A sneak peek into the world of a brand that has brought the fitness studio to your home
If Netflix turns you into a couch potato, Peloton promises to entertain you while you are running on fumes. And if numbers could speak, they would scream that Peloton has more than kept its promise.
It boasts 4.4 million subscribers and more than a billion dollars in quarterly revenue. Its social media presence has grown multifold. With an insane retention rate of 92%, it has grown into a cult.
Peloton gamifies the indoor fitness regimen. It’s not only a fitness company, it’s a media, software, hardware, merchandise company. It’s the Disney World of keep-fit buffs.
And in current times when people are skeptical of lifting dumbbells or sharing a treadmill indoors, Peloton seems to be an ideal substitute for your fitness cravings. The $2000 upward bike or the $4000 treadmill, however, is not for the fainthearted. But then value is perceived, isn’t it?
Whether Peloton will become the Netflix of fitness enthusiasts or not, only time can tell. But it certainly has become a case study for marketers on how to build a cult-like brand with an envious retention rate.
Bringing uniformity of experiences has always been a challenge for boutique studios. The influence of an inspiring trainer is restricted within the four walls.
But unlike their counterparts, trainers at Peloton have no such constraints. They can live stream their enthusiasm through the screens of thousands of Peloton users at the same time.
The sessions are much more than the trainer trying to cajole you to run that extra mile when you are thinking of throwing up all over your floor. He or she sprinkles the session with casual chit-chat about Donald Trump’s latest gaffe, mixes it with some cheeky celebrity gossip, maybe a personal cut on a new Netflix series, or might brood over the idiosyncrasies of his gay friend.
Take Cody Rigsby for instance, who has over 723k Instagram followers. He is nothing less than a celebrity within the Peloton community. With his perky smile and indefatigable demeanor, he reminds me of Chris from the sitcom Parks and Recreation. After the workouts, users are left exhilarated not only because of the intensity of the exercise but also by his charisma and ebullience.
Users not only see them as their trainers but also as their Gurus and as opinionated individuals.
“You seem to have really strong boundaries and a strong sense of self. How do you nurture that practice?” asked one user on Rigsby’s Facebook post.
Questions might range from deeply personal such as, “What’s your advice on greatly disliking your daughter’s boyfriend?” to pop culture, “Is it bad to wear glitter during the day?”
Takeaway: In a customer-facing business, your employee’s quirkiness can be a competitive advantage.
The bike or the treadmill, although the most important part of the business, is not from where the business derives its value. Apple extracts more value from its services than from the hardware and Uber from its technology prowess. Peloton is no different.
I have a bike at my home, but it is only used to hang damp towels or to-be-washed clothes. I sometimes sit on it to ruminate, or brood over my girlfriend’s shenanigans, but I don’t remember breaking a sweat pedaling on that bulky machine.
If I would have bought Peloton, however, I would have a different story to tell.
The digital content blaring out of the screen, rapidly updating leaderboards, shout-outs from fellow riders, keep you hooked. It shouldn’t be a surprise that Peloton relates itself more to a media company than a hardware company.
It helps you feel a part of a tribe of fitness enthusiasts. Knowing that there are thousands of other users pedaling hard, gasping for breath, watching where they stand on the leaderboard, getting virtual hi-fives creates camaraderie. And the post work out euphoria attaches all the good feelings with that experience to make it memorable.
The keyword here is gamification. Your real-world activities are rewarded in terms of virtual currencies such as likes, badges, or some goodies.
Takeaway: Use virtual rewards to change real-world habits.
When there is so much pain and suffering happening at the same time, won’t the bonds of friendship be eternal?
Peloton has its own lingo. Homecoming, for instance, is akin to a trip to Mecca. Users are invited to its NYC headquarters to celebrate their “Century,” — 100th ride, where they get to interact with their virtual competitors that they had only seen slide up and down on the leaderboards. Thousands gather in the studio and sweat it out as if it were a festival.
“Seemingly everyone I chatted up at Homecoming used a version of the phrase changed my life to describe why they gave a damn about an exercise bike at all, let alone enough to book flights and hotels to celebrate its existence,” writes Amanda Mull in her article about this event in The Atlantic.
