Nike’s Purchase Of Analytics Firm Zodiac Highlights Focus On Customer Lifetime Value

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Summary: Nike has big digital plans as it goes direct to consumer, aims to innovate faster and build relationships. It is also beefing up its analytics team.

Nike has acquired Zodiac Inc., a consumer data analytics company, in a sign that its digital transformation plans revolve around customer lifetime value.
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.

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