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.”
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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?