I first talked to Peloton two years ago for the Unconventionals podcast. By then, the company had already hit its stride, but was still far from a household name. They had a disruptive category insight—that you could make fitness routines stickier by delivering a boutique exercise experience in the home. And they were well on their way to proving the model. As a sign of its potential impact, Peloton was regularly referred to then as the Netflix of Fitness.
Since then, Peloton has hit a hockey stick in funding, customer and revenue growth, and influence. I recently caught up with Peloton SVP of Global Marketing Carolyn Tisch Blodgett to talk about how the company is changing itself—and the arc of the fitness category.
Sometimes, you’re the change.
There is a ton that is ripe for disruption in the fitness industry. Bottom line is we don’t follow through on our intentions for exercising more or eating better. Peloton’s goal was to create an experience that makes people “want to want to work out.” Credit Peloton with delivering on that vision for change. The company delivers a different, more enduring experience: the company has a one-year retention rate of 96%—unheard of in an industry where most people quit their gym memberships by February. They’ve also proven they can scale, combining that retention rate with more than a million subscribers.
Now, Peloton itself has become a catalyst in the industry. According to Blodgett, “What’s changed in the market is Peloton. We’ve created a category, where you can get the best of boutique fitness in your own home. Now people are actually demanding that.” And other companies are looking to leverage that demand. There are start-ups in boxing, yoga, rowing, and others that are inspired by Peloton. “It’s amazing to see these other fitness companies pop up and now the headline is: it’s the Peloton of…”
If you’re aiming to make change, think customer and category first.
Too many brand and positioning exercises try to answer the question: “what do we do better than everyone else?” Here’s a better question: “what are your fighting for?” Customers are much more likely to pay attention to a company that is addressing a bigger problem or unmet need. In fitness, diet and exercise fads fail because they promise a quick fix. Blodgett sees Peloton as fighting for something bigger. “At its core, Peloton is helping people be the best version of themselves. I know for myself, as a working mom, if I can spend 45 minutes, or even 30 or 20 minutes with Peloton before my kids wake up, I’m more patient with them. I’m more present in meetings at work. Every part of my life is better because of Peloton. So that is the story we’re telling and the brand we’re building. If we go back to the fitness category when we started, nobody else is really telling that story.”
Aim high, and people will join you.
A bigger mission can upend the influencer model. Brands are used to paying people to mention products on social media—Kim Kardashian charges over $250,000 for an Instagram photo. Peloton doesn’t pay its influencers—even though according to Blodgett Peloton members do a better job of selling than Peloton marketing. Here’s the difference, according to Blodgett: “unless you pay someone, nobody’s talking about what kind of toothpaste they use on a daily basis. What’s unique about Peloton is that our customers are actually talking about fitness habits they’ve created on a daily basis, because it really is changing their life.”
Once your business has driven change, your brand still has a lot of work to do.
Changing culture or a business model is hard, no doubt. Nor is it easy to reframe category narratives around cost and value. Investors have rewarded Peloton for creating a new business model in fitness—the company is valued at $4 billion. But it still has to convince its future customers that a $2,000 bike and $39 monthly subscription is worth it. Blodgett did the math for me—taking a boutique spin class three times a week in New York can set you back $6,000 over a year. “We often hear that Peloton is a big purchase, which it absolutely is. What we’re trying to do is to show value story in a couple of ways. One is getting that math in front of people, so they can see that you are actually saving money by buying a Peloton bike. We’re also focused on making the purchase more accessible. We launched our financing program last year. New you can get a bike for $58 a month through our financing, then separately pay your subscription.”
Keep moving the bar.
Imitation is flattering, but it’s also fraught. Peloton is facing a new generation of start-up and legacy fitness brands competing for attention and customers. Peloton is as much tech company as fitness brand and understands the need to constantly adapt based on consumer behavior. Here’s Blodgett: “Traditional fitness classes are 45 minutes, but our 30-minute classes were outperforming, so we produced more. Lots of people like on-demand classes, so we’ve added features that make the on-demand classes feel like a live class. While it’s nice to see headlines that say ‘the peloton of rowing’ or the Peloton of something else, we’re not really focused on what our competitors are doing. We’re focused on solving needs for our core consumer through innovation.”
The biggest change at Peloton is a new product. The company announced the Peloton Tread at CES last year, and recently began shipping. Blodgett connected the release to Peloton’s mission. “We didn’t set out to be a stationary bike company. We set out to revolutionize the fitness industry through technology. The bike was our first product in that journey. With Peloton Tread, we are now taking the second step.
Create new ways to invite people in.
From its earliest days, Peloton realized that people would need to experience the products themselves to understand the difference. You can book a test class at one of 60 showrooms. You can try out a Peloton bike at 50 Westin hotels. Given the baggage of home treadmills, Peloton felt it was particularly important to create hands-on opportunities to try their product. “when people think about treadmills, they think it’s high impact, it hurts my knees, it’s boring, I just want to watch a Giant’s game on it because there’s nothing else to do while I’m doing it. Peloton Tread is nothing like that. So, when we launched, we wanted people to actually be able to experience it. We invited 350 people across the media and influential members of our community to try it and then share with their communities. And for people that couldn’t come in person to New York for launch, we put Peloton Treads in all of our showrooms across the country.”
If you succeed in offering something truly novel, you can grow a market. According to Blodgett, eight out of ten people who buy a Peloton bike weren’t in the market for fitness equipment. This suggests that the power—and value—of a bigger aspiration. Here’s Blodgett: “I think brands are the only way we create change. If you think about it, Peloton’s purpose is allowing people to be the best version of themselves. It takes a brand you believe in and want to be part of to be able to do that.”