By Danielle Davis
When the Peerfit team came into Healthbox, their company was three years old, employed three people, and was still trying to figure out how to capture the market opportunity they saw unfolding in the fitness industry.
Their product was a solid, innovative solution. A flexible fitness pass, they had unbundled the traditional gym membership and offered a new option to consumers. One that let people workout at a network of several different gyms and get member rates at all of them. All the commitment people hated about gym memberships? Gone. Peerfit operated with a month-to-month membership that could be cancelled at anytime without penalty. The boredom of treadmills or one kind of fitness class? Also gone. Peerfit pulled together dozens of fitness studios, the majority offering group classes, across modalities. Everything from yoga to CrossFit, Pilates, spin, bootcamps, and beyond.
The product was a great consumer solution, but it was gaining limited traction in the marketplace. Growing was tricky. Marketing to consumers proved expensive. Plus, a fitness membership – no matter how flexible – can be a hard sell to a mass market not entirely eager to embrace exercise as a fun thing to do.
Peerfit didn’t set out to disrupt their own business model – or rebuild their entire brand image – as part of their experience in our accelerator program. But they did. Here’s what you can learn about developing your own business model from their story.
It’s not always a lightning strike
Ed Buckley, is Peerfit’s President and one of its co-founders. When I asked him about how the company came to alter their business model, I expected a big story. An “AH HA moment.” Maybe something about feeling like he was struck by lightning. But, that wasn’t it at all.
“It was our first day in the Healthbox accelerator. We just listened. That’s it.”
Peerfit founders with GuideWell’s Renee Finley
Ed laughs and continues, “One of our Healthbox mentors, Renee Finley, just flat out suggested it in our first meeting together. She said that Peerfit would be a great solution if we re-packaged it for employers and let them offer it to their employees as part of their company’s wellness benefits as an upgrade from the usual discounted gym membership.”
“It was just part of that first conversation. She planted that seed.” adds Ed, still incredulous.
What I love about this story is that it runs contrary to what many of us – myself included – have come to expect in a transformational moment. It doesn’t have to be a BIG moment. And it can just as easily come at the beginning of the accelerator program as it could at the end.
In an accelerator environment, it’s easy to get caught up in your own introduction – without really registering how it’s being received. Don’t miss out on these initial impressions and gut reactions. These are actually much closer to marketplace and investor perceptions because of the lack of familiarity cohort members and mentors have with your business. You only get one chance to hear about your business model’s first impression. Don’t forget to listen.
Sometimes You Just Need to Change the Channel
When Ed explained how Peerfit decided to take Renee’s suggestion and change their distribution model from B2C to B2B, it recast Peerfit and disrupted their product offering. Their value proposition changed, and so did their potential for growth. A “channel change” is sometimes all you need to reframe the way you think about your products or services.
“We always thought we’d be sold as one of GuideWell’s consumer solutions,” recalls Ed. “Selling business-to-business didn’t even occur to us. It would have never occurred to us. We didn’t realize all the problems we would be solving for employers if only we made them the focus of our solution.”
Once they committed to shifting the model to distributing via employers and packaging their offering as a workplace wellness benefit to consumers, “that’s when we accidentally undid the pass,” confesses Ed.
“We thought we were so innovative with our flexible pass,” explains Ed. “But maybe the idea of a traditional membership, flexible or not, was antiquated.”
“So, we built a platform that supported our new model. And that was the most valuable thing we did. Instead of a pass, we created a wellness currency platform that made it easier for employers to reimburse their employees for joining Peerfit. We would have never done that if we didn’t shift to solving for the employer’s problem instead.”
What would happen if you “changed your channel” and put your own model in a new context? A common exercise is to imagine the way a solution might be integrated into an alternate part of the health ecosystem. Have a technology aimed at helping patients? What if it helped their providers instead?
Scaling Your New Business Model Starts at Home
Peerfit founders Scott and Ed at HIMSS 2015
As Healthbox came to an end, Peerfit brought in an external branding consultant to help refine their brand strategy and image in the marketplace. The step proved valuable to cementing their new business model and to helping it achieve scale in an unexpected way.
“The biggest challenge about changing our business model was re-educating ourselves.”
“Doing the brand work at the same time helped. We totally had to change the way we described Peerfit and how it worked. Our consultant helped us change our language, wipe out phrasing and words we used for years to describe the old model…”
Now, here’s when they start scaling.
“…And we had to share that within our team. They needed to get it and live it first. Then we could all work to help the public understand it.”
Even though your start-up team may be small, don’t overlook that critical first step of educating your own team, stakeholders, mentors, and investors on your new business model. It’s essential to completing the paradigm shift. Peerfit used the launch of their updated brand and its brand manual as a way to really educate their team on the new model. It’s smart because the story is captured beginning to end in writing and it’s easily sharable. Whatever your version of this document is – I’ve seen it take the form of everything from pitch deck to business plan and now brand manual – the key is making sure that the story of your new model is told in a way that’s easy to digest and perpetuate. It needs to scale through the internal stakeholders before it can live with credibility outside your own organization.
Where are they now
Peerfit completed Healthbox in December 2014 and their final pitch was voted the winner of Innovation Day. Those fundamental business model changes initiated during the accelerator gave the company a new market to exploit, and they are making significant headway selling their flexible wellness currency to employers.
With a dozen worksites slated for rollout in 2015, Peerfit most recently launched its solution at Laser Spine Institute, a company regularly heralded as one of Florida’s best places to work. They are continuing to refine their ability to introduce companies to their platform and are setting their sights on scaling their model across the country by raising Series A funding this fall.