Zwift

Case study: The perfect product launch?

Ever so often I come across a company, product launch or marketing tactic that I feel compelled to write about it here. One company, which has made a real impact in its niche in a very short time, is Zwift. Zwift is an indoor cycling training tool that with its 3D worlds and a strong social element have managed to create a solid user base and almost fanatical members in the short (15 months or so) while, since they launched.

But how did they manage this? Zwift was not the first player on the market. Over the last few years, a number of players have entered the market; trying to make indoor cycling more interesting.  But, where Zwift has excelled – or perhaps others have failed – is to build up a community around their training platform that attracts and retains cyclists from all over the world.

Please note that I have no affiliation with Zwift – and the ‘case study’ below is merely my interpretation of their marketing strategies – as seen from the outside. As an avid cyclist and Zwift user since the very beginning (and some of the competing products), I have experienced their strategies and tactics as a user  – and interpret them from a marketing point of view.

The product launch

Zwift followed the usual SaaS (Software-as-a-Service) marketing strategy that started with an – invitation only – private beta, which moved to an open beta after about 6 months (everybody can join) and finally to a paid product (another 6-8 months later).

The reason for the private beta is threefold:

  • Firstly, it allows the company to control how many people uses their platform. This ensures that they have the hardware capacity necessary to support the optimal user experience. It is also possible to segment the users to ensure that you only focus on a certain user at a time or that you have a well-defined mix.
  • Secondly, the limited number of testers will provide much-needed feedback on the user experience and general improvements that will allow the company to make changes before opening up for everyone.
  • Finally, the marketing effect! Private betas are great at attracting attention, create buzz in the market and get press mentions before the product is ready for the wider audience.

So far so good. These tactics are pretty universal when launching anything online – regardless of whether you target the BtC or the BtB community. The three step launch rocket is the same.

So, how does Zwift go from this – fairly standardized product launch sequence – to where it is today?

In record time, Zwift has become a vibrant platform with almost fanatical users, who among other things – independent of Zwift themselves – have built supporting websites that collect information on all things Zwift, a thorough user manual, regular podcasts, several, very busy Facebook groups, organized group rides with live commentating, YouTube explainer videos and much, much more.

It is all about the community.

Community

The groundwork for the community is laid while still in beta. A lot of the marketing focus around the public beta is around creating a self-sustaining user community of users, who will act as brand ambassadors and help drive the popularity of the product.

This is where BtC companies will have an edge on their BtB cousins. Very few companies or products in the BtB space manage to create so much buzz around their offerings that people will associate their own name with it, in the same way that we do when it is a consumer product. Still, it is by no means certain that you can build a community in your niche – regardless of where you operate. It will require passionate followers, a very good product, constant nudging and – not forgetting – luck.

In the case of Zwift, they have the perfect niche for this, as cyclists are notoriously passionate about everything cycling related. It only takes two cyclists to start a heated debate on anything from correct gearing to who is the best in the pro peloton. Passionate followers – CHECK… Community potential…CHECK.

So, how did Zwift take advantage of this potential to drive their growth?

There are a number of factors that come into play here, but one of the most important factors is the fact that Zwift from the outset followed a deliberate strategy where the CEO and one of the founders took an active role on social media during the public beta. This meant that Zwift was not just another company. It was personified by its CEO whose tone of voice, willingness to answer questions and take part in the general discussion sent a very clear signal that Zwift is friendly, approachable and interested in growing with its users.

In short – users felt a personal connection with Zwift and that they themselves were part of the company. This is a very powerful psychological driver as it drives users to engage even more and recommend the platform to non-users.

That this was part of a deliberate strategy was underlined by the fact that other Zwift employees very rarely partook in the SoMe discussions and the fact that once Zwift moved from public beta to a paid product, the strategy changed.

