Two retail trends that sport can learn from

22 06 2013

Recent articles in FastCompany and AdAge have highlighted some interesting innovations and trends in the retail sector that could also impact sports delivery.

Starbucks has had a go at re imagining the rules for building coffee outlets. It’s designed its new concept store to be a work of art, and deliverable on a truck. The big idea is to find ways to build scale while still being locally relevant. This is the same challenge that the sports sector faces, to drive national scale while reflecting local needs. However I suspect the sports sector has yet to see this as a designer’s problem to solve like Starbucks do?!

Meanwhile some American retailers are working towards a concept of the “omni-channel“. This sounds impressive, but its really just looking at channel strategy from the customer’s perspective. Customers don’t categorise their relationship into bricks and mortar, franchise outlets, call centres and online. They just want to browse, buy and collect a brand’s products in whichever way is most convenient to them at that time. So the big idea with the “omni-channel is that the business re-engineers itself around delivering a consistent customer experience across all its channels. This breaks down silos internally and helps reinforce brand values externally.

Of course behind the scenes neither of these trends are easy to deliver on, in retail or in sport. Achieving scale while being locally relevant requires constantly searching for local needs that are common across the market. Local customisation can then be kept to a minimum and focused on areas of high impact to customers & partners. Likewise delivering a consistent and seamlessly connected customer experience across all touch points will require a whole new way of working and information sharing, both across the business and out through the network of partners.

So will the pain be worth it? Well organic growth comes from engaging more customers more often, and improving the customer experience is a critical part of achieving that. So whether its thorough visible delivery innovations or business model innovations the customer never sees, organisations will need to adopt these principles or risk losing out on the growth they will generate.





Nike’s growth fuelled by deep customer insight

2 03 2013

This week Nike announced it was committing $50m to Michelle Obama’s campaign to get American kids more active, citing the high social costs of the “inactivity epidemic”. This commitment is just the latest example of the lesson Nike learned many years ago – to sustain growth, they must be customer-led not product-led. And when you consider they announced double digit revenue growth in December and Fast Company voted them the most innovative company in the world thanks to recent product and manufacturing innovations, you realise just how customer-focused Nike must be!

Losing sight of customer needs & market trends

In the mid 1980s, Nike’s growth stalled on the back of a failed brand extension into casual shoes. Despite Nike being a trendy brand, and casual shoes being a growth market, they failed to grab significant market share. According to founder Phil Knight, the problem was Nike had lost sight of who their customers really were. Their target market had always been performance athletes, reflecting their heritage in the legends of Bill Bowerman and Steve ‘Pre’ Prefontaine. Since Bowerman invented the waffle sole by pouring rubber into a waffle maker, Nike have been at the forefront of product innovation in every category they play in. In entering a new market, Nike took the same approach and produced “a functional shoe we thought the world needed, but it was funny looking and the buying public didn’t want it”.

Why this happened is a warning to sports organisations that’s as relevant now as it was when Phil Knight originally gave it. “In the early days, when we were just a running shoe company and almost all our employees were runners, we understood the consumer very well. There is no shoe school, so where do you recruit people for a company that develops and markets running shoes? The running track. It made sense, and it worked. We and the consumer were one and the same. When we started making shoes for basketball, tennis, and football, we did essentially the same thing we had done in running.”

Eventually this one-dimensional approach to customer insight became a weakness. “We were missing an immense group. We understood our “core consumers,” the athletes who were performing at the highest level of the sport. We saw them as being at the top of a pyramid, with weekend jocks in the middle of the pyramid, and everybody else who wore athletic shoes at the bottom. Even though about 60% of our product is bought by people who don’t use it for the actual sport, everything we did was aimed at the top. We said, if we get the people at the top, we’ll get the others because they’ll know that the shoe can perform. But that was an oversimplification. Sure, it’s important to get the top of the pyramid, but you’ve also got to speak to the people all the way down.”

