Decoded: How Peloton Got People Hooked and Became the Netflix of Fitness

Peloton has swept the home fitness market, and in the process, they’ve built a multi-billion dollar business. But how did they thrive when so many other home exercise companies have failed? Well, in this case study, we're going to break down how Peloton managed to get their customers hooked.

The Problem

Working out at home is never the same as attending a class at the gym. But how can you have a gym-quality workout at home? That's the question the founders of Peloton posed to themselves way back in 2012. 

The answer was to create an exercise bike that also brought a personal trainer straight to you in the comfort of your own living room. A Kickstarter campaign and a $400,000 seed investment later, the Peloton brand has expanded from just a single exercise bike to include a treadmill range and app.

But how did Peloton manage to grow in what was already a saturated market? As it turns out, they built their business around the idea of forming habits, which is a key factor to their success. 

Paleton built their business around the idea of forming habits, which is a key factor to their success.

Why Building Around Habits is Important

It's no secret that the business world is super competitive. This means that the cost of acquiring customers is going up. But what if there was another way to reach customers and an even better way to retain them? Well, there is. And it's based upon getting your customers 'hooked' on your product. It’s a process developed by Nir Eyal, author of the best-selling book Hooked and a specialist in building habit-forming products and processes. 

To get people hooked on what you do, there are 4 key phases.

• Trigger
• Action
• Variable Reward
• Investment

Each phase entices people to build a habit around using your product or service. And Peloton has made their product into a habit that customers keep coming back to, time and time again. So, let's look at just how this happens.

Trigger

Triggers are what kickstarts behavior. And they come in 2 forms, internal triggers and external ones. An external trigger might be the 'ping' on your phone that tells you you have an email or notification. Whereas an internal trigger might be the need to relieve boredom. Such as checking your social media during commercial breaks on TV.

Action

After a trigger occurs, you need the user to take the desired action. Typically there are 2 prominent factors that ensure the desired action takes place. These are the motivation of the user and the ease of the action.

Variable Reward

The magic of creating habit-forming products and services revolves around giving people variable rewards. In essence, an 'unpredictable' reward is a powerful tool for businesses to use. We don't know what we will see when we log into Instagram, and we don't know what will come up when we press the button on a slot machine. The element of variable reward makes products and services extremely enticing and keeps things 'new.'

Investment

The final stage of getting people 'hooked' on a product or service requires the customer to put a bit of effort in. This can be in the form of uploading pictures, providing data, or even physical exertion. The more effort the customer puts into it, the more 'invested' they are in your product. So, let's look at how Peloton has hooked its users.

The more effort the customer puts into it, the more 'invested' they are in your product.

How Peleton Uses the Hooked Model

Peloton does an amazing job leveraging the 4 stages of the hooked model. Let’s now have a look at how they do it.

External Triggers

The first difference between Peloton and other products is their huge external habit trigger. This comes in the physical form of their exercise products. Originally it was only a bike, but now a treadmill and other items have been added to their product range. So unlike some fitness app on your phone, you've got this big, expensive machine you paid for sitting in your bedroom every day. When you wake up, you can't help but see it. And so, that serves as the external trigger. 

The second aspect that also serves as an external trigger is price. Most home workout products are designed to be affordable in comparison to a gym membership, whereas Peloton went the opposite route. Their products cost thousands of pounds, and you still need to pay for your monthly subscription. You are invested financially the moment you buy one.

Internal Triggers That Fuel Use

While Peloton has many external triggers, they have possibly even more internal ones. Internal triggers manifest within the user's mind. Often these take the form of positive and negative emotions. Peloton is loaded with internal stimuli, from the desire for customers to stay in shape and remove the feeling of guilt from not exercising to reducing the fear of missing out on a great workout with friends. 

These 'emotional pains' are easily solved because there is no friction when using the equipment. It's all in your own home. This gives the customer a way to change their own emotional state for the better both quickly and effectively. But they also have a huge external trigger, which highlights the importance of product design.