Drew Lesicko is Vice President, Product and Technology at SoulCycle. A product person by trade, his current role oversees product engineering, product design, business technology, ecommerce, and IT.
In our conversation, Drew talks about the importance of predicting customer behavior years into the future, his approach to “launching small” before unleashing a product to the market, and having the courage to stray from traditional business models that bring in big dollars.
In 2021, we launched Soul Renew — our discounted class subscription service. For 17 years, SoulCycle’s business model was very straightforward, but we changed that with the pandemic. We had to figure out how we could utilize the moment to redefine what SoulCycle was.
One significant shift in user behavior was a leaning into the subscription model. People changed their workout habits and moved toward workout routines based on home subscriptions like Peloton. When we started opening our studios again, the frequency of ridership was down.
We found that what our users wanted was value in the product, and that really came down to price. From that, the key was figuring out the right pricing to draw people in and get them willing to commit to a long-term fitness journey, as opposed to coming whenever they want. The other part was then thinking about how it’d work.
At the same time, user behavior became more transient — fewer people were going to the office regularly. Before the pandemic, it was typical to take a SoulCycle class at seven in the morning, shower, and then go to the office. Sometimes people would go after work, or sometimes when they were at home. We had to respect that and also face the fact that a lot of our riders had purchased Peloton or other at-home bike equipment. Truthfully, they were in a better position when the pandemic started.
So we decided that the easiest way to do that was to build something around the weekly routine. We built out a proof of concept and launched it in two regions — Chicago and Boston. The idea was to have classes added to your account each month for a discounted price, and the more you ride, the more you get out of it.
We saw a small uptick in users. It was moderately successful in terms of riders coming in, but very successful in increasing LTV and increasing frequency.
We expanded to three more regions to see if we would continue to see the same numbers, and we did. An increase of almost 120 percent in LTV for anyone who opted into the program.
We launched nationwide, but we were only seeing an opt-in or conversion rate of 4 percent. Even though the value was there on the individual riders, the scale wasn’t. We decided to reevaluate the price point. Then, by giving our users a more attractive price point per class, we were actually getting them to spend more with us.
Once we saw that, we knew we could be significantly more aggressive in our price points. We launched that across the country at the beginning of 2023, as well as with a one-time offer of a discount for your first month. Though adoption is still growing, SoulRenew is already a large percentage of our revenue.
Absolutely. We also separate optimization from innovation. There’s often a fine line between the two. But when you’re looking at pure innovation, there’s often less risk to it. Especially if you’re creating a new business model or new business line.
We don’t have to worry much about cannibalization there either. There isn’t as much strategic testing that you have to do with innovation as you do with optimization. Especially when it comes to pricing manipulation to increase frequency, there’s a significant amount of cautiousness around it because it could completely push the business.
Yeah. In tech, in particular, companies sometimes get very reliant on their business model. Deviating from that business model can be very scary. You want to invest significantly into what you do, whether that means doubling down and expanding versus looking at how you can diversify holdings. You need to adapt and realize that human behavior and the world will change.
Now, established companies are very scared of moving away from the thing that really makes them money. But the decision has to be around where the customer is in three to five years. It’s the classic hockey analogy that you have to go to where the puck will be, not where the puck is now. That’s really, really important.
The truth is, within product initiatives and launching new product initiatives, there are no guarantees. We’re all making educated guesses. We don’t know what human behavior is going to be, we don’t know what the market is going to want. But we can get a lot of data to make the best possible decision.
It’s not always about thinking about scale but thinking about velocity. You need to be able to look at signals in the data that are going to tell you what’s going to happen, as opposed to being fully reactive to what has already happened.
Also, it’s important to get a good sense of not only what your non-customers are doing, but also look at other indicators outside of your market. At SoulCycle, we might look at the things that Disney+ or Netflix are doing. We’re not necessarily competing against them like we are with Barry’s or Orangetheory; we’re competing against anything that takes up your time.
We live in a world of data overload. I think you often need to distill it into two or three data points that will be the most important. And then also look at how those data points translate into your North Star. At SoulCycle, our North Star had traditionally always been butts on bikes. If we can get you on a bike in our studio, that’s the success metric.
Now, I’m focusing on daily touchpoints with our customers. We are diversifying away from just being in the studio or the classroom, so we have to redefine what the North Star is. If it’s daily touch points or daily interactions with our customers, then I need to distill the data to say, how are we going to interact with this person more often?
When dealing with internal stakeholders, I often need to frame the conversation that is relevant to them. It’s not always good to paint with a wide brush. We need to give them data that speaks to them more individualistically. What is the data that resonates with them? Making sure you’re looking at those data points that are relevant to each stakeholder tends to be really important.
We use several different tools for qualitative data to create the customer surveys that we send out regularly or for new initiatives.
Working at a place like SoulCycle, however, it’s very easy to talk directly to the customer. I can run upstairs to our studio in West Village and ask people coming in for a class. Even though those sample sizes are small, I really enjoy the ability to talk directly to our customers.
I’m a strong believer in launching small and being able to work out the kinks at a significantly smaller scale.
When I was running Alpha Innovations Lab at Verizon, we launched a product called Viv in 2016. We did almost no marketing, but the magic sauce was that we got promotion from Apple during the week between Christmas and New Year’s. That was amazing because that’s when everyone gets new iPhones.
That first few weeks to months is really about getting organic traffic, understanding behavior, working out the kinks, and trying to figure out if this is a product that is truly market-viable. At that point, you can start building around the monetization of the product. You have to think about that first within the beginning phases. Some people say, “If you build an awesome product, it’ll monetize itself,” but we’ve proven that’s not the case.
No product is ever perfect. But once you have something that does feel good, that’s a little bit past the standard MVP. That’s when you can start going out there and doing paid marketing or partnerships. Once you get to that point, then you can start scaling it. Then, you have to figure out how to build advocates for your product that are going to be viral users — ones that are getting everybody else to come in. That’s often a missing piece of success.
It’s hard to measure. We try to build in loops within the experience that make it as easy as possible for people to recommend or share our products. At Soul, we have multiple refer-a-friend programs that we can then utilize to incentivize people to not only recommend the product to their friends but also bring them in to help them and help themselves.
We always see that advocates are always the highest, most engaged people coming in because they brought in someone who also loves the product. It’s the most successful advertising and marketing you can do.
I think that we’re looking at a world where there’s a course correction of what the market has seen post-pandemic. Coming out of the pandemic, people have abandoned their at-home fitness experiences and are coming back to the studios. They say that they missed the social aspect and accountability of working out with someone else.
I think what we’re going to see is an omni-experience, something that is multi-tenant and multi-location. I think our customers in the fitness space are going to understand that your fitness journey has to be holistic — sometimes at home, sometimes in a studio, sometimes led by an instructor, and sometimes self-motivated.
Truthfully, I think that the companies that can figure out how to do that in the best way are going to be the most successful. That is a big ask, I think, for anybody.
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