Photo: Lululemon/MIRROR
Will workouts drive loyalty for Lululemon?
At its Analyst Day earlier this week, Lululemon announced plans to launch a two-tiered membership program tied to its Mirror at-home fitness device.
The first tier, Essentials, is free. Benefits include access to monthly events, such as speakers and fitness experiences fueled by Mirror content, as well as early access to products. Discount benefits aren’t included in the offering.
The second tier, Studio, costs $39 per month, the same price as an all-access subscription to Mirror, a wall-mounted device that streams live and pre-recorded classes (entry-level hardware package starting at $1,495).
Studio members gain access to the 10,000 classes across 50 fitness categories already on Mirror. Lululemon is also partnering with eight studios, including Y7, Pure Barre, Yoga Six, AARMY and Rumble, to add 800 hours of additional content annually. Beyond Mirror, studio content will be streamable through an app on smart TVs, iPads and mobile phones.
Studio members will also receive discounts to IRL (in-real-life) classes at studio partners, as well as all the free-tier perks, when both debut in the fall. The goal of Studio is to “create the most immersive fitness marketplace in the industry.”
Within five years, Lululemon expects 80 percent of its customers to join a membership program, although the goal is to migrate Essential members to Studio through free trials and other efforts.
The program is expected to drive sales of Mirror for those looking for a premium experience. However, Calvin McDonald, Lululemon’s CEO, at the event stressed that the primary benefit is “connection and community” that was always the aim behind the Mirror acquisition.
The partnerships are expected to strengthen relationships with studios with many instructors already serving as Lululemon ambassadors.
The workouts will provide data on members goals and support personalization and steady engagement to drive retention and spend. The program’s test showed a direct link between “sweat,” Lululemon’s term for workouts, and apparel sales.
“One of the things that we learned from our four-city pilot test was that guests like to sweat with us,” said Mr. McDonald. “They liked that we host sweats. They like to sweat with each other and the more they sweat, the more they spend.”
Discussion Questions
DISCUSSION QUESTIONS: Does Lululemon’s two-tiered membership program make sense for the brand and its customer base? What will be the key to its success?
Poll
Loading …BrainTrust
Lululemon customers are among the most loyal of any brand today and this program is a smart move. Finding sources of recurring revenue is the Holy Grail, and it’s clear that Lululemon has its eye on it. But it’s one thing to aspire to deliver these types of programs and another to have the right offering, brand and team to execute – I believe that Lululemon does and will.
Lululemon definitely has a devoted customer base, so why not? It is a very ambitious goal but they won’t know until they try it.
A membership scheme is a good idea, especially the free tier as it will help Lululemon build a base of names and details to which it can market. The paid tier is good in theory. It is another stream of revenue and helps Lululemon build more of a community. However a lot of people who do yoga and buy Lululemon’s apparel already pay for membership at yoga studios where they go to classes in person. It remains to be seen whether people want to pay for Lululemon’s services on top of this because in this inflationary environment, a lot of households are looking to trim spending rather than buy new services. Lululemon is going to have to work hard to make this compelling and sticky.
It is smart to add a fashion/lifestyle layer to an existing subscription platform like Mirror. It targets their core demographic and aligns with a premium partner. There is also some potential synergy in marketing — want to look good in the “mirror”? Wear Lulu.
Lululemon’s membership program not only make sense but it’s exactly what the connected fitness industry needs.
Peloton has proved that it’s not all it’s cracked up to be and increasing costs + disruption across leadership/corporate are going to impact its loyal customers. There needs to be another fitness player that will take that marketshare and in this case, it will be Lululemon.
While I certainly see some meaningful value in this program to customers and to Lululemon, I do wonder when subscription exhaustion will overwhelm consumers. How many retail, media, food and apparel subscriptions can the average person sustain, let alone manage? I am trying to manage it by “subscription hopping” from month to month for streaming and shipping deals, but it’s beginning to become more work than it’s worth. I know I am not alone, and I suspect a market correction is not far off.
Lululemon clearly had a vision to expand their brand into the virtual and experiential world simply by the Mirror acquisition. It makes complete sense for them to integrate this “platform” into their retail universe. The key will be to do just that–integrate it with retail. Lululemon cannot forget its apparel fitness roots and needs to stay true to that–having the experiences be an extension or means to sell their product. I like the immersive subscription component to the modern retail plan, and recommend that they develop this component side by side (a mirror image, if you will:)) with their unified commerce approach. I can see using the Mirror device as a live shopping portal as well, a means to virtually try on new items and a doorway into the future metaverse.
Adding a subscription revenue stream to its P&L is a really smart move. Already a Wall Street darling, the analyst community will love this even more. The two tiered program appears to be spot-on and I think they’ll blow it out. By the way, the concept of “sweats” is a brilliant marketing move and connecting communities with sweats and a host of associated benefits is genius.
Introducing tiered memberships pays off for both customers and companies. Lululemon’s approach will strike the right chord for their loyal base. The more you are committed to improving your health and fitness, the stronger the emotional bond will be with the Lululemon brand. Sweating together provides group identification and support as well as acknowledgment and celebration. These are potent needs that Lululemon fulfills for its members. Brilliant strategy to complement their phenomenally successful athletic wear business.
A paid tier in a loyalty program is a constant revenue stream for the business, but it’s all about the value proposition for the consumer. Make it worthwhile, and the ardent hand-raisers will show up. A paid tier is also an aspirational mechanism, giving the masses something to shoot for, so if it’s all about community, then Lululemon should work hard on the conversion aspects.
I like that Lululemon’s program isn’t discount-driven, which is where many subscription and loyalty programs fall flat – they are simply trying to incentivize purchase, not build true loyalty or community.
I agree with Dave’s comment re: subscription fatigue. There’s some risk here – we see consumers leaving Netflix and other streamers because there’s too many offerings without the additive content. I’m not sure there is a specific risk here because there aren’t as many equivalent fitness programs, but Lulu will need to continue to keep consumers engaged over time.
I think the two-tiered element makes sense. Free covers new customers or those who are slightly engaged but curious. The more loyal fan base will want to be a part of the ecosystem and for them, it’s a small price to pay. Lululemon could probably add a higher tier down the road.
The keys to success will be compelling content, personalization, ease of engagement and listening to the conversations to keep a pulse on what’s working and what’s not.
I have two questions. What percent of Lululemon’s customers actually buy Lululemon apparel for fitness? Will the Mirror go the same way as Peloton? Good idea at the moment, but the reality of using it drops off quickly.
It’s not just about the “stuff.” It’s about the lifestyle. Lululemon is evolving into a health and wellness brand, extending its reach far beyond yoga and athleisure wear.
Creating and supporting a connected community has infinite value for Lululemon and other brands who stand for health, wellness and fitness. The relationship of sport and fashion continues to impact streetwear. So hopping into a Lululemon fitness class doesn’t require a change of clothes and in fact encourages enthusiasts to take their activewear to the streets.