MARKETING ANALYSIS

OF NIKE

A CRITICAL ASSESSMENT OF CUSTOMER

ACQUISITION, SATISFACTION AND LOYALTY

BAROUDI SALHI Samia

ENTWISTLE Maxim
VIZUETE Romain
BLANCHON Cléa

Promotion 2022-2023
TABLE OF CONTENTS

INTRODUCTION

I. ACQUISITION
1) Customer Acquisition Channels
a) Social Media
b) Nike Retail Store
c) Partner Wholesale Outlets

2) Nike Acquisition Strategy

a) Sport Sponsorship
b) Leveraging Brand Equality
c) Knowledg - based Acquisitions
d) Product Innovation
e) Use of Discounts and Promotions
f) Email Marketing & Campaigns
g) Website & Search Engine Optimization
h) Free Trials on Nike Apps

3) Acquisition Costs
4) Critique and Recommendations

II. SATISFACTION
1) Consumer Satisfaction Strategies
a) Nike’s Triple Strategy of Speed, Innovation and Experienc
b) Building relationships with customers through its apps
c) Tailoring the Message to keep the customer engaged
d) Excellent Customer Service
e) Personalized Recommendations
f) Use of Customer Feedback, Reviews and Surveys

2) Critique & Recommendations

TABLE OF CONTENTS

III. LOYALTY
1) How does Nike Membership work?
2) What makes Nike’s loyalty scheme successful?
a) Exclusivity
b) Community
c) Personalization
d) Omnichannel experience

3) Critique and Recommendations

IV. CONCLUSION

V. APPENDICES

VI. REFERENCES

 INTRODUCTION

Nike Inc, a company established in 1964 by Phil Knight and Bill Bowerman, has grown to
become the leading global supplier of athletic clothing, footwear, and equipment sold
under the Nike brand; while also owning best-selling brands in the industry like Jordan,
Converse, Hurley among others. Best selling products of Nike over the years have
included Air Force 1, Air Jordan 1, Air Max 90, Air Max 1, Nike Blazer and so on.

The Nike brand was valued at about US$34.79 billion in 2020 with its biggest competitor
Adidas at US$16.48 billion in the same year (Statista, 2021). The Nike slogan “Just Do It”
and the company logo are known worldwide due to a formidable CRM strategy (customer
relationship management) and through this, Nike has been able to maintain a strong market
position with year on year growth in sales across various segments and Regions.
Nike’s revenue generation potential keeps expanding, with sales in the 2021 financial
period having significantly grown by US$6.7billion from the prior year (See Appendix 1).
The biggest product segment for the company is footwear which alone produced 66% of
total sales, while apparel and equipment contributed 33% and 3% respectively to revenues
worldwide. With regard to geographical regions, Nike’s core market remains in the North
America Region standing at US$17.18 billion in 2021 ahead of the other Regions: Greater
China, Asia Pacific & Latin America as well as Europe, Middle East, Africa and other
Global brand divisions. Nike has grown its global reach largely as a result of its approach
to customer acquisition, satisfaction and loyalty, which are assessed further in this paper.

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 I. ACQUISITION

This section analyses the acquisition channels, strategies and spending utilized by Nike in
order to attract new customers. It further critiques the acquisition approach and presents
recommendations on how to enhance existing acquisition processes in the company.

1) Customer Acquisition Channels

Nike has made use of a number of channels to attract and acquire new customers, most
notably online channels and through Nike physical retail stores. Additionally, the company
has partnered with independent intermediaries worldwide that provide customers in other
Regions greater access to Nike products. A question arises as to which channels have been
the most effective in acquiring customers for the brand. Generally, relationships that are
developed through physical access to Nike employees are very limited. In some cases,
traffic to physical locations are driven by online engagement, display advertising, print
and TV adverts etc. However the channels with the highest impact on successful
acquisition and conversion in the last decade have been digital. By using its website,
FAQs, live chats and apps, Nike is able to reach more prospects in a shorter amount of
time. In recent times, product offerings to new customers are largely done through social
media, which is used as a tool to replicate the illusion of closeness with new customers :

a) Social media :
How does Nike use social media to drive customer acquisitions? Social media channels
allow companies like Nike to initiate conversations with potential consumers on the
latter’s terms and based on users’ interests. The modern customer prefers to engage with a
brand that is relatable and personal to them and this represents an important factor in their
decision-making process. Ramanathan et al. (2017) point out that in today’s competitive
marketplace, social media is instrumental for firms in designing optimal solutions to
attract new customers. Social media provides endless opportunities for customer
segmentation and product differentiation, and Nike has been able to successfully exploit
social media platforms like Facebook, Twitter, Instagram etc as a means to engage with a
wider customer base and connect to its target audience.

