“Chapter Seventeen Case: Fitness-as-a-Service
Peloton streams boutique-style cycling classes to high-tech, at-home exercise bikes. Peloton’s goal is to replicate the type of boutique fitness classes like SoulCycle right in an individual’s living room. The $2,000 Peloton bike offers a subscription-based, $39 monthly payment to receive on-demand access to over 8,000 classes, creating the Fitness as a Service business model. Fitness is a $31 billion industry, and trends indicate that people are spending more money on fitness each year but giving it less time; hence, the rise of the boutique fitness industry.
Peloton does not claim to be a stationary bike company, but rather a disruptive technology company. Every interaction a rider has with a Peloton bike is collected as data that feeds the experience. The company is paying attention to what songs riders like, what instructors they prefer, what type of workout they gravitate toward, what rating they give individual classes. Peloton uses that data to compare rider profiles and suggest better, more targeted content. During live classes—in which instructors and riders alike can track participants’ progress up and down the leaderboard—a community of virtual friends develops. Instructors in New York can acknowledge riders in Denver, Colorado, by name, encourage them to pedal a little faster, or congratulate them on taking their 100th ride.
The revenue model favors an active customer. If a Peloton customer rides 200 times per year, that will cost $2,690 (including the cost of the bike and the monthly subscription rate). A typical SoulCycle class costs $35. If a customer attends 200 classes a year, that is $7,000.
The company is launching a $4,000 treadmill, the second product for Peloton. The subscription fee will remain the same, and if you already pay for the bike, you don’t have to pay another fee for the treadmill: the same fee applies for both products. With the creation and launch of new products, Peloton is fast on its way to be a disruptive technology company.1
Questions
1) List five types of data Peloton might be collecting from its customers as they ride on a bike or use a treadmill.
2) What types of business questions can Peloton answer from the data listed in question 1?”