Last year on the show, there were behavioral economics analyses of Apple Card, Costco and Starbucks and this is the first time in 2020 we will be digging into a specific company. I’ll talk about the infamous Peloton ad that made the company’s market value drop $1.5 billion in three days: what happened in the ad and why it went wrong. Then I’ll explain what could have been done better and the behavioral economics concepts that back it up. I also talk about my own personal experience with Peloton. I recently got one and I’m loving it. You’ll learn about the behavioral economics of financing options, the 30 day money back guarantee, as well as how they use the concepts of social proof, herding, reciprocity, and more in very smart ways. If you don’t have a Peloton, you’ll learn a little more about equipment, subscription, and app options. I also talk about some of the really cool things they are doing that align well with behavioral economics – including sharing a bunch of concepts I see in their set up, and we will wrap up with tips for your business based on successes from Peloton.  As a note, I don’t do any work with Peloton and don’t know if they are working with anyone in behavioral economics or if they are familiar with any of these concepts or doing any of this intentionally. The stuff I talk about in this episode are my own thoughts and observations, not from any conversations I have had with anyone at Peloton. If you work there or know someone who does that would like to Connect, please email Melina@TheBrainyBusiness.com  Show Notes: [03:28] Peloton is a fitness company that sells equipment and features live streaming videos on a screen attached to the equipment. [03:52] According to Peloton’s website, there now have more than 1.6 million members. They state over 55 million workouts completed in 2019, and in their last fiscal year (which ended in June 2019) the company made $915 million dollars. [04:21] They also have a 94% 12-month retention rate. [04:48] Over the Christmas holidays, they featured an ad about a woman who receives a Peloton from her husband as a gift. We then get to watch her video blog of her entire year riding the bike and she says she didn't realize how much it would change her. [05:38] The internet hated this commercial. There was all kinds of backlash about the husband giving her an exercise bike and how it was sexist. It had negative coverage in all the publications. [06:10] According to Business Insider, Peloton lost 1.5 billion dollars in three days after the release of the ad. [06:33] In my opinion, the ad wasn't as bad as it was made out to be on social media. The real problem is mixed messaging (something many companies struggle with). [07:03] The ads that Peloton makes are clearly directed towards wealthy people. They also only have very fit people in their ads (which is fine if this is a clearly defined niche). [07:34] The other side of their brand is being a community opportunity for everyone to be able to have access to amazing fitness regardless of whether you have access (or time to go) to a gym. [07:49] If you say you are for everyone – a community of all kinds of people coming together to support each other…the ads should reflect that. [08:03] If you are truly only for wealthy people, you should say that. [08:27] There is no reason that any business can’t target a high income or high net worth group of individuals. Just make sure that the messaging is clear. [09:15] I think they do want to be inclusive – especially after having the bike for a month now. Their website is “One Peloton” and they share that messaging throughout all the workouts and interactions. They are very focused on their community. [09:24] my recommendations: First the ad needed a teeny tiny back story where everyone knew that the wife actually wanted a Peloton. [10:04] You cannot assume everyone who watches your ad or sees your message is coming from the same place as you. [10:32] When you don’t provide the proper co