Nike A Tale of Lost Opportunities

For those of you who have been following my hubs recently you will recall that I am trying to get fit and that I set a goal that once I hit 78 kgs that I am going to get some new running shoes. I wrote about this in my Fit for Business hub. Well,the day arrived this week and I took a couple of hundred dollars with me to buy some runners from the newly opened Nike Store in Rundle Mall, Adelaide.

For those of you who have recently arrived on the planet Nike is the #1 sports brand in the world, worn by athletes across the globe. In 2010 Nike generated $19 billion in revenue and $1.9b in operating income and employs 34,000 people worldwide.

Nike have also courted with controversy in recent years including accusations of using contractors in Asia who employed people in sweatshops, influencing athletes to withdraw from races if they felt that they could not win (Liu Xiang, Beijing Olympics 110m Hurdle Final) and the use of child labour in producing soccer balls. To counteract these claims Nike have developed a comprehensive corporate social responsibility platform and are working towards ensuring that all suppliers have adopted safe work practises and human rights.

Nike also owns other world brands such as Cole Hann, Hurley Internationa, Umbro and Converse and the sub brands of Air Jordan, Live Strong and Nike+.

With such a big brand selling shoes direct to the public in Adelaide, I was keen to give them a try to understand their selling philosophy and what I could learn from this multinational manufacturer and retailer.

Nike has recently opened their doors in Adelaide in our premier retail shopping precinct in Rundle Mall. The store is on three levels with ‘running’ on the first floor and then men’s and women’s fashion on the other 2 floors.

Located right next to the Nike Shop is an Athlete’s Foot franchise that is also advertising running on their ground floor. It would seem to me that running is a current focus for both retailers as they try to wedge out some competitive advantage in this space.

Nike is renowned for instore icons and a ‘reason to visit’. Unfortunately, in Adelaide there is no icon or ability to run or a machine to be assessed on, so that the consultant can recommend the right show for your gait. This is available in other stores across the globe, but not in Adelaide as far as I could observe.

For the customer wanting to buy running shoes there is a Nike Running Club logo in the window and as you cross the threshold running shoes are immediately on display. So it appears to be well merchandised and solid external advertising.

As I crossed the threshold I was expecting great a sales and customer service experience and generally I wasn’t let down.

Within 90 seconds I was approached by a sales consultant ‘Bryan’ (name has been changed) who asked if he could help me. Friedman sales teaches us in retail to not directly approach a customer, but to acknowledge that they are there and to give them some space. After a short period of time the consultant should approach and to start with a non-business related question. While Bryan failed to complete a 180 degree pass by he was friendly enough & I was keen to chat to him.

I said that I wanted to buy some running shoes and what could he recommend.

This is when Bryan the sales person appeared! He probed me to find out about where I run, how long, how often and how I run. I explained that I run on pavement, about 5 kms per day, a lot on the flat but with at least one big hill per run and that I tend to run on my toes until the end of the run where I get sloppy and run back on the heels.

I also explained that I get pain behind the right shin after I run…he said that that is exactly where he gets similar pain.

So far, so good. He recommended that all things considered that I should buy the Nike Lunarglide+ 3. This shoe has extra support in the heel and around the toes that would suit my gait and pavement running. On his advice I tried on a pair and could feel the difference immediately, so the sale was definitely on.

To value add the process Bryan then showed me a couple of exercises that I could do to relieve my pain around the shin. This is a great example of removing buyer’s remorse and providing some retail advice that I couldn’t have got from buying online.

The next thing I did was check the price - $200, which was within my budget, so these were ‘put on the counter’ and I had psychologically bought them.

I had one last question, on the Nike website it had suggested that I should buy the barefoot running shoes after I had completed the online survey. He said absolutely not for pavement running, so I was glad to be in a shop to get the right advice.

By now Bryan and I were hanging out, we had become friends and I had bought the shoes. This was his opportunity to add on.

The Friedman sales system teaches us that once a customer buys that you put the item on the counter and then you add on. Well, Bryan must have never had add on training or he was absent from this session.

With the exception of the approach Bryan had done everything by the book, he had found out about my needs, matched a product to my needs, had found a product within my price range and had value added the sale. Now was the time to add on as I was clearly in a buying mood.

Adding on is a very simple process and because Bryan had become my friend and an expert on running he could have very easily cross sold me onto a range of other items such as:

• Running shirt – I run at night a bit. With a bit of probing Bryan could have sold me a shirt with a bit of reflective fabric so that motorists at night could see me
• Shorts – I run in a 2002 vintage Newcastle United football shorts, could need an upgrade if he could sell me the benefits
• Socks – don’t all shoes need socks, this is the easiest add on he could have made all day
• Hat – in Australia we have a very hot sun and while I always wear a hat when running it’s an old Port Adelaide FC cap and it’s quite heavy (especially after I fill it up with sweat) – a lighter cap could have appeal
• Other running accessories – cash holders, ipod accessories, drink bottles etc

Now, I could have said no to any of these, but it won’t compromise the sale – it had already been made.

All retailers know that it costs a lot of money to get customers into your store and once you get one sale from that customer it can be marginal. Free money is available to you with each add on. An example is that the Nike store most likely makes the following:

Sale = $200

Buy Price = less $100

Staff Cost = less $20

Rent = less $20

Oncosts = less $20

Marketing = less $20

Total Profit = $20

Imagine if the staff member could have sold me another $100 of merchandise. This would have delivered another $50 in profit for no extra cost. This is the Nike lost opportunity.

Overall I enjoyed the experience of buying my new ‘kicks’ and I am really looking forward to breaking them in tonight. But I think that Nike and a number of other retailers are leaving money on the table by not helping their staff to learn how to cross sell and add on with each and every customer.

In my business there is a great expectation that sales team members add on other products and services each and every time. Even to the extent that before we talk about any other product we check whether they are a member and if they have the highest level. This is because membership is at the core of what we are and then every other product flows from this.

My challenge to my team is to ‘never die without knowing’; you have to ask every customer:

• To buy and
• To offer a cross sell

That way we have maximised the opportunity and we are maximising the customer’s opportunity to save and to have the right product at the right time.

Cheers Michael

Who would have guessed...people and process can improve! A couple of days ago I decided to replace my running shoes with the latest model and visited the Nike Store again. Things have change.

While the assistances seemed to congregate at the POS counter, they eventually approach without doing the Friedman walk pass, they did a direct approach. Once he knew what I wanted he sold the benefits of the shoe, the additional features and closed the deal.

The music to my ears is that he attempted an add on, asking if I needed anything else. I said I was after a pair of running shorts that had a pocket. He had once, but they all had underwear inside the shorts...not my preference. He attempted a switch sell to a pair with skins in them, but he couldn't close me. As a final try he offered socks to complement the shoes. A great all round effort.

A few days ago I returned because the shoe lace was faulty. He offered to re-lace the shoes, which is a great follow up customer service activity.

Things do change and the right person in the right role who is fully trained and focussed on the customer is an asset to any business. Happy sales!