Retailers already have the necessary data, via the transaction history, to drive proper customer segmentation profiles. In the case of Nike and other specialty retailers, it’s critical to get this segmentation right to offer the personalized and customized experience each customer group is seeking. Timely, customized and personal recommendations linked to your transaction and health data could ultimately make the difference between remaining loyal to Nike or other specialty athletic companies.

It has been proven that if retailers are able to offer a transporting experience, consumers are more than willing to opt for offers, personalized emails, etc., however, the days of sending out surveys are over, since companies have more than enough data to get the customer segments correct.

I think it depends on a lot of things. One, you have to make sure that your segments are big enough to be helpful in thinking about how to service them — distinct from other segments. But you also have to be careful that your segments are not so big that you are aggregating too much and hiding important distinctions. There’s also something to be said about the human capacity for remembering lists or groups — if you’ve got more than seven, then it’s going to be difficult for people in the organization to remember the segments in order to be able to use them in any meaningful way. Segments also evolve. Especially when you have an age attached to the profile in the segment, you have to think about what happens when that profile “ages out” of the segment. What happens to that 30-year-old weekend runner when she hits 40? Retailers and brands should have at least some lifecycle thinking about milestones that consumers hit and how that impacts how they see themselves and… Read more »

Interesting discussion — but it raises more concerns for Nike than it helps put to rest. Two thoughts:

First, they confirm what direct marketers have known for decades — if you want to increase countable direct results (like this loyalty program) then segmentation and focus will do that. BUT obsession with countable direct response leads companies to ignore larger, more profitable opportunities.

Second, Nike’s just reported quarterly numbers were incredibly lukewarm with a number of concerning items. Primarily, they show limited revenue growth and increase in cost. That’s what you’d expect from the program he described. (It’s also what you’d expect from the uninteresting styles Nike has released in the past year.)

As one local to Nike campus, I’m concerned for Nike’s future. And a massive, retail-based company shouting about their hyper focus on segments doesn’t make me feel any more comfortable.

The concept of personalization is hot, especially when we can use AI to help us better understand our customers. Even with 100 million members in Nike’s loyalty program, it is surprising how few segments there are. Most companies have between three and five segments, also known as personas, that cover more than 90 percent of their customers, if not more. With Nike’s sophistication in managing data, they could and should have more personas, allowing to target market specific interests, usage of product, etc. This is powerful, as the very specific content is pushed to the different segments. And as the title reads, “Segmentation is central to Nike’s success,” it is actually central to any company’s success. The right information to the right customer a the right time can create loyalty and give a company a powerful edge over its competition.

It is a golden time to leverage data and manage technology to speak directly to your best customers with personalized/customized relevance. Building that foundation still starts with optimizing your capabilities to mine POS/purchase history data for the most actionable insights. One can then layer on click-stream data, social and real-time data and the go-to-market art-of-the-possible around integrated customer and merchandise data, etc.

“Ultimately, we know when we deliver the exact right product, experience and storytelling it makes a tremendous difference.” It is really table stakes now for a progressive brand like Nike to put a material strategic emphasis on loyalty and a scalable granular understanding of their top-tier customers by spend, by profitability, by behavior and lifestyle, etc. This is a great call-to-action for retail across the board and a notable example in Nike: Taking the words “off of the wall” and making it happen at scale.

The more a brand knows about its customer the better. This is true for all brands. While the dream of true 1:1 personalization still exists, products and services usually need scale audiences (segments) to be successful. People do place a premium on their personal data (less so in the U.S. than Europe) so there must be some type of value exchange to make them share. Brands need to answer the question, “what’s in it for me?” from their customer’s perspective and deliver upon that to be successful.