So why are we revisiting Peloton two years later? In crisis communications time, that seems like an eternity. Yet, the Argyle team can’t help but return to the company’s self-inflicted wounds and how it’s impacted reputation over the long term.
It should go without saying that consumer and public safety must be the top priority for companies, especially when safety is threatened. When the unimaginable happens, companies need to react and do so quickly, expressing genuine sympathy and regret, and putting safety above all else.
Companies who fail to apologize, who refuse to own it and fix it as an integral part of their strategies risk losing trust, reputation and in the end, market share.
Let’s look at how Peloton’s failure to do just that has impacted their ability to fully recover two years after the recall of their treadmill.
After a pandemic boom when many of us hopped online to order exercise equipment, including a few of our team members, reports were emerging of injuries related to the Peloton treadmill and in March 2021, the tragic death of a young child.
On April 17, the Consumer Protection Safety Commission (CPSC), issued a safety warning and advised consumers to stop using the treadmill, sharing a disturbing video of a child being trapped under the belt. Peloton’s reaction was swift and aggressive, calling the warning ‘inaccurate and misleading’.
So, unsurprisingly, the outrage builds, along with the pressure. On May 5, Peloton announced the recall of 125,000 treadmills along with an apology from CEO John Foley, admitting the company ‘made a mistake in our initial response to the Consumer Protection Safety Commission’s request that we recall the Tread+”.
This continued Peloton’s horrible, awful 2021 which included a June security breach involving user information and the death of Big in the much-awaited Sex in the City 2 reboot.
In a matter of a few weeks, Peloton completely altered the course of their brand’s reputation for years. From March to May, volume increased and stayed high throughout 2021. Following their recall announcement, they saw an average of 1.3k daily mainstream hits, 85% higher than the 700 daily hit average they had in the first three months of the year.
In the 18 months after the initial recall notice, mainstream and social media continued to trend high, souring the digital environment for this cult-like brand. Conversation has been consistently negative, and the brand has struggled to get back to their values and ethos of combining health+wellness with community.
The impact has had a huge financial impact, with Peloton shares plummeting and failing to recover in a significant way.
- Own it up front and put safety first. Peloton came out swinging and had to do a public about-face with an apology from the CEO and a recall – so they ended up doing the right thing anyway but this time with significant damage to the brand. By failing to address some of the key concerns of consumers and aspects of the recall in the earliest days, the company prolonged its problems and caused potentially irreparable reputational damage.
- Don’t lash out at the regulators. Peloton came out looking frankly, heartless in response to the death of a child and the CPSC’s warnings. Was it unfair? Well, they recently got fined $19 million for failing to report, reinforcing the impression that the CPSC was the body taking care of consumers rather than Peloton.
- Stay true to your brand values. The response was a complete contradiction against Peloton’s brand – community focused and wellness-oriented. The contrast between the company’s values and how the recall was handled compounded reputational damage.
- Turning the tide gets harder over time. Peloton is now faced with a digital environment, largely driven by direct consumers, that has been mostly negative for a prolonged period of time. Two years on, righting that ship to reactive brand champions and advocates becomes increasingly difficult.
- The pile-on-factor can hurt your brand. Peloton was not ready for the next wave of negative events, putting itself in a deficit position for the other incidents it faced including the data breach and SITC, both of which would have been manageable issues if it were not for their response to the treadmill recall.
A final note for brands who are innovation leaders and often pioneers in a specific industry – don’t fall into the trap of thinking you are still the only game in town. Peloton faced these issues as newer, cheaper competitors were coming online, giving consumers choice yet they were still acting like they were the only option for interactive, live streamed fitness programs. Just as we’re seeing Netflix struggle with the same attitude, brands who feel impervious to losing equity will soon come face-to-face with the hard truth.