Nike Just Does It
First, the age of the customer shifted power away from institutions to individuals, drastically reducing the control companies had over their own brands. Then came Amazon: The competitive juggernaut ripped whatever shred of control brands had left, leaving them to figure out the algorithmic enigma of eCommerce while competing on price with brands of suspect provenance. This week, Nike said enough is enough. The brand will no longer sell directly through Amazon. Instead, it will reclaim control of its brand experience and strengthen its direct relationship with customers (a move telegraphed by its recent executive reshuffle toward direct and digital). The growing success of direct-to-consumer (DTC) companies points toward the success of brands holding their customers close in order to own and shape their customer experience. This strategy does not preclude symbiotic channel relationships; many DTC companies have stepped into traditional retail rinks (for example, Casper at Target). Leaders of brands feeling the Amazon burn may be tempted to pull the plug on their own marketplace relationships. (If Nike can do it, why can’t we?) But they need to realize that Amazon’s success has relied on its exploitation of gray areas of business that might not last forever. And Nike has the brand equity — and underlying loyalty-based strategy (see below) — that they have been developing for years to pull it off. So they did.
Loyalty Is The Fuel For Nike’s Retail Disruption
This week, Nike announced it’s breaking up with Amazon (and it’s going well — shares are trading up). It cites the desire to better manage the experience for its “members.” Membership is the lynchpin of its DTC strategy (called “Direct Offense”). The brand proselytized it in earnings calls and annual reports. Its member program, NikePlus, has driven double-digit growth in digital sales and fuels much of its retail innovation. But it’s not your average loyalty program — it focuses on access and exclusivity where other programs funnel promotions. It uses insights to create new kinds of customers experiences, such as member-only stores and hyper-local store formats. Nike is raising the bar for loyalty and setting a new standard for shopper loyalty, but leaders should not miss the forest for the trees. This announcement is a signal of broader disruption of the B2B2C retail. We are headed toward a world where we will see the death of the B2B2C salesman in lieu of DTC sales — at least in its current incarnation. Fewer units sold at higher prices will be the reward for smart brands that invest in brand equity and data-driven loyalty.
Speaking Of Loyalty . . .
Google Makes Moves Into Banking: A Loyalty Program Is Anticipated
Google looks set to offer consumers checking accounts through Google Pay as soon as 2020. Indications are that the offering could also include a loyalty program. The firm appears to be focused on driving up usage of Google Pay, strengthening its relationship ecosystem with banks and merchants, and gathering more data on consumers along the way. So is Google becoming a bank? Will it be successful? And should banks be worried? Forrester Principal Analyst Alyson Clarke shares her analysis in this video.
Competing Sale-Empowerment Vendors Aligning For Client Value
A surprising partnership went into effect last week between Salesforce and Microsoft. Salesforce named Azure as its prime public cloud provider for Salesforce Marketing Cloud and that it will build a new integration that connects its Sales Cloud and Service Cloud with Microsoft Teams. These two companies have been heavily competing, as Salesforce’s Customer Relationship Management (CRM) platform has dramatically outscaled Microsoft Dynamics 365. But this move is the type of customer experience-centric partnership that every vendor should consider, as its focus is on driving up customers’ existing service adoption standards and improving the integrations between them. “The combination of Salesforce and Microsoft enables our teams to work better together to enhance the guest experience at every touchpoint,” said Brian King, global officer of digital, distribution, revenue strategy, and global sales at Marriott International. CIOs should look to ensure similar integrations between their tools that employees are using regularly and those that are customer-facing and drive up customer insights and customer experience actions.
Facebook’s Trust Issues May Hinder The Success Of Facebook Pay
Last week, Facebook rolled out the newest addition to its fintech portfolio, Facebook Pay. The new payments system will be available across the company’s platforms (Facebook, Messenger, Instagram, and WhatsApp) and will enable users to pay for “fundraisers, in-game purchases, event tickets, person-to-person payments on Messenger, and purchases from select Pages and businesses on Facebook Marketplace.” Facebook Pay joins the growing list of Facebook-powered payment offerings, which includes Project Libra, Instagram Checkout, WhatsApp Pay, and the peer-to-peer payments capability offered in Messenger. Business leaders need to understand several aspects about Facebook Pay: 1) When compared to most of its “Tech Titan” peers, significantly fewer consumers would trust Facebook to provide digital payment services; 2) the competition for consumer money movement and management is fierce — think Apple Card, paying your bills through Alexa, and Google’s latest plan to offer consumer checking accounts; and 3) Facebook has the scale for a strong payments program. It was recently awarded a patent in the personal financial management space. And its platforms are already informal eCommerce channels in key global markets. But the success of Facebook Pay lies squarely in its ability to recapture the trust of consumers who have many other options.
A Makeup Launch And Lunch-Box Staple Send Websites Crashing: Disaster Or Win?
When websites come down, Twitter blows up, and marketing wins. The startup, Jeffree Star Cosmetics, and Kellogg’s-owned company, Pringles, both recently experienced website crashes in the face of new or limited product introductions. Case 1: When the influencer-owned makeup brand launched its site earlier this month, it crumbled under the volume of traffic before the full collection even went live. Fans took to Twitter with panic-stricken meme posting. Disaster? Hardly. By the end of the day, many products had sold out, sparking promises of replenishment conversations with manufacturers (a supply-and-demand dream come true.) Case 2: Pringles launched its third-annual Thanksgiving kit, which crippled the site and was sold out almost immediately. Pringles fans voiced their dismay on Twitter, from angry mistrust to superstitious hope (and sadness). But this is the third year in a row that Pringles has offered a version of this kit, and last year’s results were eerily similar. Another mistake — or a plan? After the products sold out this year, Pringles was ready with a discount code and Twitter announcement that a limited-edition flavor hit store shelves. Leader lessons: Don’t abuse fans with planned disasters, or you risk losing trust. If disaster does strike, recover with an “oops campaign,” consolation prize, or heartfelt apology. And of course, plan for massive increases in traffic and demand so that this doesn’t happen in the first place.
“11.11” Kicks Off Holiday Sales, And Alibaba Steals The Show
Despite China’s economic slowdown and trade war uncertainty, Alibaba generated a staggering $38.4 billion in online gross merchandise value (GMV) on this year’s 11.11 (AKA, Singles’ Day). That’s up 26% from last year. Alibaba did this by expanding beyond China, adding a group-buying feature and a separate Taobao deal app. It also launched aggressive promotions across Tmall Global’s 10 markets in Asia Pacific and North America. It stretched the duration of the events by kicking off its 11.11 event three weeks prior with exclusive preorder offers and additional discounts if shoppers paid an upfront, nonrefundable fee. If shoppers wanted to return or exchange items, they had to wait until November 12. These policies ensured that retailers would generate maximum GMV on November 11, despite the likelihood of returns and refunds in subsequent days. Finally, Alibaba focuses on mobile commerce to target digitally influenced consumers, live-streaming commerce and exclusive limited-number and limited-time offers that create urgency to buy. Taobao generated more than RMB 100 billion ($15.1 billion) in GMV via live-streaming sessions in 2018, and over 17,000 brands participated in live streaming on 11.11 this year.