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This access to prospects provides increased visibility, communication and ability to
collect data regarding consumer preferences. The company also enjoys free word of
mouth marketing from satisfied customers which is often trusted by potential
consumers.
Nike’s content marketing on these platforms illustrates an understanding of where their
target customers are as well as what their needs and interests are. The interactions are
framed as positive and inspirational in a way that aligns with the Nike brand rather
than pushing the sale of any specific Nike product. Their social media content often
emphasize how Nike can help potential customers to achieve their full potential rather
than the highlighting features/functionality of footwear or clothing. For the new
customer, social media makes the purchasing journey more iterative and immersive;
and with the consistent brand involvement in conversations that matter to them on
social media (say through messaging language/subject matter, the use social media
influencers etc), Nike becomes more than just another seller of sportswear in the
market; Nike becomes the partner that they can identify with and this results in
increased acquisitions for the brand which in turn translates into sales growth for the
company.

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Nike’s approach has resonated with its target market as evident in engagement levels
that far exceed its main competitors. Nike’s Instagram Account currently has 180
million followers, with 36.4milion on Facebook and 8.8 million on Twitter, and Nike
uses viral marketing to capture users’ attention and engage new prospects on each of
these channels. The catchy image posts and videos displayed often have several
millions views, likes and comments. Social media has provided direct links with
prospects at a considerably lower cost for the company, thereby allowing the brand to
easily connect with customers worldwide, encourage user-generated content and in
turn influence customer purchasing decisions.

b) Nike Retail Stores :

Nike operates a number of discount stores which feature select products that target
customer segments within the respective geographies. As at May 2021, the number of
Nike retail stores worldwide totaled 1,048 marginally falling from 1,096 in 2020
(Nike.com, 2021). These stores are designed to provide a personalized experience for
the prospective customer. Staff assistance is also provided to help prospects in the
decision-making process eg. by providing the prospective customers with more
information about products and guiding them to find the right products that meets their
specific needs (i.e. personalized service). Nike Live Stores goes a step further by
leveraging data obtained from members within a community to create unique physical
retail stores featuring an assortment of preferred products within the specific locality.
This serves a draw for new customers in those geographies as products are often
tailored to their specific tastes as well as cultural trends.

c) Partner Wholesale Outlets :

The company has also developed several partnerships with wholesale distributors
across the globe which in some locations act as intermediaries between first time
customers and Nike. Examples include Foot Locker, Nordstrom, JD Sports. In 2017,
however, Nike made a decision to slash these partnerships from over 30,000
distributors to a focus of 40. Outlets that were considered undifferentiated ie offering
little to no personalized experience for the consumer were terminated.

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 This pivot of Nike’s which it calls Customer Direct Offense is a way of
controlling the customer acquisition process with little to no involvement of
intermediaries, enabling the company to establish stronger ties with the
customer, control its brand messaging and collect relevant data that can be used
to shape the customer’s experience over time. According to the CEO, John
Donahoe, the direct-to-consumer (DTC) model has been instrumental in driving
acquisition growth (Nike.com, 2021).

Nike DTC Sales versus Wholesale Revenue (Source: Quartz, 2022):

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A look at the acquisition channels used by NIKE shows a shifting trend toward the
digital and this change has implications for new customer acquisitions. Digital
channels are becoming more prominent globally as the main interface for a new buyer,
and therefore digital content needs to create more of a unique holistic experience.

Additionally, the emphasis on Nike-controlled physical outlets could provide a

strategic advantage for the firm stemming from its ability to create an interconnected
experience, with each channel serving a specific purpose. The purchase journey is
often fragmented for a new customer who will have numerous touch-points that factor
into the purchasing decision. The customer may start the process from the Nike
Website and go to the local outlet to see the physical product. Both these experiences
are crucial in determining not only whether the customer will buy the product but also
the likelihood of conversion. Therefore by controlling each stage of the process, the
outcome is more likely to be favourable. Furthermore, the choice of location of Nike’s
stores can be more strategically positioned (eg. in populous geographical locations
with a distinct identity that will help build community).

2) Nike Acquisition Strategy

As part of Nike’s strategy for customer acquisition, the company employs a

number of techniques to effectively present its value proposition to its target
market. Purchasing behaviour is influenced by several factors eg brand,
offerings, economic, social and psychological factors among others; hence
different customers will make purchases on their perceptions, capacity and
individual needs. Ramya & Ali (2016) posit that buyers take in marketing
stimuli (product, price, place, promotion) and other stimuli from the
environment to inform their buying decisions but this decision ultimately
depends on the buyer’s perception and characteristics. So what strategies are
adopted by Nike in its acquisition of new consumers who have a choice between
numerous alternatives in the market?

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a) Sport Sponsorship:
Nike is widely known for its corporate sponsorship of athletes and sports events.
Nike’s alignment with athletes, football clubs and ‘causes’ that resonate with its
target markets is a key acquisition strategy for the brand. The celebrity
endorsements from famous personalities eg. Michael Jordan, Serena Williams,
Cristiano Ronaldo, LeBron James, as well as football clubs like Barcelona and
PSG allow the company to easily attract and acquire the numerous fans of these
beloved athletes and clubs. This is evident in its use of influencer marketing on
all its platforms. More importantly, Nike shapes its brand image through these
celebrities in a manner that appears authentic to prospective customers. Nike
also co-brands with sports such as the Olympics, FIFA, NBA allowing the
company access to prospects (both athletes and fans) on a large scale over a
common interest - sports.

