Nike, the world’s largest sports apparel company, is at the top of its game – and thanks to artificial intelligence that fuels their customer engagement politics, they are still growing in more than just revenue.
Inge De Bleecker of CMS Wire writes that industries worldwide were slated to spend $35.8 billion on AI systems and research in 2019.
A general sentiment about AI in a business prevails: that it forms closer ties between brands and its users and completely reshaping the customer care segment.
Some of the key customer care features in Nike (and other upscale brands) that AI is impacting significantly are:
- Personalized Recommendations
- Life-like Virtual Assistants
- Better Scalability Through AI Data
- Contextual Relevancy Aids Personalization
- AI-Based Insight For Betterment Of Customer Activation
Nike, Artificial Intelligence And Customer Engagement: A Case Study
Nike and avantgarde tech go a few years back together.
In fact, one of the most astounding illustrations of a well-crafted symbiosis of customer care and artificial intelligence comes straight from their workshops.
In 2015, Nike acquired a patent (based on Augmented Reality Design System) that paved way for holographic technology to be applied to the design of shoes. A year later, they invented self-lacing shoes – inspired by the iconic footwear from the movie “Back to the Future”.
As Matt Wujciak of Customer Contact Week Digital writes, health and wellness are becoming more prominent points of interest of millions, consumers everywhere are buying sports equipment like sneakers in increasing volumes.
In such a climate, Nike could be forgiven if they kept doing what they were doing and just reaping the rewards (read: revenue).
But that’s not the foundation of long-term success for any business. Knowing that things are best tampered with while you’re at the top, Nike announced the Triple Double Strategy in 2017.
What it entails is the following:
- Doubling the impact of innovation
- Double their market speed
- Double direct connections with consumers
A special emphasis was on the last bullet points, which yielded some truly impressive results that we’ll get to soon in this article.
The end goal of all three? More consumer engagement and employee loyalty and longevity.
Here is what Nike did.
How House Of Innovation Revolutionized Nike’s Retail
In 2018’s Q3, Nike apps contributed to over 60% of digital business
It began in April 2018 with the acquisition of Tel Aviv-based computer vision firm Invertex Ltd. This move was regarded as pivotal in Nike’s securing of new digital platforms and complemented another the previous buy of Zodiac Inc – analytics and consumer data company.
Invertex buy was met with proclamations of building “groundbreaking innovations to help Nike serve millions of members around the globe.”
Nike’s Chief Digital Officer further commented that this business maneuver would “further company’s capabilities in computer vision and artificial intelligence”, promising “the most compelling consumer experience.”
The artificial intelligence revolution continued with another purchase on August 5th 2019:
“Nike announced its acquisition of Celect, a predictive analytics company founded in 2013 in Boston. The acquisition is the latest in a series of deals made by Nike to improve their new strategy of selling directly to customers. Celect’s technology will be integrated into Nike’s app and website. Celect’s technology also allows Nike to have the proper inventory to meet customer demands.” – Rebellion Research
Nike wished to shift its business strategy towards direct sales to customers. Digital design studio Virgin MEGA helped Nike launch SNKRS app.
This was a basis for Nike’s House Of Innovation: a “blueprint for future retail locations”, integrating digital and physical retail into one.
Nike’s Personalization Of Buying Experience
The New York flagship store knows all there is to know about their customers who enter the store and log into their app: their color preferences, their favorite sports and their foot size. In short, all there is to know to provide a quality personalized experience.
This data is collected through the app. This data is then used as a means in making decisions which shoe to stock in which retail stores and, more broadly, what direction in the company should take.
Their shoppers can also scan clothes in the shop and thus send requests for a piece of desired clothing to be sent to a fitting room in their exact size.
Nike Maker Experience And Nike By You
In IBM’s January 2019 publication The coming AI revolution in retail and consumer products, Nike’s AI efforts got a prominent amount of space and attention.
In it, the sports apparel company’s automated process for custom-designed sneakers was thoroughly explained.
As a way of engaging its customers and delivering not only on expectations – but creating possibilities for buyers to create their own pair of dream sneakers, Nike has developed a system – dubbed The Nike Maker Experience – that made designing one’s shoes almost instantaneous: the customer could create their own shoes and leave the retail location wearing them!
