Thursday, November 13, 2008

Running ahead of the pack

Some people think that social media is all hype. "Show me the money", they say. OK ... how about a stock price that has been steadily rising against the market since mid-2006? [and yes, of course it has suffered in the meltdown, but not to same extent as others].

What has Nike (NKE) done different in that time? Two years ago, it launched Nike+. Essentially, this is a sensor-based technology that stores data via a 2G+ iPod on your exercise, reports back a variety of facts and figures, and can upload the data to a social network website. Millions of people have joined this network - and Nike has created an army of loyal advocates. As an example of the power of that army, more than 800,000 people joined the Human Race on 31 August in 25 places around the world.

The members of the Nike+ community are on track (at more than 1 mile/sec, or faster than any F1 racer) to record 100,000,000 collective miles. Net Advocacy Scores are skyrocketing. Sales of accessories are growing faster than many ever imagined.

While the direct correlation is hard to prove, Nike has grown US market share of running shoes from 48% in 2006 to more than 60% today. Are you prepared to say there's no connection? Not me!

Many consumer goods companies (and others like General Motors!) have tried to use social media to build brand advocacy. The results have been tragic, or so faintly positive that the ROI didn't prove out.

So what's different about Nike's approach? For a start, the community is not built around a brand or product - it's built specifically for a bunch of people with a passion for running. You can put the Nike+ sensor in another company's shoes and still share the buzz. Translation: It's not a marketing campaign. It's shared experiences that inspire people. Nike+ provides the engine for a social activity.

Thought for the Day: If you focus on the people rather than the brand, chances are you may get the chance to ride the tiger of passion!


Jon said...

Mate, did you really write 'ride the tiger of passion'?

I do like the idea that services become unbundled, and relatively free as production technology has become so available (music is another example of this that's closer to home for me - any joker can make reasonable music in their bedroom now). And I can readily believe that Nike's clever and apparently open-architecture gadget drove their sales. But I can't help wondering what would have happened if Nike+ had been created by a company with .48% market share instead of 48%.

I think the installed base and brand still form the basis of the sales here, while the technology and community aspects may produce a bit of icing on the top. Still, one can't go past the fact that this is better than some 'frequent runner' program, or 'Nike points' for buying shoes and shorts.

Jason Winder said...

I enjoyed your article. Good to hear from a fellow Nike+ user in Tokyo. I 'rode the tiger of passion' ;), and wrote up a huge blog post about the Nike+ as well.