How Peloton Uses Consumer Insights To Drive Innovation
Peloton is the exercise company currently taking the fitness world by storm. The company’s sleek $2200 stationary bikes enable busy professionals to exercise at home, at any hour of the day or night. But that’s not what’s giving the $4 billion unicorn startup so much forward momentum right now.
Peloton’s magic formula turns out to be its superior way of analyzing and aligning with larger lifestyle and technological trends. And using customer insights to solve problems in unique and creative ways.
John Foley is the hard-charging CEO and co-founder of Peloton, and a serial opportunity spotter. He was formally head of Evite, which revolutionized the invitation business by bringing it online.
Like all innovators, Foley is said to be intensely curious, with his antenna up at all times. His curiosity was initially aroused when he noticed how many stationary bikes ended up in basements and closets, unused, while at the same time time-strapped consumers were spending more time commuting and working longer hours, and lacked the time to hit the gym. Peloton’s big idea was to motivate people to purchase and then use their fitness bikes, and brag about them endlessly on social media. The breakthrough was offering live classes virtually that simulate being at the gym. Peloton users are connected virtually to live instructors leading live classes. And they can see how their performance ranks compared to other participants.
Peloton users don’t have to work out in isolation. They become part of a virtual community of exercisers. Some even get to know their instructors personally and build relationships with others in the class. And Peloton users often find extra motivation to work out by competing with other exercisers spinning remotely in their homes.
Peloton doesn’t see itself as being in the fitness business, which is crowded with competitors. Foley and his team see themselves as being in the fitness experience business, which is distinct and differentiated. Peloton sees itself in the relationship building business as well. Customers get to know their instructors personally and become part of each other’s lives. As they compete with other cyclists spinning remotely in their homes and apartments, Peloton sells the motivation and the energy of a live spin class. And Peloton gains data with which to constantly improve further.
Unlike other manufacturers of stationary bikes, Peloton doesn’t just sell equipment. Using the “razor and blades” business model popularized by Gillette, Peloton sells “razors” (stationary bikes) and “blades” in the form of monthly subscriptions to online classes, in addition to a widening array of new revenue streams to a captive audience. The monthly subscription model entitles users to online classes as well as other classes, from strength training to stretching and high intensity interval routines.
The best ideas seem so simple, so obvious. But in actuality, what Foley and his team did was worth unpacking, for it is the key to success in today’s heavily commoditized world. There are at least fourteen exercise bike manufacturers all competing with each other. But what Peloton did was to resolve a customer contradiction. Peloton’s breakthrough was to “find a need and fill it.” They figured out what was missing from the home exercise bike market — and did something about it that quickly caught on.
What Foley and company do instinctively and habitually you and I can do consciously and deliberately. How? By paying greater attention to consumers, what they buy and why. By paying attention to the rough spots and irksome inconveniences and unmet needs in our daily lives, that someone (maybe you?) might do something about. By invigorating the way we look at trends, we take in more data, and we connect more dots, and visualize new possibilities, new solutions.
This, in turn, stimulates ideas for new products, services and business models that drive growth.
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Robert B. Tucker is one of the most in-demand innovation speakers and workshop leaders in the world today. A former adjunct professor at UCLA, Tucker is president of The Innovation Resource, a consulting firm specializing in helping leaders and their organizations invent higher growth futures. The author of seven books, his international bestseller Driving Growth Through Innovation: How Leading Firms are Transforming Their Futures was translated into 17 languages. As a thought leader in the growing Innovation Movement, Tucker is a frequent contributor to publications such as the Journal of Business Strategy, Harvard Management Update, Strategy & Leadership, and Innovation Excellence. He has appeared on PBS, Bloomberg, CBS News, and was a featured expert on the CNBC series The Business of Innovation, hosted by Maria Bartiromo. Details: www.innovationresource.com or contact (805) 682-1012.