One of the most important assets any company enjoys is its reputation, both in the way it is perceived by consumers and by how it is seen by potential employees. A bad reputation is hard to shake off, as memory for the mistakes seems to last longer than for the successes. In that vein, let’s do a bit of a case study on a piece of recent news regarding exercise-equipment and media company Peloton Interactive, the makers of the stationary bikes that became world famous during the pandemic lockdown.
As with most companies, Peloton Interactive has seen its share of ups and downs. From a controversial advertising campaign a safety recall, recent stock turbulence amid job cuts, and a CEO resignation, the company has navigated some rough patches. Despite this, the company has placed itself back in the news by announcing a $95 activation fee for second-hand machines. While the company justifies the fee as a way to ensure a high-quality onboarding process for new members, the move raises concerns about Peloton’s commitment to being a consumer-friendly brand. If reputation counts for so much, wouldn’t this new fee be a step in the wrong direction for Peloton?
To Get Out of a Hole, First Stop Digging
Peloton’s recent past is littered with missteps that have chipped away at its once sterling reputation. The backlash over the Peloton Wife ad may have been overblown, but when you start adding in other complications, including halts in production due to overstock (a consequence of believing their pandemic-era sales spike was permanent), layoffs, and a safety recall, it’s no wonder the company has struggled to maintain a positive public image. Peloton does itself no favors by introducing a $95 activation fee for second-hand machines, as this adds another ding to an already fragile reputation. Instead of moving forward with consumer-friendly initiatives to rebuild trust, Peloton risks further alienating potential new customers who may view this fee as unnecessary and greedy.
Sustainability Builds Reputations Up
Sustainability matters to a lot of consumers. In addition to the cost savings of buying used, many are consciously choosing to buy second-hand products to reduce waste and lessen their environmental impact. This activation fee, however, could be perceived as a way to discourage the secondary market on some level. By adding an additional cost to pre-owned equipment, Peloton may be inadvertently contributing to increased waste and environmental harm. Realistically, we all understand that Peloton would rather sell new equipment because it earns profit on the initial sale, but its business model is actually built upon its subscription service for its live and on-demand fitness classes. If anything, the company should be encouraging second-hand sales as a way to further build out its subscription base.
Perception Is Reality
As we mentioned earlier, reputation is one of a company’s most valuable assets. For a brand like Peloton, which has faced significant reputational challenges, every move should be carefully considered. Every decision should be scrutinized with questions like, “How will customers perceive this decision?” The $95 activate fee will almost certainly generate some incremental income in the short term, but at what cost? Will this fee really move the needle for the company’s profit margins? Will it really placate concerned shareholders who think the company isn’t growing fast enough? Are these small upsides worth the price of consumers believing this fee is just a cash grab at best, or, at worst, a way to limit access to Peloton’s products? The long-term damage to the company’s reputation will almost certainly outweigh the financial gains. Peloton would be far better served by focusing on ways to enhance customer loyalty and goodwill, not on initiatives easily perceived as exclusionary or opportunistic.
One of Many Case Studies
By most accounts, Peloton Interactive produces great equipment and offers top-tier exercise classes. Their customer satisfaction scores are usually quite high. In point of fact, many of their problems revolve around the way the company is managed, not on the product they deliver. As with many other companies that struggle with reputation, Peloton needs only to get out of its own way.
Peloton is not unique for these gaffes, so don’t think we’re specifically picking on them. The kinds of mistakes this company has made could be classified as being “tone-deaf,” the kind of selective deafness that usually comes from failing to listen to customers—an all-too-common problem. What they need is an external set of ears to listen to what the people really think of their brand.
That’s where a company like ours at The Brandt Group comes in. We literally specialize in building a better customer experience by using consumer and employee feedback. That’s what you need to foster a great brand reputation, not silly fees. Even if your company already has a positive reputation, it can always be better. Let’s talk about how we can help you accomplish that using our mystery shopping services and leadership training classes.
Reach out today and let’s turn your company into the case study others look to emulate!
