Nike's membership program is the 'engine' of its DTC strategy

For Nike, a digitally-powered membership program is helping to deliver digital growth, and build a loyal base of customers that engage with the brand in ways that go beyond shopping for new apparel and sneakers.

For the quarter ended Nov. 30, Nike posted 34% digital growth on an annual basis, delivering a standout result for the quarter that indicates there is still ecommerce growth to be had during a tough time for retail. While this was helped by a Black Friday and Cyber Monday that set records for demand and traffic, there was more to it than a seasonal spike.

Perhaps fittingly for a brand with the famed slogan “Just Do It,” Nike is acting boldly as it steps into the digitally-enabled future. In recent years, its ecommerce strategy has been undergirded by a focus on going direct-to-consumer. As a result, it has scaled back relationships with other retailers in favor of bolstering its own channels, whether that be its digital properties or in-person stores. This marked a big shift for a brand that is used to appearing on shelves everywhere, but allows it to work across digital and physical channels, while centering the Nike brand.

“Our work to directly connect with consumers is founded on a simple consumer insight: Consumers want to get what they want, when they want it and how they want it,” CEO John Donahoe told analysts. “And consumers have told us they want a consistent, seamless and premium experience both digitally and physically around mono-brand and multi-brand.”

It’s clear that Nike is not only selling individual items to people through this approach, but also building an environment where people will keep returning. One way it does this is through its membership program, which Donahoe flagged as a particularly important driver of the brand’s digital growth for the quarter.

Nike now has 160 million active members, and the most recent quarter was its largest to date. Donahoe said Nike saw double-digit growth in engagement from these members for the quarter, as well. The purchases from these members mean more than just a one-time sale. While customer lifetime value wasn’t mentioned on the call, it’s clear the program helps drive up this important loyalty metric.

“More importantly, our repeat buying members who are more engaged, spend more and spend more frequently are growing at an even faster pace of high double digits as they continue to be an important growth engine for our business,” Donahoe said.

At a time of heavy discounting in retail, membership gives Nike a unique way to differentiate the way consumers interact with it. One result is that consumers are continuing to pay full price, even as they seek deals in general.

“The quality of the business through Nike Digital is among the highest quality that we have across any channel,” Donahoe said.

With ready access to purchases and preferences, membership also offers Nike a way to learn more about its customers, and it is using the data to inform product creation, line planning and experiences.

Nike doesn’t only offer shopping and discounts through the membership program. Perks include free shipping, exclusive styles, invites to events and access to workouts. In turn members can engage through a series of apps offered by Nike, including Nike Training Club, Nike Run Club and the SNKRS App. Nike is aiming to deliver more content across these apps, as well, and expects to announce more partnerships in the coming weeks.

Members can also realize benefits in-store. In fact, 50% of store demand comes from members, Donahoe said. The company is also building connection points for people who shop Nike products at other outlets, as well. Nike has connected membership with Dick’s Sporting Goods, JD Sports, Zalando and TopSports. In turn, Nike said the members are driving improved traffic, conversion and mutual profitability. And the other retailers can have the same access to data that helps them personalize their own experience, such as who a customer is and what they’ve bought.

Direct-to-consumer isn’t only about owning channels. It is about elevating the experience. Listen to executives closely, and it sounds like Nike’s membership program is the ladder that is helping it to reach the next level.

“While it's still early days on this journey, we're excited by the foundation we're creating,” Donahoe said. “The ability to give consumers a personalized experience across channels, fueled by data and insight opens up a whole host of opportunities for us. It positions us to empower consumers with their own choice while keeping the scalability and strengths in digital marketing, product creation, distribution and more.”