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Nike has also championed causes, in some cases embracing controversy as with ‘The
Kaepernick Effect’, ‘The Future Isn’t Waiting’ ad on race in Asia and so on.Nike’s
cause-related sponsorships where successful (eg women in sports Dream Crazier
Campaign) have boosted short term sales by exploiting the positive “halo” effect of
these campaigns which translates into new customer acquisitions.

For the customer, the positive emotion attached to the cause or the athlete is
transferred to the product of the sponsor and this significantly impacts their buying
behaviour. Leveraging this relationship creates trust between the new customer and
Nike, which per Edelman’s Trust Barometer (2021) represents a crucial element in
establishing meaning customer relationships.

However this alignment with a cause or athlete can be a risky undertaking as

significant expenditures are made to promote these relationships and the brand image
of the company is tied to the outcome. These outcomes can be mixed, for example
unlike positive Dream Crazier Campaign, there have been scandals with personalities
like Lance Armstrong and Tiger Woods etc. Also, the challenge with a standardized
global social cause campaign is that Nike’s strong stance in sensitive causes like
inequality and discrimination may be better received in the US than Regions with
different cultures like Japan which saw customer backlash and boycotts. As Nike
continues to tackle social issues across the globe they must properly take into
consideration potential cultural differences and interpretations. However, Nike has
demonstrated an ability to overcome bad publicity by taking responsibility and making
corrections.

b) Leveraging Brand Equity :

Nike relies on brand equity to expand the customer base. Brand equity is a key driver
for both customer acquisition and retention, because it signals utility and perceived
value in the minds of prospects. Nike is a lifestyle brand that targets not only athletes
but anyone who enjoys sports or anyone who is striving to achieve a goal. Marketing a
lifestyle instead of products has allowed the brand to become aspirational, thus
drawing in prospects who identify with the brand identity.

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The Nike brand stands for quality, variety, sustainability, care for the end user and the
society at large. By leveraging brand equity that has been built through emotional
branding and strategic partnerships, Nike is able to connect with potential customers
who want to become involved in the story of struggle, perseverance and striving for
greatness. Emotional branding involves the use of storytelling, sensory branding, cause
branding and empowerment to create meaningful and lasting emotional connections
with a customer (Kim & Sullivan, 2019). This experiential marketing approach has
been used in extant literature to explain the irrational edge of modern successful
brands like Nike.

The Never-Too-Far-Down ad is a typical example of attempts by Nike to emotionally

connect with customers, which was successful in registering more than 400M social
media interactions. By building deep emotion and a feeling of belonging with its target
consumers, Nike succeeds in acquiring more prospects than its competitors. Brand
awareness and association can be a powerful force for customer acquisition. Where the
prospect associates a brand with a distinctive positive feeling, this emotion tends to
drives the decision making process. Researchers have found brand name as an
important influence in a consumer’s choice of a product due to trust and familiarity
(Erdem et al., 2004).

c) Knowledge-based Acquisitions :
A key strategy used by Nike in its customer acquisition process is collection of
‘valuable customer knowledge’ in order to identify and select target customers. As
mentioned earlier, both physical stores and digital channels are used to collect data
from customers. The company also invests in consumer research to gather information
such as location, language, preferences, channels that prospects use most often. This
impacts Nike’s overall CRM strategy and informs product development that uniquely
meets the needs of the target market as well as enhance user experience. New
relationships are further enhanced with technology and AI software. A variety of CRM
and AI software is available to the company for the gathering relevant data and this is
fed into a central database.

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Nike maximizes capabilities from its numerous company acquisitions to transform the
data into a competitive advantage for customer acquisition. For example Nike uses
machine learning technology from Datalogue to prepare and integrate the data from the
various sources which improvespersonalization of searches and recommendations,
while AI and demand-sensing technology from Celect allows Nike to predict
purchasing behavior to create a seamless buying experience so as to meet the
expectations of potential and existing customers ie. getting the product the customer
want, when and where they want it.

With this knowhow and data ecosystem that Nike has built, the customer’s needs
drives what is put out there and this resonates with new customers. The interactions
between Nike and prospects are made more personal. According to Nike (2021),
acquisition of these technologies and knowhow have been accompanied by massive
surges in demand across Regions, most prominently in North America which saw
triple-digit improvements. Customer acquisition and retention increased because Nike
is able to identify which customers to target, the right time, and what targeted
offerings to make.
This knowhow also underpins Nike’s robust digital strategy that allows it to connect to
prospects on its various digital channels, while informing its offline strategies on
billboards, banners etc.

d) Product Innovation :
Innovativeness is a key strategy used by Nike for customer cultivation and acquisition.
This is in line with Nike’s mission to bring inspiration and innovation to every athlete
in the world. Instead of utilising price discounting to drive new sales, Nike has relied
on innovative products and satiating the modern customer’s desire for new and unique
personalised experiences. This is why the company invests R&D as well as data
science to better understand its target market. In 2021 for example, innovations like
Nike GO FlyEase hands-free shoes, the new Women lifestyle collection, offerings
through Nike Training Club and livestreaming on the SNKRS app have elevated
registrations and overall retail traffic according to the CEO’s address. John Donahue
also noted higher conversion rates in comparison with 2020 as a result, acquiring over
25 million new customers, half of whom were women (Nike.com, 2022).

