Peloton’s Masterclass in Brand-Building

Record sales and Peloton just cut marketing to zero — relying on a strong brand to drive word-of-mouth sales

Joshua VanDeBrake
Jun 17 · 5 min read
Photo by Erlend Ekseth on Unsplash

Record Sales During a Crisis

The battle for profitability is nothing new for Peloton; the company has been engaging in this uphill exercise since long before its IPO last September. With pivot after pivot, they’ve tried countless angles to achieve the coveted milestone. But the one thing that no one could have predicted — a global pandemic — might have been exactly what the company needed to put them in the right direction.

Starting in mid-March, Peloton paused all advertising in most of its major markets. Meanwhile, revenue skyrocketed 66% year-on-year to $524 million during the period. As global demand for at-home fitness solutions reaches new heights, so too is the revenue of those companies who’ve prepared for it.

Peloton’s years of brand-building seem to be starting to pay off as sales grow organically through word-of-mouth and social media, despite cutting their advertising budget to zero.

But what does this mean for Peloton? How did they achieve this? And most importantly, how can we follow this success? You’ve got questions, I’ve got answers. Let’s ride.

What Does This Mean for Peloton?

For Peloton, this unprecedented growth of sales, despite cutting their advertising budget to nearly zero in their key markets, means that they are one step closer to finally achieving profitability. But most importantly, this means that Peloton’s aspiration of being a media company, as stated in their S-1 SEC filing (among many other things), is much, much closer to reality.

Peloton’s largest markets are the US and UK. These markets also make up roughly half of the company’s marketing costs. With plans to keep advertising spend at zero, with continued revenue growth, this means huge cost savings for the company, as well as giving the team a moment to step back and reflect.

However, Peloton will continue supporting brand-building and advertising efforts in its emerging markets that could still have great growth potential.

How Did Peloton Achieve This?

Peloton focused on building itself into a premium brand from day one, by leveraging both the tangible and intangible benefits of not just buying their product but buying into the Peloton brand and mindset.

Here’s exactly how they did that:

  • First, by leveraging the latest technology and manufacturing techniques, they created a stationary bike that was head-and-shoulders above the rest. Not only that but by using an iPad-like interface directly on the bike, users could tune into live-streamed or pre-recorded classes, getting the experience of a spin studio without ever leaving their home (a bit ahead of their time but perfectly positioned, I’d say). As far as tangible benefits go, I’d have to say that Peloton’s are pretty convincing. Enough to make it cost several times the next-best comparable product? That’s where the intangible comes in.
  • Second, they took a play out of Steve Jobs’ book — they integrated beautiful design, premium pricing, and the right tone of exclusivity to bring it to market. Peloton became a status symbol. It was the at-home-fitness equivalent of the early days of the iPhone. With a price tag of over $2,000, when other options could be purchased for just a few hundred, buyers weren’t simply buying the bike. If you were buying a Peloton, you were buying the status — the intangible benefit. Not only did you care about your health, but you truly invested in the finest tools.

It was that coupling of benefits that led to Peloton’s strong brand — a combination of tangible, measurable, objective benefits along with the intangible, self-empowering, status-boosting benefits.

How Can We Replicate This Success?

Most of us are strapped for resources and budgets right now. Add to that, marketers are receiving mixed signals on how to respond to current global situations. Some “experts” are advocating that we double-down on brand-building, while still others are pulling back their marketing spend and other external investments. What’s the deal?

Well, Peloton has demonstrated the value that a strong brand can provide, even in a climate of global uncertainty. But it’s not as simple as posting a few photos on Instagram. It’s about creating a community people are proud to be a part of.

To replicate this, the first step is to take a hard look at our own businesses. We must objectively look at what intangible benefits we offer to our customers. Intangible benefits — things like community, status, and pride of ownership — are what build a strong brand that keeps people coming.

Branding is the intangible benefit that turns into a tangible bottom-line benefit for the company. And looking at the price of a Peloton bike versus the competition, it’s clear that there is a real, tangible value to those intangible benefits.

Final Thoughts

Peloton was a company that I had been betting against before the world turned upside down. But the company’s early investments and commitment to establishing itself as a premium brand seem to have paid off now that their subscription products are so accessible while benefiting from that premium brand association.

But this success isn’t without its challenges. Peloton has had to make some huge adjustments due to disruptions brought on by the coronavirus — the very thing that is pushing subscriptions to the moon. All of the company’s retail stores have been closed since March, and it has closed its production studios for the time being as well, leading its fitness instructors to stream sessions from their homes.

And despite halting advertising in its key markets, this move is temporary. As Peloton develops new products further down the line, the company will reignite their marketing efforts accordingly.

But for now, Peloton is enjoying the benefits of a long-term brand strategy and setting an example for how to pivot and thrive in an emerging market. One that, hopefully, we can replicate in our own companies as well.

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Thanks to Niklas Göke

Joshua VanDeBrake

Written by

Passionate about Marketing, Startups, & VC. Marketing Manager. Ambivert. Millennial.

The Startup

Medium's largest active publication, followed by +686K people. Follow to join our community.

Joshua VanDeBrake

Written by

Passionate about Marketing, Startups, & VC. Marketing Manager. Ambivert. Millennial.

The Startup

Medium's largest active publication, followed by +686K people. Follow to join our community.

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