Peloton Manages High Intensity Growth

Few brands were better positioned for growth during this year of lockdowns than Peloton. The home exercise brand has reported triple digit sales gains in the last year. And so when I interviewed Senior Director of Global Product Marketing, Ryan Dillon-Curran, at MediaPost’s D2C Brand Insider Summit earlier this month, the topic was growth – how do blockbuster D2C brands manage runaway success? The company redefined home exercise but has also widened its footprint as a media platform with musical artists and a social influencer network of beloved coaches. You can listen to the entire podcast at this link.



We should mention that while the well-publicized Peloton treadmill recall may be top of mind right now, Ryan was not able to address that issue when we spoke. But I am sure it is a marketing story we will be revisiting throughout this year. 

MediaPost: How does a fast growing D2C manage growth?

Ryan Dillon-Curran: I think what was more true than ever before is being really comfortable ripping up the playbook. And I think as marketers we always pride ourselves on tight strategy and planning, but in the last 12 months we've done that -- and we've known at a certain point this doesn't work. 

What I really came out of it knowing is, you gotta be decisive, but [it’s also] just calling it quits and pivoting and having confidence and conviction and guts sometimes. For us, what we've learned particularly around a member base and the category of fitness, you've got to keep it exciting.

We've spent a lot of time and resources in [users'] music experience, so recently we've launched a Beyonce artists series, Beatles, Miley Cyrus, Billie Eilish and really diversifying our content offering and keeping it fresh for folks. And then, as we think about modality, that's been a big push for us too.

So we're not just a cycling company, but introducing Pilates, additional strength training content and a ton of other offerings, that really diversified the offering. So I think you’ve got to be nimble and agile, but really be willing to rip up the playbook and keep it fresh. [Don't] be afraid to innovate and keep the gas on, even if that means innovating against yourself.

MP: Did you know in the beginning Peloton would become a media platform? 

Dillon-Curran: [Co-Founder John Foley]’s  vision was always to build vertically integrated companies in the world, and he’s deeply passionate about the content experience. But I don't think we realized the power of the media platform we've created and how it can bring people together, how it can make people feel.

And there's a responsibility that comes along with that. So as we've evolved and elevated the content, our marketing had to change. Doing a boutique cycling class in your living room was quite novel, and today it's expected. So the role of our content, in terms of creating differentiation, is really important for marketing.

Obviously, we believe our hardware is incredible, but it's really the content of that experience and that community and the instructor and the music that really elevates that experience. 

MP: What's been the biggest challenge in getting the product positioning, targeting and messaging right?  

Dillon-Curran: I think that's exactly it: How do you balance mass versus niche? We invest in is research and really deep consumer segmentation work that  helps us understand those pockets of consumers. Getting into their homes, talking with them, understanding who they are, what their lives are, and, again, just making sure you have that deep understanding of the consumer that's backed by data and then those qualitative insights that help add color.

So whenever we talk about a consumer of Peloton, we have a shared language and a shared understanding. So then everything that comes out of the brand is shared in terms of the intent. And I think segmentation work typically is a long-term view, but we're actually always refreshing our segmentation as our product portfolio changes, the market changes, as our business needs change. So definitely something we've maybe over-invested in -- rather than your traditional marketing.

MP: What have you learned about building into the infrastructure these forward-looking teams not shackled to immediate performance metrics? 

Dillon-Curran: One, you have to know that your team is going to change, rules are going to change, but have a group of marketers who are focused on that short term, [and] have a group of markers focused on long-form initiatives.

So, for example, for our Bike+ launch, we needed a team working on that for two years. I partnered with our product team: understanding the market, understanding developing those feature sets. And then we have those long-term initiatives, even the campaign we just watched. I think we probably worked on it for 10 months, and we wanted to have the rigor and the understanding upfront to make sure the execution was right. 

