Nike: A Full Stack Athletic Performance Company

The story of how Nike used data to go from selling rubber to interacting daily with runners

Nike+ logo            In the summer of 2006, Nike’s CEO Mark Parker looked out his window and contemplated how best to usher Nike into its next big stage of growth. Specifically, Parker was considering a new product concept called Nike+, a service to help Nike customers collect and understand their running data. Parker of course asked himself whether Nike+ aligned with Nike’s mission: “To bring inspiration and innovation to every athlete* in the world”? (With the asterisk, the Nike Mission Statement clarifies “If you have a body, you are an athlete.”)

It seems obvious today that an athletic company like Nike’s relationship with its customer should reach beyond just the selling of running shoes and athletic gear. That was not so clear in 2006. In the more than eight years since, Nike+ has transformed Nike from being a “hardware” company into a full stack provider of solutions that enhance people’s athletic performance. Nike’s relationship with its customers has undergone a transformation based on the introduction of Nike+.

Launch of Nike+

Nike partnered with Apple to launch Nike+ in 2006 (1). It was the first step towards providing a more complete fitness solution and building a running community. After hearing about Nike+, I can remember deciding to buy a new pair of Nike sneakers and convincing my mom to buy the Nike+ kit for me for my birthday. I was excited to try out the new gear on my next Central Park run. I attached the sensor to my shoe and attached the wireless receiver to my iPod. As I ran, the sensor tracked my speed, distance and calories burned. When I returned home, I synced my iPod and upload my data to nikeplus.com. The site presented a visual representation of my workout. I could even share my latest run with my friends on Facebook and on Twitter. I couldn’t wait to go on my next run to see if I could improve my time. This was the earliest version of Nike+. It has since evolved to become a seamless and powerful tool and an important engagement platform.

Mutual Value Creation

There is no question that Nike+ has improved the running experience. It has changed the way users think about and interact with their running routine generally and with Nike products specifically. Nike+ effectively turned the individual sport of running into a data-driven social experience. It provided a tool that empowered runners to start tracking runs, setting goals and competing with other runners online. It developed training programs and connected customers to tips from coaches. It even opened up Nike+ as a platform so developers could create other tools and applications that could add even more value to the Nike customer experience.

Moreover, Nike+ enabled Nike to participate more actively in the running experience. Gone are the days when a customer only interacted with Nike a few times a year when in need for new gear. Now Nike and its customers had a weekly or even daily relationship. With this expanded relationship, Nike also gained the ability to use customer workout data to design and create products that would better serve its customers. Nike+ enabled Nike to provide a more personalized, improved customer experience.

The business results for Nike have been excellent. Nike market share increased from 47% in 2006 to 58% in 2015 (2). As of August 2013, 18 million people were using Nike+ and by 2014, 28 million (3) (4).

User Growth v01

Developing a Playbook for Data-Driven Companies

What is most instructive, however, is the “playbook” that Nike+ represents for other consumer-oriented businesses. Nike’s strategy has played across three main steps, which in combination have helped transform Nike into a data-driven company. Those steps are:

  1. Help your customers track how they behave and specifically how they interact with your products.
    Nike+ first and foremost capitalized on the customer’s desire to understand themselves more. Through simple tracking and visualization, Nike+ helped customers better evaluate themselves. This was valuable to customers independent of any additional offerings.
  2. Use that data to personalize and enhance a customer’s experience.
    Once Nike could analyze sufficient data, the company could start to design better products and experiences for its customers. Nike+ shortened the feedback loop for designers and marketers significantly, which they used to their advantage in testing and delivering new products to market.
  3. Ultimately, make data a core competency across your organization.
    Nike+ delivered powerful results for Nike’s core apparel functions. Over a similar timeframe, Nike massively improved the way it tracked its supply chain and other elements of its operational performance (5). Data is now not only a major contributor to how Nike interacts with its customers. It is also deeply embedded in how the company achieves operational excellence.

 Sources:

(1) https://www.apple.com/pr/library/2006/05/23Nike-and-Apple-Team-Up-to-Launch-Nike-iPod.html

(2) http://www.thestreet.com/story/13197557/1/nike-is-losing-share-in-one-key-market-it-used-to-dominate.html

(3) http://www.fastcompany.com/3016141/fast-feed/18-million-people-are-using-nike-to-track-their-fitness#

(4) http://www.marketwatch.com/story/nike-fuel-lab-launches-in-san-francisco-2014-04-10?reflink=MW_news_stmp

(5) https://datafloq.com/read/the-nike-gamification-platform-delivers-valuable-b/502

(6) https://hbr.org/2010/07/are-you-ignoring-trends-that-could-shake-up-your-business/ar/1

(7) http://www.wired.com/2009/06/lbnp-nike/?currentPage=all

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4 thoughts on “Nike: A Full Stack Athletic Performance Company

  1. Great post on a company that saw a potential shift in the market and capitalized on how to take itself from more than just an apparel and lifestyle company to an integrated training and technology company. The Nike+ was a huge leap and was the first of the wearables (if you can call it that). Nike partnered itself with the rise of Apple’s iPod, iPhone and overall trend in fitness apps which further augmented sales of its core products – footwear and fitness apparel. By leveraging personal data through Nike+, Nike was able to cement itself into the lives of consumers even further. It can attract new users looking to improve their overall fitness as well as influence existing Nike consumers to purchase new products by featuring ads.

  2. Great post AJT!! I totally agree with you that Nike+ changed the way Nike interacts with its customers and that it changed the way running was viewed by many people. Even if you don’t want to get “social” and share your performance with friends on social networks, the data Nike gives to the users is enough to make you compete against yourself! You can also use Nike+ to train for a race and the app keeps “motivating” you for the whole process. I think is a great way of using data to create value for the customers, and also Nike benefits from it: people gets more involved in running, and wants to buy better gear. Who do they think about when they have to buy? For sure Nike is top of mind for them!

  3. Fantastic post. Nike has absolutely been very smart about using Nike+ to reinforce its entire business model, from the CVP to the sales and marketing, and ultimately driving customers to keep purchasing Nike products in order to benefit from the integration of the different products (i.e. Nike+ chip; Nike+ app; Nike+ online community etc). Furthermore, the partnership with Apple – pure gold, as this takes advantage of the value network that Apple has already created for its consumers.

  4. Awesome post about Nike. Nike+ is yet another demonstration of how innovative the company has been since its founding. I am a former Nike+ user and certainly loved the products. My concern with fitness trackers is that many consumers do not truly understand how to interpret the data and translate it to reality (i.e. how to I adapt my workout regimen). Providing new data points to consumers without educating them on proper interpretation can lead to problems, especially when considering health issues.

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