Peloton’s Secrets to Launching Revolutionary Products
Product, Community & Business Strategies which makes you say "I Peloton"
A revolution is justified by a forcible overthrow of a social order with a new system. In order to transition to a new system, it should satiate the existing predicaments.
In the book Good Strategy Bad Strategy,
In 1998, Richard Rumelt asked Steve Jobs “what is your long term strategy for Apple”?
Steve Jobs responded: “I am waiting for a window of opportunity”.
Steve Jobs based on his instincts saw a window of opportunity in the world of technology in 2007 and launched the iPhone. A business needs only one such major opportunity to become a world leader in its niche.
Business leaders like Steve Jobs have an appetite for strategy due to years of experience, knowledge of the field and understanding of consumers. It helps them make decisions and identify such windows of opportunities.
It happened again in 2012 in the fitness industry. Peloton which surprisingly is also known as Apple of Fitness.
Only identifying the opportunity and building a product does not lead to becoming the world market leader. The product needs to justify the definition of revolution — it should satiate the existing predicaments.
We will be exploring: identifying opportunities, crafting product, honing the business and strategies to building a community.
Cultural Changes Leading to Window of Opportunity
1. Evolution of Fitness & perception of a fit
In 9 words:
Hula loops … Vibrating belt … Gym … Jazzercise … Aerobics … Home equipment … Spinning … Cross-fit … Peloton
The fitness regimes have transformed not so drastically in the last 100 years. You can still find Hula loops, vibrating belts and all the above exercises in one form or the other. Although, it has changed the way we perceive what fit means.
A healthier wo/man was sexy as it symbolised wealthy enough to eat. (the age of hula loops & vibrating belt).
Gym led the age to Bulky being the new sexy for men and Jazzercise for lean women.
Spinning, Cross-fit has brought us to body fat percentages and the age of athleticism. Nike has significantly contributed to the perception of a daily athlete.
Products and media have been contributing to trends & setting the cultural tone since ages now, thus it plays a crucial role in understanding when could be the window of opportunity.
Eg. Zima(Hard Seltzer) launched in 1990s and was ridiculued, but White Claw (Hard Seltzer) holds 50% of Seltzer market today and is competing with beer brands.
2. Problem Statement
The variations of fitness regimes have often stemmed from the very same problems we have with our fitness routines today.
The difficulty in starting a workout routine, feeling lost standing at the centre of the gymnasium, inability to adapt the form in a workout, constant requirement of a trainer, loosing the motivation, time constraints, you know the rest…
The existence of a series of problem statements and unhappy consumers raises the possibility of a window of opportunity.
3. Boutique fitness has been growing
Between 2013 to 2014 membership in boutique fitness studios grew from 22 per cent to 28 per cent of the gym-going public, faster than the overall gym membership growth of just 1.5 per cent.
In 2017, boutique brands made up 40% of the market, up 121% in four years, compared with 18% growth for big gyms.
The growth of boutique fitness has positioned trainers at the centre of our fitness journey, a transition from gyms. It has also led to group classes through boot camps and building of fitness communities.
Strategic Product Building Solving for every behavioural problem
1. Designing for Ease
Ease could be perturbed by time constraints, lack of motivation, laziness and any factor which does not let you reach your workout.
I agree it’s not easy to get out of your comfort zone either at 6 am or 10 pm, get to the gym and cram a workout. It is valid for every habit which you are trying to build. If it ain’t easy, it won’t happen.
What if the trainer came to you with everything?
A bespoke stationary bike with a large connected screen on it was born. The work out is sitting right in front of you now.
2. Social Proof
A three-day streak would be broken by binging Netflix from the couch with a guilty eye on the Peloton staring at you from the corner.
How can you instigate consumers to adapt to frequent use?
The word social proof was coined by Robert Cialdini in his book Influence. It means human beings would undertake behaviours in a given situation based on others actions.
Human beings are driven creatures. When there is competition at their faces, they are driven more than anything. When the competition is with people you know or have got to know, it becomes even more fierce. Human beings tend to do a lot of things due to societal proof.
