Clip in- we’re taking a look at what helped Peloton speed past competitors.
If 5 years ago I told you that 2020’s hottest company was an at home spinning bike, you wouldn’t have believed me. Yet, that’s exactly what Peloton is. But Peloton is also unlike any other exercise company out there. They describe themselves as “an innovation company at the nexus of fitness, technology, and media” and “the largest interactive fitness platform in the world.” So how did they turn the out-dated spinning class into a sensation?
Peloton pioneered connected, technology-enabled fitness. And while they didn’t invent instructor-led boutique classes (shout out to Soul Cycle for that), they were the first ones to bring the boutique workout class experience to the comfort of your home.
To date, Peloton has raised 8 funding rounds totaling $994.7MM, IPO’d in February 2019 at a $8+ billion valuation, and currently has ~1.5M paying subscribers. So let’s call Peloton for what it is: an exercise equipment empire, an immersive media company, and a beloved cult.
Ok, but first let me paint you a picture
If you’re the average-joe consumer looking to kick start your “fitness journey” you have plenty of options. You can: use YouTube for free, buy a gym membership for $49/month, go to a workout class for $29/class… or you can get a Peloton for almost $3k.
So why would anyone buy a Peloton?
Let’s take a look at their pricing. Their most common offering is the Bike+, basically a stationary bike with a rotating touch-screen. You also need specific riding shoes to use the bike, bringing your total to $2,695. But that’s not all, to access the classes you also need the $39/month membership fee.
We know people are willing to spend on health and fitness (the market is $4.8 trillion), but there’s spending… and then there’s spending. At first glance Peloton seems extraordinarily expensive to the alternatives. So how have they been so successful?
The AHA! Moment
Prior to starting Peloton, the founders knew boutique workout classes were a hit (think Soul Cycle, Barry’s Bootcamp, Orange Theory, etc), but finding the time to exercise, shower, and get to work always seemed impossible.
John Foley, CEO and Co-Founder of Peloton says: “I founded Peloton in 2012 to solve a challenge in my own life. My wife, Jill, and I knew great fitness experiences made us feel like better versions of ourselves, but there were countless barriers to working out regularly… We were addicted to the fast-paced energy, the motivational instructors, the thoughtful programming, and the way exercising with a group pushed us harder… However, with demanding jobs and two small children at home, just getting to the gym became harder and harder.”
They knew their best shot at breakthrough was by making fitness entertaining, approachable, effective, and convenient. The first step was to recreate a premier workout class in the home. This meant building the equipment, creating the class, curating the music, and developing the software to run all this on.
But success is not just building a great class, people have to believe they need it.
The founders knew that while their opportunity market (ie: TAM- Total Addressable Market) was large, the amount of people willing to pay the price (ie: SAM- Serviceable Addressable Market) was small but grew as their brand awareness grew.
Their next step was to create a compelling brand story that clearly communicated the benefits while setting Peloton apart from the ocean of options available.
Not your mom’s spinning class
The problem was that spinning and stationary bicycles aren’t sexy. Peloton was faced with the question: How do we make spinning lucrative again?
The answer: they sell you motivation.
In their first years, their marketing was about making Peloton seem fun, luxurious and of course, sexy. Their campaigns were focused around attractive actors working out in attractive homes. Both their 2014 Morning Ride ad and their 2016 Hello Let’s Go ad follow this model. If we look at most of their digital creative during this time period, it all follows suit:
This strategy worked well for years until an infamous Twitter thread blatantly called out how unrealistic and unrelatable their ads were. The average person already found Pelotons expensive, there was no need to make the ads in-your-face out of reach.
Granted, while this moment was a direct critique at Peloton’s marketing strategy, it did show prove one thing: Peloton had entered the mainstream conversation.
At this point, Peloton pivoted their messaging and ads slightly to make them resonate with their users while maintaining their key selling points. As it stands, Peloton’s messaging is “Peloton makes you want to show up.”
If we take a look at their website, messaging, and ads we see their key value propositions are the following:
- Making it easy: Peloton makes hard work fun and thus makes showing up to your workout easy. They do this through the convenience of working out at home, metrics to track your progress, a community holding you accountable, etc.
- Showing the reward: Instead of getting caught up in fancy product-shots, every Peloton ad has an “afterglow” moment. This is a shot of the flushed, smiling faces of athletes after a workout showing the endorphin-high Peloton provides.
Interestingly enough, while community is a major pillar for Peloton (1.5M+ paying members with 95% retention rate) they do not overly talk about their community. Instead, they leverage copy like ‘never ride alone,’ and show the leaderboard and show multiple riders to reinforce that you are a part of something bigger.
All of this together makes it so that the end consumer can relate to the message. They believe that by buying a Peloton they will finally commit to their workout, wake up for that 6 am class, or meet their weekly workout goal.
But that’s not all
One of the biggest factors that accelerated distribution were the Peloton instructors.
Back in the day, SoulCycle showed us the successful class model of making the teacher more important than the workout. For their classes, Peloton did the same… but this time, they recruited instructors with large followings from Day 1. Some of their top instructors have over 500k followers on Instagram.
When you do this, you’re not just paying for a fitness trainer, you’re paying for an additional marketing channel.
My take?
2020 broke my addiction to boutique fitness classes and I’ve come to appreciate and love working out at home. I anticipate this trend is the same for others and we’ll continue to the see the rise of at-home fitness even as establishments start to open up.
Separately, Peloton showed high-quality home workout classes can be done successfully. If they were able to do this with spinning, I expect companies will continue to create more at-home workout experiences that are just as good, if not better, than the boutique classes I once went to.
And lastly, if you’re still not tempted to get a Peloton, remember all the cool kids already have one… even President Biden 🙃
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