How Nike is Using Mobile Apps to Significantly Increase Sales

Photo of someone wearing Nike Air Force 1s
 

By Tricia McKinnon

Is Nike losing its world domination? Not a chance. But it has been challenged by formidable rivals like Adidas in recent years. For example, in 2016 Adidas’ market share in the United States was 6.8% and by 2017 it increased to 10.3% while Nike’s share decreased from 34.5% to 32.9% during the same time period.

Not willing to take the challenge lying down, Nike made a number of strategic moves. In 2016 it hired its first chief digital officer and in 2017 Nike launched an initiative called the Consumer Direct Offense. The initiative is Nike’s Triple Double Strategy: “2X Innovation, 2X Speed and 2X Direct connections with consumers.” Speaking about the initiative Nike’s CEO at the time, Mike Parker, said: “through the Consumer Direct Offense, we’re getting even more aggressive in the digital marketplace, targeting key markets and delivering product faster than ever.” 

Over the course of several years Nike has successfully grown its direct to consumer business. Its mobile apps have been central to that growth. For example, in Nike’s second quarter, fiscal 2020 earnings results, Nike reported that its digital business grew at 38% and the Nike and SNKRS apps were the primary contributors to that growth. 

If you are looking to emulate Nike’s successful mobile app strategy here are the key strategic moves you should consider to get ahead of the competion. 

1. Focus on a narrow segment of your super fans

It is easy to create a product that tries to be all things for all people. After all, focusing on a narrow segment can seem risky. What if we alienate other customers?  What if we miss opportunities?  In 2015 Nike launched its SNKRS app which is targeted at sneakerheads, customers who are fanatical about in-demand limited release sneakers. 

If you only buy a pair of Nikes every other year the SNKRS app is not for you.  It is specifically designed with a super fan in mind. For example, SNKRS app users receive notifications about limited release sneaker drops so they don’t miss out.  To provide some context limited release drops compromise only 5% of the sneaker industry. As you can see Nike decided to target a very small segment of its large customer base (there are over 300 million members in Nike’s loyalty program) with this app.  

By focusing on superfans who tend to be the most vocal brand advocates this narrow segment of customers can create a halo effect that draws attention to the brand as a whole.

The SNKRS app has been widely successful. In 2016 the app generated less than $70 million, by 2019 it is estimated that it generated $750 million in revenue which was approximately 20% of Nike’s digital business.   

2. Commit to using data to inform product design

Nike’s apps generate a wealth of data. Some of the data they produce include which product photos customers are zooming in on while in the app, which merchandise they linger on and what they skip past.  Using data like this a few years ago Nike noticed that many highly engaged users of its SNKRS app living in New York were Dominican.  Nike used that data as well as conversations with app users living in Dominican neighbourhoods in New York to create a sneaker targeting the Dominican community called De Lo Mio Air Force 1.  

Nike didn’t stop there it created a marketing campaign to support the sneaker launch where it shot photos of Dominicans wearing the Air Force 1s using Dominican photographers. When the sneaker eventually dropped it quickly sold out. Commenting on the campaign, Ron Faris, Nike’s former vice president of SNKRS digital product said: “as we showed that content to people in the SNKRS app, it lured more people [who] resonated with that community to want to be part of that community itself.” 

Nike sees personalization as big opportunity. Speaking about this the chief operating office of Nike, Andy Campion said: "our vision is to create direct, unbreakable relationships with our consumers. And we know the most direct connection is through the mobile device they carry with them everywhere they go." 

3. Provide unique and unforgettable experiences

In 2018 during NBA’s all-star weekend if you were one of Nike’s super fans you may have received a notification on the SNKRS app informing you that a limited-edition Nike Cortez sneaker was going to drop soon.  

The shoe was made in collaboration with Kendrick Lamar. Since Nike used geo-fencing even if you were a superfan you only had a shot of getting notified about the drop if you lived in L.A. And if you did receive the notification then the next day you had to show up at Nike’s NBA all-star game headquarters.  The most engaged sneakerheads got wristbands to attend a Kendrick Lamar performance that evening.  

Now that’s the type of experience that a customer is going to remember forever. It is an unbelievable experience because Nike has such a deep understanding of its customers’ wants and needs. It is easier to pull off an experience that a customer is going to remember when you are focused on a narrow customer segment of like-minded people.

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4. Offer an integrated mobile and in-store shopping experience

Michael Martin, Nike’s former global head of digital products has said: “the way we look at digital and in-store is not channel-by-channel, or one channel helping the other. Instead, we architected the entire notion of why someone with a phone in their pocket would walk into a store.” “We want to have the best store experience where our most connected customers are, whereas another company might look at the inverse — if people are shopping in the app, they don’t need a store there. But we see our approach as better serving our customers.” Martin has also commented that viewing the store and Nike’s mobile app as connected customer touchpoints has increased Nike’s sales.

In 2018 Nike launched a new store type called Nike Live stores. These stores have a number of innovative features that customers can unlock using Nike’s mobile app. One of the key features offered in the store is Nike Scan. Using Nike’s app a customer can scan a product’s barcode to receive more data on a product including whether or not the product is in stock, in store, at nearby stores or online and what colours are available.  

Customers can also use Nike’s app to request to try on a shoe. After making the request using the app, the app shows the customer that the sales associate has received the request and is in the process of retrieving the product. The stores also feature pick up lockers for online orders and mobile checkout. Nike has said that concept has been incredibility successful.

Nike has even hosted a SNKRS popup store.  A popup in Atlanta in 2019 featured special releases tailored to customers in the Atlanta area including Virgil Abloh's The Ten collection and Air Force 1 drops.. To shop at the pop up customers had to select what they wanted and then purchase it in the app. Once again Nike used geo-fencing to send notifications to SNKRS app users about the pop up within a 25 mile radius of downtown Atlanta.

Tricia McKinnonCustomer Experience, eCommerce, Strategy & Growth