Peloton feeds on the mindset of hustle.
A Peloton Studio houses 60 people in a class with instructor, all staring at a screen which shows a leaderboard, ranking everyone in the room as s/he tries to keep up with instructors(celebrity trainers/pro-athletes). That’s not it.
The entire class is remotely connected to everyone tuned in to it from their home based peloton bike setup. It doesn’t end here. It is later uploaded to peloton cloud joining thousands of other classes. It stays there waiting to be downloaded by future users.
The hustle truly never stops
Designing based on social proof gets you out of the couch. It is imperative from a shareholder report that a member gets in 17.7 workouts a month on an average on their pelotons. I’m averaging 12/month with my functional workouts(no Peloton).
I wrote an essay of a unicorn brand which has leveraged social proof better than ever:
How did a Fast-casual-restaurant become a $ billion brand
3. Familiarity & Simplified Process Design
(there’s no how-to)
One among the many problem statements of enduring the fitness journey is overcomplicated processes and incorrect knowledge resources. The “form” in weight training, “technique” in cross-fit and “routines” in endurance sports have a steep learning curve.
It requires understanding before even getting started.
The familiarity plays a significant role in adapting to a fitness regime.
You get on a bike and you pedal. Can you do that? Sure, anyone can. That’s peloton for you.
4. Energy to keep going
When an activity is easy and desirable, we take it up.
When the activity is engaging and inspiring, we keep doing it.
When the activity reaps rewards, we are attracted to repeat it.
Working out at a gym is mundane. The music being played is never of your own choice, the hanging earphones are distracting and the trainers are never there when needed.
Fitness Boutiques did change the way we workout by placing highly enthusiastic trainers in the middle of the workouts. The trainers of many SoulCycle chains have become influencers and celebrities in their own right leveraging social media.
The high energy & enthusiasm of trainers bring out the best in everyone on the floor. The music is specially curated for the type of workout being done which keeps the momentum of the activity rolling.
Peloton is an innovation company. It received success due to culmination of performance hardware and digital content delivery of highly enthusiastic instructors.
We will discuss engagement of users & instructors in community building below.
Building a Community & Marketing
1. Meeting for a common cause/activity
It’s 101 community building. People getting together for a common cause or activity.
How is it better than you working out at a fitness boutique?
It’s due to our focus. Let me explain.
We are not focussed on the performance of other people when we are out in a gym/boutique. We are focussed on our form, music, the next workout etc.
Peloton members join a class together and can see and appreciate each other through pioneering technology.
Peloton screen is a social interfacing tablet. The screen shows pedal revolutions per minute, power output, the resistance on the bike wheel, but it also shows other competing members and their performance. The focus changes from our own performance to what our counterparts are doing, which triggers communication.
2.Engagement on the screen (also a product design attribute)
The engagement by people on the screen is un-parallel. Inspiring engagement is community building 102.
Cultural Diversity
Cultural diversity carries a global community. It enables us to build a foundation for a global colossal engaged community.
Peloton leverages engagement and a culturally diverse community across the globe keeping the communication persistently interesting.
Peloton members do this with high fives through the screen, trainers congratulating people on their milestones like 50th, 100th or 1000th ride on the bike.
Peloton all-star ride was broadcasted live on ESPN as a sporting event with participants across the country.
3. The Instructors & Celebrity Buzz
Athletes live, train and endure for the sport, dreaming an Olympic medal for their home country.
Then there are self-made celebrity trainers who have trained all their lives and managed to build an aspirational social following by being a successful trainer.
In the last decade, trainers have become the epitome of success in the business of fitness. The energy and enthusiasm they have brought to otherwise mundane and demotivated workouts are un-parallel.
Peloton Instructor Mantras
The mantras help hugely while working out. Exactly when you feel like giving up and your instructor is shouting out to “keep going, it’s gonna happen” is motivating.