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As Nike products across the Regions are standardized with minimal changes, the
company heavily invests in quality and innovation that appeals to consumers globally
in terms of product design and functionality. New features like the use of Augmented
Reality (AR) to accurately measure a customer’s foot size, send signals to prospects
that Nike is ready and capable of meet their specific needs. Nike’s innovation is also
evident in its streamlined distribution systems that provide quality service and
experiences which also differentiates the brand. By offering the best, Nike benefits
from customer referrals via web platforms and word of mouth.

e) Use of Discounts, Promotions and other Perks :

Nike provides discount coupons to targeted segments like students, the military etc as
means of acquiring those prospects. This is framed in a way that depicts a caring brand
that understands them.

The company also has sales promotions which often take the form of special offers
given to the customers it targets which serve to motivate new customers to purchase
Nike products so as to enjoy other perceived benefits. Here, the new buyer’s
information and email is captured which presents Nike with access and opportunity for
conversion of one-time or impulse buyers.
Nike’s use of discounts and other special offers is important for certain market
segments especially because of its pricing strategy. By demanding premium pricing
for perceived quality products, prospects that prioritize price over quality or those that
have access to less financial resources (eg. students) may otherwise be difficult to
acquire.

f) Email Marketing & Campaigns :

Nike relies on email marketing, sending emails every week to customers which provide
new content, news and exclusive offers to customers. These emails are themed as
welcome series and email newsletters to purchasers to provide them with more
information about the brand and its offers in a bid to acquire new buyers.

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g) Website & Search Engine Optimization :
Several million searches are made daily on search engines like google to gather
information, often representing the beginning of a buyer’s decision making journey. Nike
invests in optimizing the search engine and website searches to show up for keywords
LO QUE NOS DEPARA
relevant to the brand and its products. By tailoring the optimization to each of its
EL PRÓXIMO AÑO
Regions, Nike ranks highly on first page of such a search, leading prospects straight to
Nike products as a top option to meet their needs. Also, Nike’s official website has been
optimized for ease of search, hence prospects are able to navigate easily in terms of site
upload speed, attractive web design, mobile friendliness and also by using simple
keywords (eg. sports shoes, men’s shoes etc). Overall, Nike’s website visibility and
optimization have been instrumental in attracting new customers.

h) Free Trials on Nike apps :

Nike+ provides free trials to new customers and provides them with free access to fitness
courses, music, meditation etc . Additionally, customers have access to 30-day product
trials on every order with a no-questions asked free return policy. This motivates
prospects and even skeptics to sign up, thereby providing Nike an opportunity to convert
and acquire them by tailoring offering to their specific interests and needs.

3) Nike Acquisition Costs

In the absence of published data specific to customer acquisition costs or total number of
prospects acquired, a look at the company’s marketing expenditure provided an
indication of how much Nike spends in order to attract and retain its customer base.
From the company’s Annual Report, a line item referred to as “Demand Creation” has
amounted to over US$3billion each year since 2014. This expenditure ranges from
advertising costs that are incurred globally to expenditures on strategic partnerships and
multimedia campaigns. In 2020, the figure stood at US$3.59 billion and US$3.11billion
in 2021 (Statista, 2021). The fall in the demand creation expense was a consequence of
pandemic restrictions which resulted in lower marketing and ad expenses for brand
events, sporting events and retail operations.

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Nevertheless, significant capital expenditures were made to support Nike’s digital
marketing activities. Sponsorship contracts are huge capital investments which can be
amortised as acquisition and retention costs over the contract period. For example,
Forbes LO QUEestimated
(2020) NOS DEPARA
Michael Jordan’s sponsorship contracts with Nike at
EL PRÓXIMO
US$1.3billion since the firstAÑO
deal in 1984.

Nike’s innovation strategy over the years have also involved major acquisitions (See
Appendix 2). More recently, attempts to increase its direct-to-consumer interactions and
data-driven personalization to grow its customer base led the company to acquire
Datalogue, Virgin MEGA, Zodiac, Invertex, Celect etc. These complementary
technologies while boosting acquisition and retention rates require significant capital
outlays. Nike’s customer engagement efforts are laudable and the outcome has been the
cultivation of customer trust at acquisition and consistency in excellent branding; the
benefits of which will be continually enjoyed long-term in the form of customer loyalty.