The process is wonderfully futuristic and beyond convenient:
A pair of blank Nike Presto X shoes placed within a system. The customers choose the colors and graphic elements they’d like to bestow upon their custom Nikes – all through voice activation commands!
The Nike Maker Experience makes use of artificial intelligence, object tracking and projection systems to create the desired product, 100% tailored by the buyer, according to their tastes.
The final product is completed in less than two hours. For the sake of comparison, the standard sneakers customization procedure – with client communicating hir or her wishes to the brand – takes a fortnight.
By personalizing their customers’ journey experience in this way – by letting them customize every single element of their shoe – Nike is able to attract even the most indifferent of users to its products.
To sweeten the deal, the brand has taken on numerous brand ambassadors – musicians, sports figures, street artists, lifestyle influencers and others – to design their own, ready-made sneakers, whose bounty Nike puts up on their website and app for display and for customers to explore.
That’s an integral part of Nike By You lifestyle scheme which entails complete customization of products with an almost unlimited range of bespoke signature elements.
And they certainly know their share of, well…shares! Once the customer has designed their shoe online, they can save it on Nike’s website, get an instant shareable link and share their own, personal Nike shoe with their friends on social media.
The possibility of immediate sharing of something so personal (and, ultimately, cool) enhances customer satisfaction and user experience. All part of Nike’s “customer first” policy.
How Artificial Intelligence And Customer Engagement Improved Nike’s Brand Reputation And Customer-Centricity
90% of all the Big Data in the world is made in the last two years
Artificial intelligence is capable of capturing the so-called Big Data that is reshaping the landscape of online and even retail stores in more than one way.
Big data and AI have giver rise to the so-called personal (virtual) shopper assistants.
These virtual assistants can:
- Facilitate the use of voice and image searches
- Analyze customer’s preferences and their history of behavior
- Make predictions for sales and segmentation
- Analyze reviews
- Process orders
- Suggest solutions and answers to questions etc.
Virtual assistants are also sometimes called chatbots – and Nike is already capitalizing on them, by boosting the conversion rate from retail campaigns. The company is extensively using data algorithms to, as Customer Contact Week Digital defines it, cultivate customer trust.
Trust and loyalty are intertwined and dependent on each other – which is why the brand went one step further still.
What led to a notable rise in shoe sales is Nike’s venture into customer-centricity. In a nutshell, the company is constructing a conglomerate of personalized customer relationships via “one-stop shops” for custom-tailored workout regiments, shoe recommendations based on AI algorithms and anything in between.
As an example, the apparel behemoth has developed the Nike+ program for loyal customers which are offered exclusive access to new and future releases. They are also entitled, through this AI-based individualization scheme, to engage with experts for equipment recommendations.
Nike Fit: Augmented Reality For Scanning Customer Feet
Pushing forward their individualization agenda, Nike rolled out the Nike Fit app. Augmented reality-infused technology takes a snap of customer’s feet and, with absolute precision, measures them.
The goal is to get the perfect shoe size for the buyer who may be making the purchase out of the comfort of their own home (away from retail location) without fearing whether they got the size right.
Nike Fit uses a smartphone camera to capture and scan customer’s feet using some of the artificial intelligence’s most delicate ingredients:
- Computer vision
- Data science
- Machine learning
- Recommendation algorithms
The whole process takes just a few seconds. It is a superior method of measuring your foot because it takes into account the entire morphology and anatomy of it, rather than just length and width – an “old school” way Nike itself deemed “antiquated”.
Once the fit is scanned to perfection, Nike takes it one step further and treats its customers with a “best fit for you” recommendation. Total customer personalization is completed in the app: once you search for shoes to buy after measuring your feet, you will see only your size for any given sneaker in the store.
Nike Fit matters because it reshapes not only the way their shoppers experience shoe purchases and get high-end service…
…it also helps Nike be more accurate and better in designing and manufacturing their products.
The Impact Of Nike’s AI-Infused Customer Engagement Program
Nike combines a world of mass-produced retail stores, the “big picture”, for their target customers and leveraging of individual customers and technology to communicate their products in a personal way, through:
- Ready-made products
- State-of-the-art apps and customization programs
- Rewarding loyalty schemes
- Retail shops that blur the line between physical and virtual experiences
The outcome is the cultivation of customer trust and the creation of brand integrity and recognition that will turn legacy.