People follow athletes due to their inspirational story & credibility and people are influenced by social celebrity trainers by the aspiration spirit.
The celeb trainers are also able to boost the popularity of the bespoke bike by reaching millions of people following them on their platform.
If you are looking for an essay on community building, nothing beats the story of Gymshark:
Gymshark shows how Niche-specific brands can reach the £ billion mark?
Business/Brand Strategy
1. Target Audience
The target audience of Peloton is anyone in the fitness niche. Although, the price point of Peloton is a simple proof that it would interest only serious buyers who are either daily athletes, pro athletes, people who have money to burn to buy fancy fitness equipment, has tried pilates before but Peloton looked fancier.
There’s a fun Twitter thread of where consumers park therePeloton.
2. Positioning & Top-Down Approach
Peloton benefitted by positioning the product for the premium users first. How?
A top-down approach in terms of the price market helps in creating a trend while democratizing access. Eg. Apple.
The premium users are often avid users. You wouldn’t invest a significant amount of money on something unless you could derive large value out of it.
The premium & avid users help in spreading the word of mouth for the product. It is evident from the fact that Peloton surpassed word of mouth to television ads.
The peloton had reduced their prices of the digital app to 12.99 and offers a 30-day trial for people to explore. Why?
Peloton has achieved an aspiration lifestyle status for its products, the goal from here is to build a bigger audience by democratizing the access.
3. Democratizing access
Peloton started by selling a stationary bike with an installed screen which delivered content on fitness by Peloton signed instructors. The Peloton Bike costs $1895 and the Peloton All-Access Membership costs $39/month.
Building the ecosystem further for new users, Peloton built a digital app enabling access to all trainers and workouts. The Peloton Digital Membership costs $12.99 per month.
The digital product allows users across the world to try Peloton workouts. The digital app relies on the enthusiasm and energy of the Peloton Instructors at the core to influence users to join the Peloton Ecosystem.
Although, the digital app doesn’t allow the users to participate in community workouts and performance boards, which has been the driving force for members to keeping up with the habit of Peloton.
The future goal of the company is to build a subscription/lease model for peloton bikes too. Instead of a one time purchase of bikes, they want to build fitness as a service model.
4. The Ecosystem & complete ownership
Product
Peloton owns the entire ecosystem & complete ownership as opposed to the popular buying off the shelf model which are easy and fast. John Foley was unable to find a bike and a tablet which could last a long time for consumers enabling minimal maintenance.
Unsurprisingly, investors didn’t invest in the business right away upon finding out that the team was building both bike & tablet from scratch due to the risks involved with it(ironic).
Peloton is an innovation company at the nexus of fitness, technology, and media that owns the member experience from end to end — which is why you could realistically call us hardware, software, content, logistics, and retail company, all at the same time.
— John Foley, CEO & Founder Peloton
Challenges Ahead & Final Note
The Endurance Challenge
The major challenge for Peloton would be maintaining the energy of members without letting boredom prevail. The fitness industry is prone to short-lived trending workout routines.
Peloton would have to unlock ways to endure.
Streaming the Democratized Access
Peloton costs a lot of money. Cheaper alternatives with mobile/tablet streaming services can compete with the brand for the market space. Also, Peloton could face competition from AR-based apps reciprocating an outdoor real-life cycling experience for serious cyclists.
Although the market and audience are different, AR fitness apps can leverage the top-down approach to grow from pro-athletes to enthusiasts and fitness conscious crowd.
Innovating with Products
Peloton launched with a Bike. It has since come up with a Tred and a functional workout membership-based digital app. The growth of the fitness industry has been very specific in terms of form. Peloton derived both of its products from cycling & running.
The next sport which Peloton would innovate could set the tone of the brand growth.
Peloton has helped to solve various problems associated with the fitness world. The brand IPO’d in 2019 with a valuation of $1.6 billion. It has an added advantage of the entire ecosystem to itself enabling complete control over the brand.
Peloton’s innovation is setting the tone for the future of fitness and how we train.
See you in the next one.