Peloton's Controversial Ad Wasn't a Total Loss; It Taught Entrepreneurs a Valuable Lesson in Consumer Behavior

The whole Peloton ad debacle will soon be forgotten, but no one should overlook the valuable lessons it teaches entrepreneurs.

No matter which side of the fence you're on with the recent Peloton ad debacle, there's no arguing that the company missed an opportunity to showcase its core values, what differentiates it, and why it's a special company with a special product. According to CNBC, Peloton says it's "disappointed in how some have misinterpreted this commercial" but said it has received an "outpouring of support from those who understand what we were trying to communicate."

Yet, as demonstrated by the massive social media backlash, Peloton made a mistake no company should make in our modern marketplace. There's a lesson here for small businesses: Stick to your core message, your guiding principles, and what's representative of the culture that makes your loyal customers so devoted and engaged.

Where did it go wrong?

The holiday commercial makes Peloton out to be a product for a superficial and ego-driven marketplace, but that's not what Peloton is really about. The success of Peloton and other fitness revolutionaries, like Orangetheory, is driven by their reliance on the science of intrinsic motivation. Peloton is part of a movement of organizations that tap into insights about human behavior to create products, services, and experiences that are genuine and personal. They connect to people in ways that build loyalty and engagement.

"Behavioral science has found that extrinsic (or external) incentives -- like money or good looks or fleeting praise and punishment -- do not engender engagement and sustainable motivation," says Jeff Kreisler, editor-in-chief of behavioral science website PeopleScience.com. "If you give people a bonus for certain behavior, they may change what they do. However, when you take that bonus structure away, they'll revert right back to their old habits."

On the other hand, research shows that intrinsic (or internal) incentives inspire something deep and meaningful. Peloton's practice, if not its ads, shows that people can change their lives with science.

Peloton is part of a growing, though still fairly unique, approach to selling an age-old product (fitness) by appealing to human behavioral motivators. The tactics keep customers with any body shape and fitness level engaged, satisfied, and thirsting for more. "Understanding how to play to the human psyche is valuable for any leader, because determining what motivates customers and employees is a major contributor to organizational success," says Kreisler.

What are the behavioral insights that could have been highlighted?

"Fitness" is an ambiguous concept, so we need to focus on something more immediate and tangible to pursue that goal. Peloton rides include a dynamic leaderboard, and users can earn badges and rewards for reaching various workout goals. This gamifies the workout experience, which is key. Research by Christopher Hsee and his associates demonstrated that when there's a medium point--i.e., badges, points, standing on the leaderboard--between our effort and our goal, we have a bias toward maximizing the medium itself. In other words, gamification helps us reach our goals.

At the same time, Peloton also connects users to their higher purpose, transforming what can be challenging workouts into an experience driven by something more significant. Kreisler points out that instructors inspire riders to remember why they strapped in, to focus on the future pleasure rather than the pains of the present. "Such focus on purpose can have a massive impact on engagement from the exercise bike to the boardroom and beyond," he says.

Throughout the rides, Peloton uses other behavioral insights like endowed progress and recognition (why the commercial actor was so "excited" that the instructor called her out) to ignite internal motivators.

"Peloton creates a tribe, using the power of social inclusion and our inherent need to belong," says Kreisler. "We are a species that needs to feel like we belong, sometimes to an extreme." The word peloton means a pack of riders, working together toward a goal. Somehow, even though users are all working out alone and remotely, Peloton gets them to feel like they are part of a team.

All of that is why Peloton is a huge success. Not the stuff we see in the ad, but the invisible stuff that motivates us to get up and try, to take action, to find meaning.

The ad addresses none of that; it is superficial. Our consumer culture is overflowing with appeals to the superficial--beauty, status, consumption--so it's understandable that the ad triggered a response to those aspects of the pitch. "Appeals to the internal benefits based upon sound principles of behavioral science and what matters to people require more thoughtfulness than Peloton exhibited," says Kreisler. "The ad never got close to showing that Peloton taps into who we are and what we feel, rather than how we look or what our husband thinks of us."

What could Peloton have done differently?

Had the ad focused on what's fundamentally special about Peloton, it would not have received any backlash; it would have been successful. The ad could have depicted the Peloton recipient getting badges or passing people on the leaderboard. Had the actress demonstrated her commitment out of obligation to other riders or connected to some higher purpose or goal, the ad would not have missed the mark.

Who knows? The brand may have intentionally chosen to spark disruption, but it's not likely. Peloton neglected to go back to its core message before producing this particular ad. This is the major takeaway for business owners: Know your mission, purpose, and values. Use them as the foundation for everything you do, and never make the mistake of straying from them.