We [also] have seasonal leads. As we think about [our] marketing calendar, we map it up by seasons, and then a senior product marketing manager typically will lead a season, and they could be planning for that season for 9-12 months. But when they're in the season they're driving a team of diverse cross-functional partners that are actually driving and optimizing performance in that quarter, so they've spent the ramp-up understanding all of the strategy and insight and driving the execution. But then they’re also dedicated to the season itself and driving performance with a cross-functional squad that's really ready and equipped to act on short-term insights and learnings. 

MP: You told me earlier that you think D2C marketers would do well to act more like CPG brands. What does that mean? 

Dillon-Curran: We pride ourselves on really going deep on consumer insights, putting a ton of rigor behind our marketing before we even go to market. We'll do months of deep consumer work to really understand what is that right insight or identify the right language, or if the new part of the feature is set. But then we're also able to turn on a dime and react in real time based on what we're seeing in digital. So we kind of plan for months, but then we’re ready for chaos. 

And then the other thing that the CPG marketers do really well, that I think is really important to apply to [the] D2C world, it's just a rigor behind the business outcomes they drive. There's a really deep business accountability your CPG brand manager has, and that's definitely a discipline we're trying to instill in our team. And I think the more understanding of the outcome you’re going to drive and how you drive them and have that accountability to the business, the better your marketing will be.

MP: What are the key post-purchase touch points and behaviors that help you understand churn and LTV? 

Dillon-Curran: It's really hard to re-acquire consumers the second time around, so that early experience is really important. I think it's something I've seen a lot of D2C brands neglect. [They] over index in terms of just focusing on growth and worrying about retention later.

Your most loyal advocates become your most efficient marketing tools because they’re organically sharing great experiences. We look at a ton of data. The obvious one is the frequency and volume of working out. But we really look at engagement outside of [that]: consumers engaging strength, and stretching, and yoga as part of their Peloton experiences is awesome for us. We're producing over 100 live classes a week, and we're looking at what are members taking, not taking, and how do we adapt our content or offer, and what we're serving up to react in real time. 

MP: [Attendee Question] How do you balance brand awareness and subscription goals as it relates to where you invest media dollars and ROI measurement?

Dillon-Curran: Yeah, another really good question. Again, I think the economics are business-dictated. I think, for Peloton, building brand awareness and driving acquisition at the same time has always gone hand in hand and been part of our special sauce. There are times when you need to think of them together, and there are times when you need to think of them differently.

And, for us, TV is actually a really effective mechanism where we can drive awareness and interest, but we also do it really efficiently so we're able to achieve those goals. And then you find your big brand moments. But it's always a balance, and you have to invest in brand upstream because over time that's going to bring up your baseline, and it's going to help you bring down your performance marketing costs over time. So there's no secret number, but a constant investment in brand and a balanced approach is definitely critical, in my opinion.

MP: [Attendee Question] What CAC:CLV ratio do you consider a success?

Dillon-Curran: I think it's always going to depend on your business. Even at Peloton; we have our bike business, treadmill business, app business. They all have different CLV to CAC ratios, and I think we would all look at them and call them successes. I think probably there are generally too many business dynamics applied, but traditionally speaking, you always want your LTV to be greater than your CAC, of course.

MP: And finally, how have your acquisition and retention strategies evolved with more competition, as customers have more choice? 

Dillon-Curran: On the retention side, keeping things fresh is really important for members. So that's new content offerings, like I mentioned, new modalities, new features. As we think about the world we're living in right now, social interaction has never been more of a thing, since we've been deprived of it for so long. So introducing software features that help create more social interaction has been a really big part of our retention story. We've launched High Fives. We’ve launched tags to help bring people together in a world.

And then on the acquisition side, yeah, I think the category has changed a ton. The idea of a bike in your living room, taking a live spin class, isn't novel anymore. I'm really leaning into what makes the Peloton experience far superior, what drives differentiation for content offering to our community, the motivation and power of our instructors.

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