Can a customer referral program save Nike?

Since 2020, Nike has been fighting new competitors that have risen via word-of-mouth marketing, such as HOKA, Allbirds, On, and Brooks. 

While Nike certainly invests in ad campaigns to generate word-of-mouth, they may have overlooked some strategies used by smaller competitors. For instance, competitors have used referral programs to boost organic brand awareness.  Not implementing these strategies might be one of the major reasons why Nike’s stock price has plummeted this year.

Maybe what Nike needed was a solid customer referral program? To determine if a referral program could save Nike, we will examine the brand's current state, how it would benefit Nike and examples from its competitors. 

What is the current state of Nike?

During 2024, Nike's stock price decreased by 20%, and at its lowest, it fell by 30%.

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Plus, if you zoom out even further, the stock price has fallen around 100% from its all-time high, which was in December 2021.

Related to the plummeted stock price, Nike has also been in the news a lot lately. For example, Yahoo reported recently that Nike’s disappointing earnings resulted in a 17.8% single-day stock price drop.

Even according to Statista, Nike sales haven't increased from the previous year, which is unusual.

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Nike’s overall revenue increased by 10 percent in prior years but not in 2024. Something is definitely not going well for them.

In our opinion, a well-designed customer referral program could help Nike out of its current bind. Most of Nike's competitors have successful referral programs, so why wouldn't it work for them as well?

Does Nike have a customer referral program?

Nike doesn’t have its own customer referral program. It does have an affiliate program, but it is not easily accessible for most customers. To get in, you need to apply. 

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In addition, Nike’s affiliate program doesn't reward both the affiliate and the potential customer, which makes it less appealing. With the current terms, only the affiliate gets a 15% commission for every new purchase.

Most successful referral/affiliate programs, like Puma's, use two-sided incentives. The advocate and customer get a certain percentage off the next purchase. This encourages customers to spread the word about the brand since both parties benefit.

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Why would Nike benefit from a customer referral program?

As of now, Nike doesn't have a refer-a-friend program, and they're missing out on a huge opportunity to leverage word-of-mouth marketing.

Many of its main competitors use referral programs and other word-of-mouth marketing to gain an advantage.

Launching a referral program could bring many benefits to Nike, including:

1. Access to a new pool of customers

Unlike traditional marketing methods such as paid advertising and email marketing, all the revenue from referral programs is from new customers. Referral programs enable brands to tap into a new market, which consists of existing customers' friends and family.

Even though Nike is already popular and most people know it, referral programs could motivate existing customers to recommend it more to friends and family. In addition, Nielsen’s study found that 88% of consumers trust recommendations from people they know more than any other marketing message, which is ideal in this situation.

2. Low upfront investment with high revenue potential

The only real cost of starting a referral program is investing in referral program software, such as ReferralCandy. Plus, the global average referral rate is 2.35%, which means that most brands see a positive ROI on their referral programs.

This means that even if the referral program doesn’t turn out to be a success, there isn’t much to lose.

3. Amplified word-of-mouth marketing

Referral programs increase word-of-mouth marketing by motivating satisfied customers to share their positive experiences. This organic growth can lead to a broader customer base and increased brand awareness.

Nike competitors who run successful referral programs

Next, we’ll show examples from some of the main Nike competitors running successful referral programs. This demonstrates how referral programs are used by other big brands and how Nike could use them as well.

We’ll look into the referral programs and word-of-mouth strategies of On, Brooks, ASICS, Puma, and HOKA.

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1. On

On is a sportswear company that is relatively new compared to industry giants like Nike. On Running was launched in 2014 and has quickly gained popularity among runners. In 2023, On reported a 46.6% growth rate year over year, which is remarkable.

Some of On’s successes can be attributed to its referral program. On offers, a Give 10%, Get 10% off referral program, in which both advocates and referrals are rewarded. It is one of the simplest referral programs, yet one of the most powerful ones.

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2. Brooks

Brooks is an American company specializing in running shoes, apparel, and accessories. It is especially known for its high-quality running gear. In 2023, Brooks had a record year, selling 20+ million units and growing revenue by $1.2 billion. 

To achieve this, Brooks used various word-of-mouth marketing methods and also has a referral program. The referral program is available to Brooks Run Club members and members earn metres for their activities. The activities include checking in at Brooks events, referring friends to the company, etc.

Brooks’ referral program is unique, but it is something Nike could take inspiration from to increase its sales.

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3. ASICS

ASICS produces sportswear and is mainly known for its running shoes. In 2022, ASICS saw a record year, with revenue increasing by 14.2%. ASICS was profitable across all categories. 

One of ASICS’ ways to grow has been through referral programs, which they pay a lot of attention to. ASICS promises $10 off for the advocate and friend for purchases over $75.

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4. Puma

Despite many of the major companies, like Nike, taking a hit to their revenue, Puma increased sales in 2023. Puma’s revenue reached €8.6 billion in 2023, an increase of 6.6%. To increase sales, one of the strategies Puma uses is a referral program.

Puma’s referral program is simple: “Get 20% Off and Give a Friend 20% Off.” For such a well-known brand, Puma's discount is quite significant. Puma recognizes that offering a substantial discount for referrals will pay off in the long run.

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5. HOKA

HOKA doesn’t have its own referral program, but it does offer an affiliate program. Despite not having a referral program, HOKA uses many word-of-mouth strategies from which Nike could learn.

Hoka has seen 30% year-over-year net sales growth, demonstrating its success. One way HOKA accomplished this was by leveraging endorsements from runners who benefited from their shoes. In addition, Hoka built a strong community of people who naturally spread the word, reducing the need to continuously invest in marketing.

To summarize: Should Nike start a referral program?

We believe Nike could benefit from a referral program to increase sales through word-of-mouth. Nike already has a strong community, but it doesn't try to encourage existing customers to recommend its products to their friends and family.

Many of Nike’s competitors have simple referral programs, such as "Give 10%, Get 10%", where both the advocate and friend are rewarded.

Our question is: Why couldn't Nike offer something similar and benefit from it?

How do you start your own customer referral program?

As the previous examples showed, customer referral programs are a popular method of growing a brand's customer base. 

While these brands do not publish their referral programs' profit margins, they certainly benefit from them. In the end, why would anyone keep running a referral program that doesn't work?

If you want to start your own referral program, check out ReferralCandy. It includes all the key features you need to run a successful referral program, including:

• Referral templates
• Email marketing
• Analytics and reporting
• Automation capabilities
• Integrations with ecommerce platforms and marketing tools

If you want to see what ReferralCandy customers have accomplished, check out our case studies.

For example, BranchBasics used ReferralCandy to set up a referral program and generated over $1.5 million in referral sales. Toki Mats used ReferralCandy to generate an extra $500,000 in revenue through its affiliate program.

An easy step you can take? Sign up for ReferralCandy’s 14-day free trial today.