Becoming genuinely customer-led

So what’s different now Nike are customer-led rather than product-led? Knight continues “whether you’re talking about the core consumer or the person on the street, the principle is the same: you have to come up with what the consumer wants, and you need a vehicle to understand it. To understand the rest of the pyramid, we do a lot of work at the grass-roots level. We go to amateur sports events and spend time at gyms and tennis courts talking to people.”

Within this story are several keys to organisations being genuinely customer-led

  • Be wary of using staff as a proxy for the needs of the customer, as this becomes potentially limiting if/when the actual customer base diversifies beyond the core customers
  • To understand customers, get out to where they are buying/using the products and services you provide – see how they use it, and listen to how they would improve it
  • To achieve scale, design products and services based on the common needs across target customer groups, rather than focusing on the differences between them.
  • Changing the focus from creating products to delivering solutions (as discussed in this recent post on ‘Re-evaluating the 4Ps of marketing for sport’)

In this context, Nike’s announcement of combining social responsibility with business growth makes good sense. Nike knows what’s important to their customers both now (a company that takes social responsibility seriously) and in the future (active and sports-aware kids will become the target customers of the future). It’s not just their innovation department that is thinking several steps beyond the current product line.

To read more about customer-led growth, click here





Business model reinvention – opportunities for the sports sector

17 02 2013

With the latest round of funding for NGBs now confirmed, many are taking the opportunity to review not just the offers they make to their target customers but also the underlying business model they use to deliver those offers. To support those conversations, and introduce some of the key ideas, I’ve summarised a few recent articles that have been part of those discussions. This is subject I’ll build upon over the next few weeks, as while only one of the articles is about the sports sector, all the lessons are relevant for NGBs and other sports organisations.

Core competencies – Nike CEO Mark Parker On His Company’s Digital Future
(Austin Carr, fast company)
Nike is undergoing a digital revolution writes Austin Carr. It started with the Nike+ partnership with apple that tracked and changed people’s running behaviour. More recently the Nike Fuelbands are using “visual feedback” to change people’s wider lifestyle into something more energetic. But the story is more than these data-based innovations, impressive though they are. It’s the fact that Nike’s core competences that once were limited to trainer design, now extend to digital software and behaviour change science – to help achieve the same strategic goal of selling more shoes.
Business model question for sports organisations – what are the core competencies/capabilities your organisation needs to deliver on your strategic objectives, and how will you go about filling any gaps?

Key activities – Invest to innovate: Coke’s 70/20/10 rule
(Josh Leibowitz, McKinsey)
McKinsey partner Josh Leibowitz puts forward the argument that companies need to innovate to grow and that innovation is an investment mindset not all companies have. Amazon for example are restless innovators, achieving year on year growth through constantly introducing, testing and adapting new capabilities. Similarly Coca-Cola have a clear mindset based on investing 70% of marketing into “now” programmes, 20% into “new” or emerging trends and 10% into “next” ideas. Then they follow a systematic process of “start small and scale fast”, because they know growth comes from the scale of execution not the quantity of ideas.
Business model question for sports organisations – what key processes does your organisation need to be very good at to deliver its value proposition to target customers?

Channel strategy – Apple CEO likens retail experience to Prozac
(Ingrid Lunden, TechCrunch)
Apple’s 400-ish stores serve over 10 million people a week, but Tim Cook isn’t even sure that ‘store’ is the right word anymore. “They’re so much more than that” he says, referring to the fact that their delivery channel continues to create a customer experience that its competitors find hard to match. In becoming the face of apple, the stores have gone from a sales hub to a gathering place for the local community (a strategy also used by Sir Richard Branson to launch Virgin Records many years ago). But despite this changing role, they’ve not lost sight of the sales objective – as they’re having to close stores so they can build bigger ones!
Business model question for sports organisations – what is the experience you want your target customers to get as part of your value proposition, and how consistently is it currently being delivered across all your delivery channels?