With Nike’s firm acquisitions, the company acquired unique capabilities to expand its
market share in the competitive digitalized market environment. Furthermore, its
emphasis on digital channels in finding new customers eg. via Nike’s website or social
media allows the firm to decrease customer acquisition costs while increasing return on
marketing expenditure. Lastly, the company’s use of customized mass marketing to serve
customers personally and at scale helps Nike to efficiently manage its customer
relationships at reasonable costs.

Generally, acquiring a new customer is often more expensive than retaining an existing
customer. Efficiency indicators like customer acquisition cost and marketing return on
investment per prospect targeted can be used by Nike as key metrics to help quantify the
effectiveness of Nike’s acquisition strategy.

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 4) Critique and Recommendations

The business model of Nike comprises a unique value proposition (from accessibility
to variety, quality, and solid branding) that allows it to target mass market segments.
This coupled with strong revenue and growth models driven by innovative product
development, brand monetisation and superior technological capabilities provides Nike
with a competitive advantage within the industry.

Regarding customer acquisitions in existing markets as well as market penetration in

new geographies, Nike relies largely on brand equity and athletic sponsorships, rather
than say diversification as a growth driver. New firm acquisitions are mainly targeted
at amplifying existing capabilities to produce innovative products for the various
product segments of the company. For Nike, this consistency in quality and its identity
is invaluable in the customer acquisition process, because on the resulting effect on
product differentiation in the mind of a potential customer. The effects of branding
tend to ripple through the acquisition to satisfaction and loyalty stages of the CRM
process because these are all a function of consumer perception.

It is clear that strategies adopted by Nike tend to balance the need to acquire new
customers and retain old ones. While most companies at the acquisition stage adopt
transactional marketing (i.e. impersonal, one-way marketing which focuses on
highlighting product features) instead of emphasizing relationship marketing, Nike
merges the two at the acquisition stage with a focus on long-term value and continued
satisfaction for the customer, thereby increasing retention and loyalty down the line.
This is unlike pure transaction marketing which focuses on a single sale instead of
generating repeated sales and does not differentiate between a new or repeat customer.
From the high level of annual reported sales, it appears Nike’s focus on brand
recognition, innovations, investments in R&D and demand generation has been paying
off. Nike’s customer acquisition successes over the years can be explained by Afuah’s
(2014) framework which highlight key dimensions of value creation, rarity,
inimitability, adaptability and brand monetization; all of which allows for
transferability in a way that creates unique emotional experiences for new customers
worldwide

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Moreover, Nike’s revenue streams consist of wide varieties of athletic footwear,
apparel, equipment and accessories which are produced to meet the needs of target
consumer segments, all while developing efficient distribution networks to access
these consumers on a large scale.

Again, the expected benefit for the potential customer is clearly defined i.e. Nike will
help you achieve your goals be it athletic or personal. Nike excels at tailoring
communication to target market eg Dream Crazier campaign for Women; while
maintaining the core brand message that says ‘join the community, we have products
just for you’.

However, a number of issues need to be addressed in order to better enhance

Nike’s customer acquisitions worldwide:

Pricing is a significant factor in customer acquisition and the Nike’s model

assumes that value created matches or even exceeds costs for new consumers.
However due to the global effects of Covid-19 on consumer behavior,
considerations surrounding pricing have become more weighted in purchasing
decision-making among consumers today (McKinsey & Company, 2020). Nike
must adapt based on these considerations that have a significant influence on
consumer spending at this point in time.

Secondly, there is the need for Nike to maintain uniformity of brand messaging
across various acquisition channels.

Thirdly given the growing ethical questions surrounding data collection, privacy
and exploiting customer information to emotionally influence customer behaviour,
it is imperative for Nike to do this in an ethical manner and with consent of its
customers. The data collected must also be handled with the utmost care.

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Another challenge with regard to data for Nike is the speed with which collection
and analysis can be done to extract valuable insights, especially when competitors
such as Under Armour have also begun investing in predictive data analytics. The
advantage lies in availability of timely, relevant, sufficient data. As Nike has made
technological acquisitions in the area of data analytics, it should also consider
partnerships adjacent business for the data eg. travel planning businesses, fitness
apps etc. Nike’s athletic products are closely related to fitness profiles. These
complementary partnerships could double as affiliate networks to draw more traffic
from new customers.
As mentioned earlier, sponsorships come with risk that sometimes translate into
lower than expected return on investment (ROI). Customer acquisitions that rest on
brand alignment with specific personalities must be gradually redefined to focus on
a relationship with Nike based on benefits that the new customers stand to gain
from the company. Brand icons must also thoroughly vetted by Nike and chosen
with care to avoid clutter, confusion or increased cynicism in the mind of
prospects.

Lastly, trust is fundamental to customer acquisition. Current trends impacting the

trust dynamic between the firm and target customers is being led by the social
media revolution. Customers have more power through these platforms to
communicate their expectations and reviews which in turn heavily influence buying
decision. The challenge with online relationships come with a difficulty of
controlling content. As a result, it is recommended that Nike’s social media
presence must be well managed. Nike also needs to be responsive and proactive,
delivering consistently on brand promises, and most importantly listen to
customers.