Nike utilizes artificial intelligence in such a way that it not only anticipates customer needs and meets them – they also tell customers that what they want is achievable. That they themselves can partake in designing a product fit only for them.
Nike’s yearly revenue amounts to $39.12 billion. Investment in AI has helped grow the revenue share through the Nike Direct segment (brand’s site, app and stores combined).
The shift towards direct sales to consumers made them rise 12% annually – to $10.4 billion in 2018. Direct revenue now contributes to about 30% of Nike’s profits and this number continues to climb.
The key to these turnover figures was in the company’s many innovations – with Nike House of Innovation being the most prominent one.
And it owes it all to artificial intelligence technology being put to customer care use: to sate the hunger for experiences, personal and responsive retail environment.
What these products and services, enhanced by AI, big data and recognition algorithms, are making possible is:
- Improved Personalization: Artificial intelligence is pushing Nike’s business – as it does the entire fashion segment – towards selling directly to customers, cutting out the middle-man, and offering a fully customizable, experiential shopping
- Empowering Self-Service: AI changes the notion of waiting for a) you turn to be serviced b) your product to be delivered c) miscellaneous. Chatbots are already handling the majority of customer queries online
- Constant Availability: Services powered by artificial intelligence, such as virtual assistance agents, don’t go to sleep. The 24/7 availability is one of the most sought after qualities in customer care but was also the one that was hardest to procure – until AI kicked in, of course.
- Virtual Assistants Provide Happy Experiences: Kindness and pleasantness is always a guarantee with virtual assistants and chatbots. Real-life customer representatives can (and most likely have) a bad day – with AI, the company is sure to always have a “smiling” assistant providing a quality user experience.
- Consumer Becomes The Ultimate Signal of Demand: Thanks to big data and machine learning algorithms, the brand continues to close the gap between them and the consumer, ultimately knowing that is demand en masse as well as individually.
When Invertex purchase was announced, Nike’s Chief Digital Officer, Adam Susman, proclaimed that the company’s goals of personalization were only shaping up.
The addition of “world-class data-science talent and best-in-class tools” was to be used to “power one-on-one relationships with consumers through digital and physical consumer experiences.”
Nike’s Artificial Intelligence And Customer Engagement Future Steps
Nike’s website gets 60 million visits per month, with 7 minutes being the average time spent by visitors
In an interview for Particle Data website, Heidi O’Neill, president of Nike Direct and in charge of eCommerce and direct retail, revealed what artificial intelligence and machine learning mean for the company in the long run.
- The curation of completely personalized stores for every single shopper in the future (by looking at every retailer and their specific consumer relationship)
- Innovations like audio-guided run in Nike Run Club app track running stats.
- Nike Training Club app hosted nine million workouts
- Big data is used to know where Nike consumers are and to select and curate products in stores
- The company identifies (through data science) and invites high-value consumers to exclusive events, such as guest spots by top designers in House of Innovation store
Nike CEO Mark Parker has previously stated that the success of NYC and Shanghai flagship shops exceeded all expectations – and he had AI and ML to thank.
“Both stores create the most personal and responsive retail environment in the industry. It’s a digital experience brought to life in a physical space.”, comments Parker.
Based on announcements by Nike’s top executives, further personalization, customer engagement – with a dash of exclusivity – will remain a priority for the company.
House of Innovation’s mythical 5th floor is reserved for Nike+ members only. But other than housing exclusive gear, it’s also symbolic of the brand’s direction: transparent benefits for all who simply choose to engage themselves up a notch (Nike+ membership is free of charge).
The company is already mulling the development of their digital customer experience in these three ways:
- Building relationships through mobile apps
- Career advancement for store and customer support agents
- Implementation of AI innovation via Voice of Customer
This final point offers a most immediate glimpse into the future. Nike Live is a promise of “hyper-localized” customer experience – an ecosystem of sorts, bolstered by consumer research through a Voice of Customer program.
The entire experiential concept is centered around a smartphone app which is in charge of member’s loyalty points, information on products and reserving them.
The futuristic retail concept, located in Los Angeles, is available for Nike+ members only and caters to buying patterns and customer engagement typical of the area the store is in. Another location is in plans for Tokyo.