The athletic shoe and apparel maker, which is in a dogfight with Adidas and Under Armour, has a strategy called Consumer Direct Offense that aims to develop products faster with personalization at scale. Nike also has to focus on selling direct and owning the customer relationship since retail is a messy industry.
In 2016, Zodiac raised $3 million in seed funding to launch predictive analytics tools based on forecasting individual customer lifetime value. The models were developed by Wharton School Professor Peter Fader and a team of data scientists at the University of Pennsylvania.
Zodiac’s mission is to understand the value of an individual customer to boost revenue and retention with the right marketing, recommendations and offers.
In November, Nike outlined plans to juice its growth in the years ahead by scaling new product platforms quickly and then going direct to consumer via its retail outlets, mobile apps and e-commerce partners.
Mark Parker, speaking on Nike’s third quarter earnings conference call, outlined the company’s progress across key areas:
- 2X Innovation, which revolves around developing new platforms (types of shoes and technologies).
- 2X Speed, which revolves around investing in digital to serve consumer demand faster. There’s also a heavy dose of investment in robotics and automation.
- 2X Direct, which leads with digital channels as well as Nike’s own retail outlets.
Analytics will be critical to multiple efforts. Parker added that Zodiac and its “proprietary tools will help us deepen relationships with consumers all over the world with a primary focus on our NikePlus members.”
The company’s digital efforts are showing some results. In the third quarter, Nike reported third-quarter revenue of $9 billion, up 7 percent from a year ago, with income before income taxes of $1.2 billion, down 12 percent from a year ago. Nike reported a net loss in the third quarter of $921 million due to charges related to the tax changes in the U.S.
