It has been embedded into our brains that the key to higher conversion is offering a seamless checkout experience.
It perhaps comes as no surprise that brands and retailers are investing big bucks into offering a checkout experience that requires the least amounts of clicks and a variety of payment options, all in hopes of driving conversion.
While, for some retailers, this approach may be the golden ticket, it is not necessarily the answer for every brand. Why? Today’s top-performing brands and retailers offer more than just an optimized checkout experience. They also focus on staying “relevant.”
Relevancy goes beyond creating a product in high demand. Establishing relevance means focusing on values that serve your company and customers authentically.
A great example is Peloton, which saw an uptick in sales as at-home fitness became the new hot trend. But while demand for at-home fitness gear reached its peak during the pandemic, the category has since mellowed out or is on the verge of it.
Here’s what brands and retailers can learn from the rise and fall of Peloton
But wait, before we do that, let’s go back to the basics for a quick second. First, let’s define a trend.
A trend is defined as a general direction in which something is developing or changing but usually lasts for a short period of time.
Ok, great. Now back to Peloton.
During the pandemic, Peloton was on top of the world as its stock pushed $171 per share and its market cap hovered around $50 billion. Peloton fast became a Wall Street darling.
In May 2020, Peloton reported a 66% increase in sales and a 94% increase in subscribers. In September 2020, Peloton said it had had its first profitable quarter, with sales spiking 172% since the same quarter from the previous year and revenue rising to $607 million. And in early 2021, Peloton reported its first-ever billion-dollar quarter, primarily driven by holiday sales and sustained demand for at-home fitness.
Fast forward to 2022, Peloton revealed that it would be letting go of 2,800 employees and replacing its CEO and co-founder, John Foley.
The fall of Peloton
At-home fitness was a major trend during the height of the pandemic. If you couldn’t get your hands on a Peloton bike or treadmill, you opted for an alternative like Echelon and iFit Health.
Post pandemic, however, more and more people have returned to gyms and group fitness classes.
Seems logical, right? But there’s a bit more to it.
Peloton’s three strikes and its failure to stay relevant
Strike 1: In March 2021, a child was fatally injured in an accident with a Peloton treadmill. This tragedy led shares to dip 4%, with regulators urging a recall.
Peloton’s response: Peloton made a change to make the treadmill safer, but it led the equipment to become unusable unless users paid $39 per month. Then, following customer outrage, the company said it would work on a fix.
The failure to stay relevant: While this is truly a tough one, the logical response would have been to create a fix but to make it available to all customers without needing additional payment.
It was also reported that Foley initially pushed back, calling the warnings “inaccurate and misleading.” The company’s failure to take accountability obviously did not sit well with current and future customers.
Strike 2: As consumer demand plummeted, Peloton failed to find a way to maintain its hype.
Peloton’s response: Peloton saw major traction during the pandemic because its solution solved a problem many faced during quarantine: how to stay active while at home. As COVID cases subsided and consumers returned back to gyms, Peloton looked to stay relevant by offering classes within its app.
The failure to stay relevant: During the pandemic, brands and retailers that made a pivot in response to their customers’ changing needs were the ones who were more likely to survive. That still stands true in today’s environment.
Peloton, unfortunately, failed to do so while its customers left their homes for in-person experiences. While the company briefly offered in-person classes in New York, it later stopped offering them.
Strike 3: Around 200 full-time Black employees voiced concerns over pay disparity at Peloton over Slack in September 2021. Some said they felt they were being paid less than the industry standard.
These employees also voiced their frustration with additional internal factors, including a workforce-diversity report promised to employees, which they never saw.
Employees also pointed out that the company knew the benefits of aligning itself with the BLM/Anti-Asian Hate stance but did little to address internal inequity and diversity concerns.
“At Peloton, we are committed to pay equity and take it very seriously. We’re proud we have team members who openly share their feedback when they have questions or concerns, especially when conversations are hard. We have a number of initiatives and processes in place today to ensure equitable compensation, and we are committed to continuous improvement as part of our journey to becoming an antiracist organization,” said a Peloton spokesperson in a statement sent to POPSUGAR.
The spokesperson noted that Peloton complies with local and national pay equity laws and regulations specific to each country. It also conducts an annual compensation review to ensure equitable pay for all team members and participates in the MLT Black Equity at Work program.
The failure to stay relevant: The company response lacks urgency. Businesses in the retail landscape have been particularly hit hard by the Great Resignation wave.
The failure to address employee treatment is also likely to not sit well with customers, especially Gen Z and millennials, who consider the treatment of employees as a significant factor when choosing brands to engage and purchase with.
While optimizing the checkout experience is crucial, it is important to build a brand that consumers want to associate with.
Establishing relevancy is critical, but it also needs to be nuanced. Check to see how your brand deals with customer desires and their changing expectations, how well your brand handles customer issues, how well it aligns with customer values, and how your brand is doing so in an authentic manner.