Combine your runners high with the social media dopamine shots, and you get the Peloton high. There are milestones to be celebrated, shout-outs to appreciate your fellow riders, groups for moms where they can discuss their NPR (Not Peloton-related) stuff.
In fact, one of the major reasons for people being unenthusiastic about indoor workout-outs is that there are no shared experiences. Peloton knows this. And works towards making its community as vibrant as possible.
Takeaway: Facilitate shared experiences so that users can feel a part of a valuable community.
Wouldn’t it be great if we could get a seat in one of Peloton’s marketing strategy meetings?
We might not get a seat, but fortunately, we do have access to the content that their marketing executives stare at in those meetings. Last year, some of Peloton’s marketing documents were leaked, courtesy of Business Insider.
Few key themes from the deck I have highlighted below.
Understanding your target segment is the key
“… they just described me to a tee,”
Creating a sharp caricature of your customer to understand the target demographic is the basic but hefty challenge that a marketer faces. Peloton shows how it’s done.
- Prioritize fitness, workout 4+ times/week
- Enjoy the energy of workout classes
- Look forward to working out
- Follow an exercise routine of multiple types, like walking for exercise + weight lifting + jogging/running.
- Spend USD $150+/month on fitness
- Aged 25–64, mostly married, with kids.
- Equal male/female demographics.
- Typically, live in big suburban areas
- $100,000 — $150,000+ per year, household income. Employed Full time. Highly educated.
Note how they are not shying away from reducing their target range to suburban rich fitness enthusiasts. That’s the key.
“… I was like welp, they just described me to a tee,” posts a Reddit user on the thread that discusses their marketing strategy.
Takeaway: If you can’t pinpoint your market segment, you haven’t done it right.
Gamification is not just another slide to include in your deck
“Making Hard Work Fun,”
I see a lot of marketing folks trying to gamify everything and anything. Like AI/ML/VR, gamification is the new slide that needs to be included in every deck. But gamification adds value only when it solves a real problem.
Peloton gives us an outstanding example of how gamification can create value. They highlight this in the slide “Making Hard Work Fun,” saying,
“Our brand is about making the hard work enjoyable. We visually represent this by heroing our content and instructors while still always showing hard work (i.e. not a party on the bike).”
Takeaway: Gamification is a solution to a unique problem. It’s not a solution to all your problems.
Build a community, not a cult
“I, for example, fit their demographic exactly and hate the ‘cult’ vibe,”
Cults, for obvious reasons, have negative connotations associated with them. Although Peloton gives cultish vibes, that is not how it wants to be perceived.
It might be an advantage early on, but as the business grows, and if Peloton is viewed as a brand of mindless spooks, then a lot of potential customers (especially since their target customers are well educated) might shy away.
“I, for example, fit their demographic exactly and hate the “cult” vibe,” points out another Reddit user.
Peloton makes it a point to invest in building a strong community: “Shared experiences are hugely popular and research shows people are more motivated/accountable / fulfilled when they work out together, with friends and in shared spaces,” but making it clear what they are not: “Preachy, Fad, cultish, religion…”
Takeaway: Work towards creating a community, not a cult.
Making potential customers price indifferent
“Potential buyers will have no point of reference…”
If you are going to differentiate through premium pricing, you need to build a product or service that is much more than the sum of its parts. And then, you need to make sure that the customer perceives it that way.
In other words, as mentioned in the deck, “Potential buyers will[should] have no point of reference except our advertising/promotions so we need to make it sing.”
Consumers feel that something is cheap or expensive by comparing it with similar products. What if there are no similar products?
There might be a similar product, but what about the service? If your product is bundled as a service, then your service might be unique and therefore can differentiate you from the rest of the market.
Takeaway: Bundle your services to make price comparison pointless.
The potential for Peloton to grow is huge. The fitness space is yet to see a major platform emerging. With millions of brand advocates, a handful of highly influential trainers, and a virtual world that makes you pedal or run harder, Peloton seems to be miles ahead of the competition in the fitness industry marathon.
The more people are onboarded on the platform, the greater number of people will feel left out. And in days where the need to run a marathon is driven by the feeling of showing it off to your social media followers, Peloton with its premium tag, its appealing trainers, and celebrity partnerships is providing the perfect platform for users to make their voices as far-reaching as possible.