Buy High, Sell Higher
Besides leotards and juice cleansing, Peloton may just be one of the most exciting developments in the history of fitness.
Their matte-black bikes garnered meteoric popularity in recent years as millions of riders clipped in every day for thirty minutes of Britney Spears, sweat, and sometimes, tears (or was that just me?).
And the reasons for Peloton’s past success are clear:
- Timing: as commercial gyms became obsolete with millions in quarantine, Peloton offered a pandemic-compliant alternative.
- Marketing: armed with celebrity-tier instructors and headline-worthy advertisements, Peloton could market its products without heavy incentives or price cuts.
- Value: Peloton’s premium products came with premium price tags, which fueled perceptions of exclusivity and prestige.
These strengths had consumers punching in their credit card numbers faster than Peloton instructors could yell “Tabata.” Demand was so high, each order came with delivery delays ranging from weeks to several months...Unfortunately, delivery was the first of many problems.
Nobody can maintain a Zone-7 intensity forever.
In mid-January 2022, Peloton temporarily halted production in response to waning consumer demand. Shortly after, the fitness giant resorted to replacing its CEO and firing nearly 3,000 employees.
Don’t get me wrong; Peloton is an example of how meticulous marketing and fortuitous circumstances can result in explosive success – but it is an equally strong reminder of how fickle market dominance can be. In our work in customer due diligence, we have repeatedly observed that the most competitive and long-enduring companies are not necessarily the first-movers nor the most innovative -- they are those who consistently deliver on what many may consider being basic fundamentals of the customer experience.
Even at the height of popularity, Peloton had issues like inconsistent customer service, weak delivery performance, and limited integration with other popular health peripherals (e.g., Apple Watch) that routinely frustrated customers. In other words, Peloton routinely fell short in protecting the fundamentals for the sake of headline-making ventures like new product launches and expanding the ever-growing compendium of course types (there are even 30-minute shadowboxing classes – try explaining that to your downstairs neighbors).
As gyms began to reopen and tens of formidable substitutes – some of which were produced by premier brands like NordicTrack – started flooding the market, these shortcomings became tougher to stomach.
Then came the waning demand, damaging consumer perceptions around exclusivity. Then came the more desperate marketing moves like a series of price cuts and expanded trial periods.
Then came some PR disasters like the recall of Peloton Treadmills due to insufficient safety features.
And presto! We arrive at today where the fitness industry’s once prodigal child faces significant pressures for reorganization. These challenges did not happen gently and gradually over decades – they swiftly compounded over the course of less than two years.
One must always prioritize continuous improvement and unwavering commitment to the quality of customer experience. If not, the impassioned masses will stampede to the next novel product as quickly as they arrived.
Customers are quick to flock with the masses to the next big thing. If one is fortunate and capable enough to find themselves being the next big thing, one must always prioritize continuous improvement and unwavering commitment to the quality of customer experience. If not, the impassioned masses will stampede to the next novel product as quickly as they arrived. Peloton’s ability to address its recent setbacks quickly and thoughtfully will inevitably determine whether its products get covered in the sweat (and tears) of its adoring fans or wrinkled clothes and layered dust.