Peloton had a truly impressive run during the beginning of the pandemic: In the first quarter of 2020, subscribers more than doubled from a year earlier, and The Wall Street Journal credited a “coronavirus surge” for its 66% increase in sales. Health-conscious people sidelined by closed gyms ordered bikes despite wait times of a month or more, and the company ramped up production accordingly.
And then came its spectacular flameout. Its share price dropped 76% in 2021. Last month, the company announced it would halt production of its bikes and treadmills due to decreased demand. And last week, the company said it would cut 2,800 jobs and replace the CEO of the decade-old company.
At its core, this was a case of a wild mismatch between supply and demand, but even more critically, it was a case of the company not understanding that its market was finite. After all, what if I told you that every household in America would one day own a $2,000 stationary bike? Hopefully your response would be to stop reading. Logic dictates that there is a limited demand for expensive home exercise equipment, but that logic gets lost when a product captures the zeitgeist the way Peloton did. How do we stay objective when looking at the products we hold so dear?
Anyone working at a company or on a product that took off during the pandemic may be wondering how to avoid the same fate. In the decade-plus I’ve spent as a qualitative researcher, I’ve helped companies including Viacom, Mattel, Instagram, Netflix, and others understand their users. From designing intuitive UI to building accessible products, the secret ingredient remains the same: Asking the right questions of the right people is what allows us to design products that really “get” people and make their lives better. Let’s use Peloton as a case study for understanding how qualitative research can help prepare for the ups and inevitable downs in demand—and how to design products and experiences with staying power.
YOU ≠ EVERYONE
If you’ve used the logic “I like it, so everyone else will too,” now would be a good time to stop. For every person like you, there are dozens who aren’t, and those are the people you need to talk to. Bubbles are bad for business, and responsible design requires that you build a product for a diverse set of users.
For every complaint or concern a customer has, you likely have an answer—but just because you know that answer doesn’t make it intuitive. Just because it makes sense to you, the creator, doesn’t mean anyone else will understand it.
Research doesn’t need to be a long, costly endeavor; Peloton’s designers could have shadowed a delivery team for a few days, paying attention to personal details like where people put bikes in their homes, what other exercise equipment they owned, and how they approached the bike for the first time. When they turn it on, do they know how to ride without an instructor? If new and prospective users don’t know they can track their performance metrics without participating in an instructor-led class, or that they can cruise the streets in the South of France while listening to their own soundtrack, then Peloton’s position in the competitive landscape becomes increasingly small. Had they understood the potential value in those hard-to-find features, Peloton could have improved its UI and captured prospective customers who prefer self-led exercise.
When another person in the household wants to use the bike, do they know how to set up an account? Can they adjust and readjust the bike easily? For many prospective customers, a purchase at this price point is expected to serve multiple people in the household; early design mitigations could have been identified and implemented to make the bike more accessible and customizable.
A slightly higher investment would have allowed the team to check in with new users weekly for a month or two, whether by survey or interview, to see what pain points emerged and how the design was—or wasn’t—serving their needs. With so many stationary bikes flooding the market, gaining these insights could have helped the company stay a step ahead of its competitors.
PAY ATTENTION TO YOUR USERS—AND YOUR NON-USERS
Most people will only want to purchase one Peloton bike and, assuming they’re well designed, it should last for a long time. As a customer, this is fantastic. As a business, it poses some complications.
Early in the pandemic, Peloton couldn’t produce bikes fast enough to meet demand, creating months-long waiting lists. Once production ramped up, wait times declined and, eventually, so did demand. A significant reduction in cost worked to capture prospective customers who were on the fence based on price.
But price isn’t the only factor in a purchase decision of this magnitude. There are some hurdles that are too big to overcome—if someone desperately hates cycling or indoor running, or refuses to exercise at home, they’re not going to purchase a Peloton. Others may be on the fence because they have limited indoor space, don’t enjoy instructor-led classes, or are loyal Peloton app users but only want non-cycling classes.
Continuing to double down on production of their existing bike signaled a resistance from Peloton to listen to users, innovate their design, and expand into categories that could have attracted new customers. Introducing a more compact bike design, non-connected options, and equipment that supports other app-based classes like Pilates, boxing, and strength training may have allowed Peloton to continue serving their existing (loyal) user base while also appealing to new customers.
As a product matures and sales progress, so will the reasons why people aren’t purchasing it. The barriers faced when first launching a product aren’t the same ones poised in a mature market.
UNDERSTAND THE NEED YOU FULFILL
Peloton isn’t really about a bike. It’s gamified, at-home exercise with a strong social community element. It taps into people’s need to feel emotionally connected and physically active. It alleviates the feelings of stagnation and loneliness of the last two years. Its success was due, in some part, to luck. A need emerged and their product was already well suited to fill it.
Now let’s imagine a world where people are actually going to the gym or group spinning classes, where they’re commuting to and from work and lose that time they’d dedicated to the bike. The circumstances may have changed, but the need for community, connection, and endorphins remains. The question then becomes, how else can Peloton fulfill those needs? The company is in a unique position, as consumers trust them to design excellent digital and physical products. If Peloton wants to continue as both a digital content provider and designer of physical goods, it’s time to get off the bike and expand.
One pushback I often get from executives and designers alike is that “customers don’t know what they want.” That is to say, one can really only imagine things they’ve already seen and aren’t always aware of what’s possible. This can make testing individual concepts only somewhat helpful, since consumers are responding only to what they see and not what can be.
Co-creation sessions allow designers and customers to work hand-in-hand, with designers ideating and iterating based on immediate feedback and collective brainstorming. During my time at Mattel, many product improvements and breakthrough ideas were generated by designers who simply sat on the floor and played together with kids. In this way, they could see how their hands were (or were not) able to manipulate the toy successfully, understand their dexterity, see their frustrations, and make meaningful design changes.
DON’T FORGET YOUR COMPETITORS
People can buy a non-Peloton bike at half the price and participate in Peloton classes using the app. The market has already exploded with rival bikes equipped with tablet holders so you can stream classes, and these options will only get better.
But rivals and cheap knockoffs don’t need to signal the beginning of the end. Just look at IBM. After the success of its PC computers, machines running Windows flooded the market and, in 1993, IBM posted a staggering $8 billion loss. So what did IBM do? It completely pivoted the business away from producing low-cost computers and hardware and focused on B2B IT support. It had earned a tremendous amount of trust from its successful inventions and could seamlessly move into what was essentially an advisory support role.
If the magic of Peloton is in the classes, and you can use the classes on any bike, the question becomes why anyone would buy the expensive name-brand version. This is the core question that Peloton, and any brand with excellent, if non-patentable, design must answer about itself.
Annie Sklaver Orenstein is a qualitative researcher, writer, and storyteller who has spent more than a decade conducting research on behalf of companies including Viacom, Mattel, Instagram, Facebook, Pfizer, Netflix, Johnson + Johnson, and more. Follow her on Twitter @anniemollie.