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 II. SATISFACTION

Customer satisfaction is a measure of how products and services of a company meet or

exceed the expectations of the customer (Anderson et al, 2004). Customer satisfaction
is built on the notion that a company’s success relies on the extent to which its
customers value its offerings. Customer satisfaction is regarded an important
performance indicator in any modern enterprise, and can be related to marketing,
product/service quality, customer relations etc. Consumers have expectations before
buying any item and the onus lies on the company, in this case Nike, to meet them.
According to the American Customer Satisfaction Index (Figure 2), Nike has held its
own among competitors in the industry as one of the top performers with regard to
customer satisfaction; but for the company, this satisfaction scale has fluctuated over
the years since 1997. In the year 2020 however, Nike has become the leader in the
retail sector with a satisfaction index of 80. The company has achieved this by
listening to its customers and responding appropriately in line with the changes in their
lives (ie. dealing with a pandemic).

The American customer satisfaction index scores for athletic shoe companies in
the U.S. from 1997 to 2020 (Source: Statista, 2021)

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 1) Consumer Satisfaction Strategies

a) Nike’s Triple Strategy of Speed, Innovation and Experience :

Nike accelerates its innovation and speed to market to ensure that its customers remain
satisfied and to avoid the threated posed by competitors in the industry. This is
combined with the Nike Customer Experience (NCX) to create personal connections
with consumers by increasing engagement by its agents on various platforms and
exploiting technological capabilities to help consumers feel like they are central and
important to the brand. Product development is also influenced heavily by R&D and
data of what customers need or want. This allows the company to provide products that
are well received by customers, thereby guaranteeing their satisfaction.

b) Building relationships with customers through its apps :

Nike’s satisfaction strategy attempts to extend the life cycle of each customer using
‘value-creating mobile apps’ which become part of their daily routines. Eg. the Jordan
Breakfast Club provide members with daily reminders regarding personalized workout
regimes created by renowned athlete and trainer Alex Molden.

The Nike Fit app also has technology-driven app features that can measure each
customer’s perfect foot size, revolutionizing customer service in the footwear industry.
These individualized and customer-centric features on Nike’s apps make their
customers feel valued which ultimately creates satisfaction.
Again, providing customers with these unique experiences and allowing them to share
them with friends on these apps represents added value for the consumer.
Consequently, the higher the value of product/service to the consumer, the higher their
level of satisfaction.
Through this process, Nike also gains valuable data on customer behaviour, which
allows it to assess their desires and expectations first-hand in order to devise ways to
upgrade their product and service utility for continued satisfaction of their customers.

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c) Tailoring the Message to keep the customer engaged :
Advertising Campaigns by Nike over the years are often tailored or themed, not only to
connect to new consumers but also to signal to existing customers that they are
listening and are aware of changes in their environment or circumstances.
Nearly a third of Nike’s sales is spent on marketing strategies and ad campaigns to
continuously communicate with its customers that they are there, they understand and
they are ready to keep supporting them with everything they need. These reassurances
are meant to deepen the relationship with its customers and to keep them confident in
the brand’s ability to continue to satisfy their ever changing and complex needs.

Also through these tailored ads, Nike is able to promote new products and services that
have been designed to meet the needs of its customers. The adverts highlight strong
attributes of athleticism, greatness, care, quality and keeping up with technological
innovation and cultural trends which communicates to the client that the company is
working hard at keeping them happy, engaged and entertained.
The satisfaction of Nike’s customers is evidenced by their sales and status as the most
valuable sports brand in the world. The brand does this by sells the idea that it knows
what the customer needs and it is more than capable of meeting that need. This goes
beyond the specific product on sale at a specific point in time.

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d) Excellent Customer Service :
Nike does not rely on its brand equity to provide sub-par customer service. In fact,
excellent customer service is a priority for the company. The company leverages
channels like social media provide support and/or information to its customers in
timely and consumer-friendly way. For example @NikeSupport on Twitter is active on
a 24hour basis in different languages of preference. Their responsiveness has been well
observed on several occasions with executives like the Director of Engineering
responding to a customer complaint on twitter in order to rectify the problem. There
are also live agents available to assist customers at anytime. This further cultivates
customer trust and increases satisfaction levels.

e) Personalized Recommendations :
Leveraging its knowledge infrastructure, Nike is able to make personalized product
recommendations to individual customers showing that the company really knows its
customers, and is able to anticipate and meet their needs. For example the Nike+ app
displays “Featured Picks” based on the customer’s data and previous purchases. These
relevant recommendations offer an added convenience during the purchasing
experience. Nike get to facilitate the decision-making journey, increase spending and
satisfaction all in one swoop. Additionally, the personalized experience becomes
seamless for the buyer.

f) Use of Customer Feedback, Reviews and Surveys :

Nike has maintained that what drives its growth lies in its obsession to serve its
customers. In order to adequately satisfy the needs of its market, the company
encourages customer feedback and reviews. The Consumer Feedback Survey tool on
Nike’s website serves provides an avenue for customers to rate their level of
satisfaction and point out any shortcomings of the firm in meeting their expectations.
Nike increases engagement by offering a discount reward to motivate customers to
provide their feedbacks through these surveys.

