Madison Reed has raised $32.1 million since launching 15 months ago.
What Nike calls its “sales funnel” uses the web to attract shoppers, convert them to buyers and retain them as customers. Conversions are up 67% since the program began nearly two years ago.
Last year, Nike Inc. began focusing on Nike.com as a selling channel rather than an information-only channel. What happened? Traffic to the site fell by 25%. But before anyone starts to feel sympathy for Nike, Patrick O’Neill, general manager of Nike.com, reports that conversion rates shot up 67%. On top of that, sales have increased 5% monthly since the focus on selling started, O’Neill told the eTail 2003 East conference this week.
O’Neill attributes the successful conversion of Nike.com into a store to a three-step approach that he called “the sales funnel” to attract, convert and retain customers.
One of the key elements of the attraction step was to create Nike web sites for the various sports and activities that consumers perform in Nike shoes. Nike operates about a dozen web sites, including NikeBasketball.com and NikeSoccer.com. At some of those sites, customers can create custom shoes, which Nike plans to extend to all sites, O’Neill said.
O’Neill also stressed the importance of offline advertising of URLs. “Do not underestimate the importance of including the URL in all offline advertising,” he said. Evidence of the success of offline promotion, he reported, comes from analysis of how visitors arrive at Nike sites: Over 50% of traffic comes directly to the URL, rather than through a search engine or an affiliate, and 50% of that traffic are new visitors.
Another key element in attracting shoppers is e-mail, O’Neill said. E-mail communications need to be intentional and include information, not just pitches, he said. “The secret is to define the purpose and set up the objectives upfront before you mail,” he said. An example of a successful e-mail campaign is a holiday e-card to customers that achieved a 13% click-through rate and a 2% conversion rate, he reported.
Once customers have arrived a site, the next step is to convert them to buyers, he said. One effort that Nike undertook in its conversion efforts was to change its registration process. For starters, it stopped requiring customers to register before they started shopping. Then it simplified the registration process. When it did so, registration rates increased from 2.5% of visitors to 6%. “Previously we had a painful process,” O’Neill said. “We asked a lot of questions for new registrants. Now we ask their e-mail and Zip Code.”
Finally, Nike attempts to retain customers through customer service initiatives, including shipping all orders within 24 hours and making live chat available for customer service.
Like almost all retailers and manufacturers these days, Nike has wrestled with channel conflict issues, which prompted questions from O’Neill’s audience. “I had an hour to talk about this two years ago,” he quipped. “We lived through channel conflict. It began eight years who when opened NikeTown stores.” But he said the power of the brand can overcome channel conflict if a retailer emphasizes that a strong brand benefits all employees. “We deal with the conflict by elevating the brand and that benefits everyone,” he said. “When consumers flock to the product brand, it benefits all channels. At Nike.com, we are lifting the brand.”
Another attendee asked how Nike deals with unauthorized online sellers of Nike products, especially those who sell at eBay. “We are extremely particular about who we allow to sell our brand online and we do police the Internet to see who’s selling Nike online,” he said. “We send cease-and-desist orders to those who are using brand images and logos without our authorization.”