Peloton’s rabid fans, celebrity coaches are key to the future

FILE PHOTO – A person walks past a Peloton store in the Manhattan borough of New York, U.S., January 25, 2022. REUTERS/Carlo Allegri

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NEW YORK, Feb 11 (Reuters) – Peloton Interactive Inc’s (PTON.O) star trainers are proving just as valuable as its stationary bikes in helping the company survive the pandemic.

Peloton’s sales boomed as people bought the company’s home fitness equipment when COVID-19 forced businesses and offices to close. Its fortunes faded as vaccinations increased, gyms reopened and rivals offered competitive products. A subsequent 84% drop in the company’s stock over the past year has sparked interest from potential buyers including Amazon.com Inc and Nike Inc, according to media reports.

Peloton makes stationary bikes and treadmills through which people can subscribe, on a monthly basis, to participate in the company’s library of live and pre-recorded exercise classes remotely.

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To combat declining sales, the New York-based company on Tuesday announced a restructuring and named a new chief executive, Barry McCarthy. Peloton is cutting 20% ​​of its corporate staff while sparing those who run the company’s online fitness classes – and who are essential to keeping its 6 million customers peddling and paying.

Peloton talent works on fixed, multi-year contracts and can leave the company before their agreements expire, the company said in a regulatory filing Tuesday.

Cody Rigsby and Robin Arzon, who teach cycling, have become household names, with around 1 million Instagram followers each and Facebook fan pages that attract tens of thousands of Peloton members.

“Instructors have become incredibly important brands,” said Tim Calkins, clinical professor of marketing at Northwestern University’s Kellogg School of Management. “If a member sees their three favorite instructors leave the platform, that connection is reduced and the whole proposition is significantly diminished.”

As of this month, Peloton’s 12-month retention rate for subscribers to their course platform is 92%, he said.

A Peloton spokesperson told Reuters that the company’s roster of instructors is fundamental to the user experience, adding that Peloton will continue to invest in its content and programming.

Peloton charges $39 per month for an all-access membership, which requires subscribers to also purchase a bike for at least $1,500 or a treadmill for $2,500.

SUPERFAN

Maryland-based Peloton member Amanda Segal was slow to get hooked on Peloton when she bought a bike in 2018. But Segal’s relationships with Peloton instructors — particularly the Peloton-based cycling instructor London Leanne Hainsby – ultimately turned her into a super fan.

Segal now runs Hainsby’s 6,500-member Facebook page, called Leanne Hainsby’s Yes To You Crew. She also hosts a Peloton community podcast.

“For me, it’s 95% the instructors,” she said, adding that most of the 2,000 rides she’s done have been with Hainsby.

Around 50 Hainsby groupies, introduced via the Hainsby Facebook fan page, traveled to London in November to meet. Some fans stood outside the Peloton’s London studio to meet Hainsby and cycling and strength instructor Ben Alldis, Peloton member Doug Ransom said. Ransom is also a manager of the Hainsby Facebook group and traveled from Texas to attend the rally in London.

“If Leanne was going to NordicTrack tomorrow, I would probably buy a NordicTrack bike,” Ransom said of her loyalty to Hainsby.

Platoon member Alon Nager of Maryland recognized the value of instructor personalities when he joined the platform in 2018 and was fascinated by former instructor Jennifer Jacobs. When Jacobs left the company in 2019 to work on his personal brand, Nager said his Peloton experience got worse.

That was until he attended instructor Kendall Toole’s first bike ride in June 2019.

“There was something about her that was just magical. It brought back all the feelings I had before with the other instructor,” Nager said.

Instructors play a huge role in driving company brand loyalty, said Daniel McCarthy, assistant professor of marketing at Emory University’s Goizueta Business School.

“She could be a friend. She could be a sister,” said Peloton member Enisha Blakely, referring to cycling instructor Tunde Oyeneyin. “It made it a lot more enjoyable for me.”

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Reporting by Danielle Kaye in New York Editing by Anna Driver and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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