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Nike also gathers reviews and feedbacks via social media platforms, retail outlets, and
questionnaires distributed by their agents. Nike mines customer feedback from chats,
emails, posts and all these sources in a bid to gauge whether the company has
succeeded in satisfying it customers and if not, identify the best way to improve.

Further, Nike uses its technology capabilities (eg AI) in this regard; i.e. to optimize
the times messages are sent in order to fulling engage the customer or to collate
channel-engagement scores thereby identifying which channels and products have been
the most successful and vice versa. When customers share their experiences regarding
the products/services of Nike, this provides invaluable insights into what they desire,
and Nike adjusts accordingly to meet these expectations. This in turn drives conversion
for the brand.

2) Critique & Recommendations :

Satisfaction is an integral part of the customer relationship management (CRM)
process as it simultaneously impacts customer acquisition and loyalty, which overall
drives profitability of the business. Satisfaction increases acquisition because the
tendency of satisfied customers to provide customer referrals and good reviews on
various platforms is high. Customers with high satisfaction levels are usually more
open to forming long-term relationships with the brand (Hill et al, 2003).
Nike’s satisfaction strategies have been successful because it prioritizes the customer
and defers to the customer’s opinion as the right one. Rather than being defensive, the
brand is always encouraging feedback and criticisms in order to improve. This makes
even dissatisfied consumers feel like collaborators with the company, thus increasing
their rate of retention.

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However as the value of the Nike brand to customers goes beyond product features
and functionality, other activities of the company tend to significantly affect its
customers’ overall satisfaction. There have been occasions where customers have
expressed their dissatisfaction with Nike’s activities eg. The United Student
against Sweatshop (USAS) protests over the exploitation of workers in Honduras
and other Asian countries. Another example is some customers’ disapproval of the
Colin Kaepernick endorsement as an advocate against racial discrimination by
kneeling while the national anthem was being played, as they found it to be
disrespectful and rebellious.

One key recommendation for Nike is to remain sensitive to customers’ feelings

from the product development to customer service and equally important post-
delivery interactions. This is because the satisfaction process is a continuous one;
hence customers’ attitudes and responses can change in an instance.

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 III. LOYALTY

Nike is most valuable global sports brand, with a current brand value far exceeding its
competitors (Appendix 3). The Nike loyalty scheme is one of the contributors to this
success. In 2021, the program boasts of more than 300 million memberships and is
considered as having one of the best loyalty schemes in e-commerce.

The loyalty program was engineered to cater to people with different athletic or
shopping interests, with a focus on providing value beyond its products. Membership
starts with registering on Nike apps or the WeChat Mini Program in China. The Nike
app and membership signups are free. Members are then granted access to a wide range
of benefits which are rewards for their loyalty to the brand.

1) How does Nike Membership work?

The Nike membership program is a club where Nike customers can receive exclusive
perks. One can become a member on the Nike website or any Nike app i.e the Nike
app, SNKRS app, Nike Run Club and Nike Training Club. The rewards program is
managed from the Nike app which members use to view their rewards and collections.
The benefits of the Nike loyalty scheme includes: priority access to tickets to sporting
events, exclusive products, early access to product launches, training and nutrition
content, fitness tracking, personal workout consulting, rewards for being active on
Nike apps, discounts, special offers on birthdays and free delivery.
Nike has partnerships with AppleMusic, Mindspace among others to provide a wider
range of rewards to loyal customers.

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Some of the possible Nike unlocks in the loyalty scheme:
Previews and early access to new collections
Free ClassPass class credits
A Free month of Apple Music
Access to Nike events
Testing new products
Shopping in-stores during special hours
Personalised and customised items (in store or studio)
Monetary discount vouchers (on purchases over a certain value)

3) What makes Nike’s loyalty scheme successful?

TNike has established itself as a brand with the most loyal customers. The company’s
loyalty program has been widely successful with increasing memberships due to its
emphasis on exclusivity as well as a commitment to community, personalization and
omnichannel experience.

a) Exclusivity :
Loyalty is rewarded with exclusive perks. Loyal customers are given priority tickets
for sports events and Nike events. They are granted access to collections that are
available to members only and early access to releases by the brand. This is valued
because most of the Nike products are limited editions and customers feel special by
having this access. This makes exclusivity a strong incentive for loyal behavior among
Nike customers.

b) Community :
The Nike loyalty scheme also creates a community that customers want to be a part of.
There are shared activities in the form of training support, inspirational and
educational content that create a feeling of togetherness. Members can also follow and
comment on similar interests. Community is a key driver for building long-term
relationships and Nike’s message of togetherness is in line with its brand values. This
makes it easier to form emotional connections with the customers thereby securing
their loyalty.