Core purpose – Kill Your Business Model Before It Kills You
(Ron Ashkenas, HBR blogs)
One from the archives (last October) to finish with, as this nicely summarises the point of the previous articles. Ron Ashkenas asks why leaders wait too long to modify or abandon their business model. Kodak is a good example, hanging on to a core belief that film was part of the photography future even as the market (they invented) went digital.
Business model question for sports organisations – what assumptions are currently held about the purpose of your organisation that no longer reflect the value proposition you are planing to deliver to your target customers?





The 3rd place…

3 04 2011

I was reading the Starbucks entry on wikinvest the other day. The bit that particularly interested me was the short entry on Starbucks 3rd place – a market positioning based on delivering a differentiated customer experience that became a catalyst for growth within the coffee shop market. growth.
The entry reads: Starbucks’ success is due in large part to the trendsetting triumph of its coffeehouses as an informal and convenient “third place” outside of home and work, ideal both for informal meetings and a quiet moment away from the hubbub of daily life. Wi-fi internet access in all stores also makes it a place where customers can work. Book and music events also take place at Starbucks, in accordance with the company’s goal of making each location a community center of sorts to garner the loyalty of local customers.

It made me wonder whether sport can build on it’s current position, for some customers at least, as being their 3rd place between work and home. What Starbucks did wasn’t new, coffee shops were already a 3rd place for some. But what Starbucks did was build it up into a relevant and compelling customer experience, and one they could use to grow their whole market (not just their share of the existing market).

Golf is a sport that often combines business with sport, and team sports like football create social and community bonds around playing. But how could a sport deliver a customer experience – consistently across all it’s touch points – that set a completely new standard? What would it take for a sport to no longer be seen by its participants as an either/or to working or spending time with the family? Could it be West Wing-style mass jogging networking events, using voice to text software on an iPhone? Or family canoeing days that start with brunch at a cafe, and end at a cinema?

The answer probably isn’t either of those suggestions. But it is out there…





Sustainable business growth at Nike

26 03 2011

Last week, Nike announced their quarterly results. Constant dollar revenues grew 9%, with growth in every geography except for Japan. But it wasn’t the results themselves that interested me; but rather, how they explained their strategy for creating sustainable business growth.

Mark Parker, NIKE Inc.’s President and CEO, said “everything we do at Nike is based on delivering long-term sustainable growth. At the same time, we’re focused on delivering value to our shareholders in the near term. This is the balance you’ve come to expect from Nike, and it remains our commitment going forward.

We strike this balance by leveraging our significant competitive advantages, and chief among them are our authentic emotional connections with consumers, innovative product and retail experiences that lead the industry and a strong NIKE Inc. portfolio that gives us tremendous opportunities for growth and significant levers to drive profitability.

Consumer-driven companies with strong brands and compelling products will be in the best position to maintain their margins, and disciplined companies who are lean and focused on how they use their resources and who are aggressively seeking new ways to grow will prosper. Those who don’t won’t. In that sense, the roadmap for success in the future is no different than it’s always been”

Later in the call Charlie Denson, President of the Nike Brand, added: “As always, we’re focused on managing the business for sustainable long-term profitability. For the Nike brand, that means staying laser-focused on innovation, first at the product and brand level to drive the top-line growth and also driving innovation and discipline into how we run the business.”

While Nike is a multi-national commercial business, I believe there are some important messages here for the UK sports sector; whether the goal is increased profitability, more fans on seats or more participants on pitches, courts and roads.

Nike see their competitive advantages as including “authentic emotional connections with consumers, [and] innovative product and retail experiences”. And the Nike store environment and the style and tone of Nike’s services and communications would confirm this. They lead the market by listening to what consumers say about how they play sport – what it means to them, how it makes them feel and how they want to ‘consume’ it. They’re not bound by the rules of each sport, but rather by the needs of their consumers.

