and coaches.
- Member Days: Global access to rewards for activity and personalised exclusives across stores and digital.
- First dibs on tickets to sporting events.
- Exclusive & early access to new releases.
- Engagement Incentives for customer interactions with the app.
- Try them out: No quibble 30-day ‘wear test’.
- Personalisation – Birthday, product and location-based tailored offers.
- Partnership Benefits: Nike membership is linked to JD Sports and Zalando accounts. Nike’s retail network encompassed 30,000 retailers and 110,000 points of distribution. It now has 40 core retail partners, two of which include Zalando and JD.
Nike representative adds:
“When they encounter us in a multiplayer environment, they want as consistent an experience as possible. And our partners find that’s also helpful for them. If we both serve consumers better, it's good for everyone.”
- Mobile capability: For this type of loyalty scheme the mobile app is such a dominant element that it needs to perform perfectly. Nike have ensured the app has undergone many stages of testing. Friction free experience are crucial to its success and the tech is doing just that.
- CRM Platform: They use Salesforce – tying together all digital channels for well-planned automation and a single point of reporting.
- Nike use their data analytics company Zodiac to crunch together its data points from customers using the scheme and other connected devices like Fitbits to understand customer habits and predict purchasing decisions.
- Data Sharing: Partnership: JD Sports chief executive Régis Schultz says the partnership allows them to share data and “learn more about their behaviour and journeys to create new, richer and more engaging experiences”.
- Website speed & automation: Key to all of our projects with clients is ensuring we maximise a brand’s ability to load fast and reduce ‘friction’. Nike have undergone significant technology quality processes and ensured the weight of the loyalty app is spread.
- AWS Cloud: Nike aggressively moved into cloud-native, micro-service architecture to enable speed, scale, and stability. They migrated more than 100 million users from Cassandra to Amazon Neptune, while remaining up and available 24/7.
- Use of AI: Nike acquired Invertex – a 3D-scanning company that specializes in using automation technology to build consumer and medical devices.
The AI has recommendation algorithms that find a customer’s “perfect fit” for each Nike shoe style based simply on snaps the customer provides. A brilliant example of retailers using innovative AI tech to deliver to a crucial need.
The obvious challenge they address with this tech is to lessen the friction of ordering the right size, thereby dramatically reducing returns. One of the biggest profit loss sources.
- A Seamless & Connected Experience – Whether customers are shopping in-store, on the website, or through mobile apps, the loyalty programme ties all interactions together.
- Fast interactions – while ensuring the quality experience you expect with website and app speed protected.
- Members Days Deliver 60 million members across 25 countries with the member’s days proving to influence higher sales conversions.
- Well Designed: Visually it’s honestly brilliant – easy to navigate and continually driving you to want more ‘Nike’ with inspiring moments and products. From UX to the creative look and feel, the app design is an example of how to do it right.
- Social media great omnichannel experience with all social platforms integrated within the apps sharing influencer and motivational stories
- Differentiation – access to Nike ‘experts for whatever sport you play’.
- Home Page Visibility: The scheme was not prominently displayed on the Nike GB homepage. It took about 30 seconds for me to locate the ‘Join Us’ tab in the top right-hand corner of the page. But they are still tripling their sign-ups – imagine what they could do if they improved visibility further?
- Negotiating the options and ‘what I can get’ can take a while to navigate. Quite a bit of reading – there’s a lot to take in. They do address this with rewards for continuing to engage with the app. But has it just got too complicated?
- Some of the results they have achieved:
- 100 million members, whom the company said spend around three times more than guest customers on Nike.com
- Nike CEO John Donahoe – predicts that Nike’s digital business could reach $30 billion in sales by 2026,
- Nike also utilizes this data to inform its physical retail location strategy, reducing risk and enabling the best chance of profitability for new store launches.
- Data-informed product – use data to select and curate NPD products.
- Nike’s global brand engagement broken down by Statista gives their loyalty scheme an impressive 37%.
- Nike is ranked ninth in the world in terms of consumer brand loyalty. 79% of Nike consumers said the loyalty incentives are a big reason for their brand advocacy.
- Partnership Success: Shares in JD Sports Fashion ticked up 2% to 102p after the self-styled ‘King of Trainers’ extended its ties to sportswear titan Nike.
- Customer Engagement Helps Drive Nike Profits The company recorded a 5% increase in revenue, generating $46.7 billion over the 12 months.
Now, although we don’t know what CLV Nike are currently calculating for the business, we do know this programme is a success and their continuing push for innovation is keeping them at the forefront.
Our role as part of the CLV challenge is to ensure the technology supporting the tactics does what it should. The secret to successful loyalty programmes is great thinking, with well-targeted benefits, supported by technology that does 100% what it should. But as part of this to also allow for growth and for a programme that will never stand still.
Our responsibility is to ensure retailers can run CLV tactics that are seamless. This means they are fast, error free, customer centric experiences that provide the internal teams with the clarity of reporting they need.
As part of this we are always cognisant of future growth and to remind our clients CLV never stays still. Allowing for more complex system needs are a part of growth, and we encourage planning to this with measured test and experimentation.
Sources: RetailWeek, Webmeridian, TheGrocer, Google, McKinsey, Retailwire, Forbes, Vogue, Statista, IRI data