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c) Personalization :
The Nike loyalty scheme also emphasizes personalization; for example members are
made special offers on birthdays/anniversaries, and also given access to personalized
product suggestions which make them feel valued more than one-time shoppers.

d) Omnichannel experience :
Nike ensures that customers’ experiences stay connected when using different Nike
channels ie via the website, apps or in-store. Only one login is used for all the
platforms and a customer’s loyalty profile is uniform which means rewards are granted
based on activities on any and all channels. This seamless experience encourages the
customers to keep engaging.

4) Critique and Recommendations

Nike is at the maturity phase of its life cycle hence managing long-term relationships
with its large customer base is key to sustain its growth trajectory.
Nike uses rewards to communicate to loyal customers how valued they are. As a result,
the consistency of this activity becomes important to the loyalty process. Additionally,
the effectiveness of the scheme over an extended period is dependent on whether the
customer can perceive a high long-term benefit. Here, Nike’s loyalty program clearly
excels. Nike+ rewards focus less on financial incentives and more targeted experiential
rewards eg access to events, meetings with celebrities that are part of the community.
This makes it more difficult for consumers to switch to other brands.

Research has found that perceived benefits of a rewards program is a positive predictor
of customer loyalty to the brand (Kim et al., 2013). Nike is benefiting from these
reward schemes as it generates incremental sales for the company. Loyal customers are
not as price sensitive, and this translates into higher profitability. Nike also gets the
chance to obtain data on consumer behavior and preferences to better personalize their
future experiences with the brand.

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Despite the glaring success of Nike’s loyalty program, there is still room for
improvement hence the following recommendations:

Lack of incremental engagement: Under the rewards program, all rewards and
benefits are available once a member joins the program. This is like to result in
diminishing marginal returns. Nike needs puts mechanisms in place to ensure that
long term interest in the loyalty program is stimulated for its members. Rewards
can be more incremental and experiential over time.

Need to highlight customer referral benefits in the loyalty program: In its

communications, Nike can also highlight the rewards that are available to loyal
customers who make successful customer referrals. This will keep the customers
engaged while also improving customer acquisition rates.

IV. CONCLUSION

Customer relationship management is important to the success of any organization.

From Nike’s CRM strategy dissected above, it is clear that acquisition, satisfaction and
loyalty dimensions tend to impact one another in some ways. In light of this, customer
relations management within a firm must be well designed with appropriate strategies
that balance short-term needs with long-term objectives.

It is also important for companies today to understand that CRM is a continuous value
exchange between the company and customers. This requires investment in
relationship building and management in order to maximize the benefits from the
process. Therefore strategies implemented need to reflect consumer needs, competitor
analysis as well as external changes in the environment. This will enable companies to
acquire and retain their customers, thereby increasing firm growth and profitability.

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V. APPENDICES

Appendix 1: Nike’s Revenue Worldwide 2017-2021 in Million Dollars (Source

Statista, 2021) :

Appendix 2: Nike Firm Acquisitions (Source: Forbes, 2021) :

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Appendix 3: Nike Brand Value versus Competitors (Source: Statista, 2021) :

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VI. REFERENCES

Statista (2022). Nike sales worldwide since 2004. Available at:

https://www.statista.com/statistics/241683/nikes-sales-worldwide-since-2004/
[Accessed on 30 October 2022]

Statista (2021). Brand value of the leading 10 apparel brands worldwide. Available at:
https://www.statista.com/statistics/267931/brand-value-of-the-leading-10-apparel-
brands-worldwide/ [Accessed on 30 October 2022]

Ramya N. & Mohamed A. (2016). Factors affecting consumer buying behavior.

International Journal of Applied Research, 2(10), pp. 76-80.

Quartz (2022) Nike brand global sales by channel. Available at:

https://qz.com/2025862/nikes-direct-to-consumer-sales-are-taking-off/ [Accessed on
30 October 2022].

Nike.com (2022). Available at: https://investors.nike.com/investors/news-events-and-

reports/default.aspx [Accessed on 31 October 2022].

Forbes.com (2016). Available at:

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on-the-customer/?sh=3dac79c656da [Accessed on 1 November 2022].

Forbes (2020). Available at

https://www.forbes.com/sites/kurtbadenhausen/2020/05/03/michael-jordans-1-billion-
nike-endorsement-is-the-biggest-bargain-in-sports/?sh=172d5d486136 [Accessed on 1
November 2022].

Anderson, E.W., Fornell, C. & Mazvancheryl, S.K. (2004). Customer Satisfaction and
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Afuah, A. (2014). Business model innovation: concepts, analysis, and cases by Allan
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McKinsey & Company (2020). How COVID-19 is changing consumer behavior—now

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insights/how-covid-19-is-changing-consumer-behavior-now-and-forever [Accessed on
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