Many people associate Nike with product innovation, whether it’s Nike Air in the 80’s or Nike+ in the 00’s. But innovation also runs through how they manage their business processes and costs. Innovation and discipline is a powerful combination, as the likes of the Barcelona football team or the British cycling team regularly demonstrate. But how often do these twin traits of innovation and discipline emerge within the organizations and processes running sport?

So according to Nike, sustainable business growth comes from:
– being a consumer-driven company (clarity about why you exist, and where your strategic priorities are)
– creating authentic emotional connections with consumers (knowing who you exist for, and why you are still relevant to them)
– delivering innovative and compelling products (aligning what you provide to the people you exist for)
– providing innovative retail experiences (differentiating how you deliver your innovative products)
– embedding innovation into all aspects of the business (creating continuous improvement in both what you produce and how)
– being disciplined, lean and laser-focused (all business processes have a clear and relevant purpose, and are carried out both efficiently and effectively).

These traits exist across elite sport, and no doubt also reflect Nike’s origins with Bill Bowerman and Phil Knight. But they are just as relevant to how sports organisations across the market place could be operating. Can you share a good example of how these principles are being applied within the UK sports market…?





What’s the $ impact of a poor customer experience?

20 08 2009

A new survey conducted by Greenfield Online, has investigated the economic impact of delivering poor customer experiences. The press release on Yahoo! Finance explains how they measured it, but some key take-aways are:

  • 72% of both New Zealand & Australian consumers said they had ended a relationship with a company due to poor customer service.
  • The Australian’s had ended 1.37 relationships each, at an average of AU$403 (US$338)
  • The Kiwis were a little lower, ending 1.17 relationships at an average of NZ$386 (US$257)
  • Indian consumers were the most sensistive to poor service, ending an average of 1.84 relationships each

While I’m always a little sceptical of the results of sponsored surveys (this was was sponsored by Genesis Communications Laboritories), the theme still raises a very interesting thought. It’s a commonly held belief that it’s cheaper to retain a customer than acquire a new one. However, to what extent are companies investing in evolving and innovating their customer experiences, to keep up with customer’s changing expectations?

Call centre’s have been around for a long time, and this research suggests that over half the consumers polled still prefer to use the phone, rather than newer channels such as email or web self-service. But recent call centre innovations seem to focus on developing cost-saving self-service, rather than improved customer experiences. And this survey suggests that it’s these same automated self-services, that feel the most challenging for these defecting customers.

Do you have an example of when a call centre either exceeded or failed to meet your expectations of service?





No friends, no access – no problem!

11 08 2009

Ever wish you could have an exercise buddy to train with? Or wish there was a mass participation race near-by? In the old ‘real world’ you’d be stuck with no friends and no access. But not any more.

MapMyRun have partnered with the Columbus Half Marathon, to bring Columbus to the world. On August 30th, MapMyRun members around the world will join those in Columbus, running the 13.1 mile race. But they won’t just be there in spirit. By registering in advance, and entering the route they will run, they will be able to ‘compete’ with runners in the race and around the world. Better yet, if they succeed, they’ll even get a finishers hat, shirt and medal!

This is brilliant. Never again will race organisers have to turn runners away. Meanwhile, MapMyRun further engage their community of runners, connected by their common pursuit of running (or cycling, walking and skiing, which they also cater for).

Nike have been credited with a similar level of engagement and community around Nike+. And have also held virtual races around the world. Where MapMyRun could push the boundaries, is by extending this concept to those pursuing other sports too. Or perhaps by including video recording of your experience. And by tying it into existing real-life races, they can even cater for the virtually home sick. The loneliness of the long distance runner is no more.

This also has me thinking. What other events/brands restrict access to those being physically present? Orchestra’s already play “live” to theatres full of people around the world, who get dressed up to enjoy the experience of almost being there. Sports broadcast games to giant screens, where fans can gather, sing, drink, cheer and get almost the same experience as being there.

So where else could brands take this..?








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