At one point in time, being a Peloton product manager must have felt like having the best job in the world. It seemed like everyone had fallen in love with the pricy stationary bike and video subscription service. The product was literally flying off the shelves. However, things changed. Oh yeah, there was that pandemic thing. Then there was a botched new product introduction. These days things are not looking so great over at Peloton. What went wrong for these product managers?
When A Product Becomes Not As Attractive
The product managers at Peloton Interactive have seen their market value tumble as they struggled to gauge demand for their web-connected bikes. Going into last year, Peloton was racing to keep up with orders. Both their revenue and share price were soaring, and product managers were telling the world that they hadn’t considered the possibility that the company could be stuck with a glut of bikes if pandemic-fueled demand subsided. Less than a year later, Peloton product managers slashed the price of their bikes. They later warned their investors that their annual sales might come in 20% below the company’s projections. The reason for this was Americans’ return to normalcy as Covid-19 cases waned. Since then the company has implemented a hiring freeze amid their widening losses.
The product managers at Peloton were onboard for the company’s rise into a juggernaut with a $50US billion market value and then a decline to a company worth less than $15 billion. The reasons for this decline have been miscalculations and reversals by their top management. The moves offset opportunities for the product managers and compounded challenges that were caused by the pandemic, from skyrocketing consumer demand to a global supply-chain slowdown.
Peloton management’s view was that there was a paradigm shift, in which most people would continue to favor home workouts once the pandemic subsided. Consumer surveys showed the opposite. It turns out that it was a false narrative. People really did want to return to the gym. The product managers realize that mistakes have been made. They have both over- and underestimated demand at times. Early last year, the company came under criticism from consumer advocates and U.S. safety regulators after it refused to recall its Tread+ treadmill. It ended up subsequently recalling the machine. The product managers are rolling out deals to fend off rivals, which were almost nonexistent two years ago.
Getting Back Up On The Bike
So where do things stand for the Peloton product managers? They have more than 2.5 million paid subscribers, more than triple their base before the pandemic, many of whom also are investors. The product managers have rolled out new products and expanded beyond the U.S. The good news is that subscribers continue to flock to Peloton’s online classes. Products were able to generate more than $4 billion in annual revenue for the fiscal year, compared with $915 million two years prior. In the short term, the Peloton product managers could benefit from a rise in Covid-19 cases because of the Omicron variant that is prompting cities and states to implement mask advisories and vaccine mandates for indoor activities including gyms.
When the pandemic hit, demand exploded. The Peloton product managers had to juggle to keeping bikes and treadmills in stock while managing their live studios and more than 100 retail locations in North America and Europe. Soon their customers were complaining about too long wait times and missed deliveries, even as Peloton continued to advertise in search of new orders. The product managers said that Peloton would push back the launch of a new treadmill, double the size of customer-service operations and start shipping exercise equipment by air to ease delays. Logjams at ports in Asia, where Peloton made most of its products, and a shortage of shipping containers and truck drivers, were jamming supply-chain operations around the world and this impacted Peloton’s ability to deliver their products.
Peloton has lowered the price of its original stationary bike by 20%. A marketing plug backfired when a Peloton bike was blamed for the death of actor Chris North’s character in HBO’s reboot of ‘Sex and the City.’ The Peloton product managers said they didn’t know the plot when it agreed to have one of its instructors and its bike appear in the episode. The product managers believe that they’ve had moments when they had their glory, and situations like right now, that they feel like they have some work to do to get back on the right side of the line.
What All Of This Means For You
Once upon a time, being a product manager at Peloton was one of the best jobs to have. The product, although expensive, had been very popular before the pandemic. However, once the pandemic hit and all of sudden potential customers were unable to go to the gym, the product’s popularity soared. However, production difficulties and an inability to deliver the product on time caused customer issues. As the pandemic started to ease, more customers slipped away. What can the Peloton product managers do now?
The Peloton stationary bike has been a very popular product. The company became very highly valued as their product took off. Peloton’s management believed that once people discovered their bike, they would no longer want to go visit the gym. It turns out that they were wrong – people wanted to go back to the gym. Peloton does have 2.5M subscribers and their products are still very popular. However, missed deliveries and supply chain problems have started to turn customers away. The product managers have lowered the cost of their product. However, some marketing mistakes have cost them more customers. They now need to make plans on how they want to be successful going forward.
The good news for Peloton is that they make a very popular product. What the product managers at Peloton need to do is to reset how they have been interacting with their customers. They are going to have to create a new world in which their customers have the choice of staying at home with their Peloton bike or going to the gym. They also have to make sure that new customers get their product when it has been promised to them. If they can make this happen again, then they just might be able to get back up on this bike.
Question For You: How can the Peloton product managers get people to keep using their bikes now that gyms are open again?
Click here to get automatic updates when The Accidental Product Manager Blog is updated.
P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!
What We’ll Be Talking About Next Time
When you think about all of the products that product managers are responsible for, there are a number of them that come to mind as being “difficult” products to successfully manage. For one reason or another, these products are difficult to talk about and therefore are difficult to market. In this category go condoms, guns, doughnuts, and, of course, cigarettes. However, there is a new product on the market that probably belongs in this category but it’s so new that nobody is really sure yet. I’m talking about e-cigarettes and product manager’s plans to expand their product development definition and market them using social media.