In addition to the CEO, the community was also driven by a large handful of regular users, who had taken it upon themselves to keep the momentum going. These users were the ones I already mentioned, the ones who organized group rides made explainer videos etc. etc. While not directly supported by the Zwift company, I’m sure they have been in close contact and probably been rewarded for their efforts. That all makes good business sense, as it is a lot of work driving a community and Zwift cannot do it themselves. A user driven – even if it is subsidized – community works much better and is more credible.

The community also also established more than 70 Facebook groups (usually country specific) – where the community help each other and organize rides.

 

Gamification

The sense of belonging that users felt with Zwift seems likely to have been part of a larger plan to utilize what is known as gamification. In short, gamification is an online marketing technique that motivates users by taking game-like mechanics and using them to drive certain behaviors. It is generally accepted that gamification works best if it involves most of the following achievements;

  • achievements
  • customization
  • belonging
  • socializing
  • learning
  • mastery
  • status

In Zwift, the more you train, the more virtual swag you get (new bikes, new wheels, and new jerseys). The gamification keeps people coming back in the hunt for more and to keep their place in the invisible hierarchy that reigns on Zwift island.

Achievements, customization and status…CHECK

But the gamification also works by keeping people guessing. The company leaves it to the community to figure out and documenting changes in the ‘gameplay’ and what swag is unlocked at what levels. There is no official manual to Zwift – nor is there much in terms of support. This is driven and maintained by the community. Questions are being asked and answered by the Facebook group community more than on the support forums.

Learning, socializing and mastery…CHECK

This is brilliant – as it is another user engagement driver (and saves support costs), but it is also a dangerous strategy. Not everybody wants to use social media and there is a risk of losing beginners before they get started properly without a solid onboarding procedure. But is looks like Zwift has taken a calculated risk in order to steer people through to the community.

Additionally, there is a number of other gamification drivers built in, but the above covers the basics needed to reap the benefits of Gamification.

Attracting interest in the first place

Getting users engaged and converted is  important for a SaaS, but nothing is more important than attracting interest in the first place. After all, if nobody visits your site, then what good is a great conversion rate or a gamification strategy?

Media

As already mentioned, Zwift used the media to help with the initial traction. Zwift got a lot of press coverage which helped attract the first users. But that is not the only thing that Zwift has been doing to attract attention.

Partnerships

A classic marketing technique – which Zwift have also successfully utilized – is partnering with companies/people within in same (broad) niche. In this case, relevant partners include (professional) cyclists, bicycle manufacturers and other online platforms that cyclists use.  Co-promoting each other’s offerings can be a win/win situation that enables both partners to grow their user base quickly – with limited costs. High profile partnerships have been established with companies such as Strava and GCN (the cycling YouTube channel). Both have a large user/fan base which Zwift can tap into – and the other way around.

Events

Zwift also regularly attends cycling related events all over the world, reaching potential users – and enabling them to try the “Zwift-experience”

Ambassadors

But the one source of new users which in time will have the potential to outperform them all is the users themselves.Cyclists talk to cyclists and happily recommend products and services they are happy with. So, keeping users happy and engaged should – in itself – feed Zwift new users. Users who already know someone in the community and have joined based on a personal recommendation. Very powerful marketing.

In terms of effectiveness, the carefully selected partnerships likely drive most of the current traffic and subsequent revenue for Zwift. PR is most effectively used early on in the process – where the news value is higher. Later in the process articles and blog posts will continue to work by sending low volume visitors to the site (and help with the search rankings) – but the big influx of visitors will come within the first few days of receiving media mentions.

In some ways, a similar phenomenon is seen with respect to the partnerships. When Zwift moved out of Beta and into a paid solution – the partnership with Strava ensured a massive influx of customers within a short period of time, But where the “novelty” of Zwift for the media might diminish – meaning that they will get fever press mentions over time, tweaking existing or establishing new partnerships can continue to feed the funnel for longer.

While not relevant just yet, it may make sense to formalize an ambassador program at a later stage. This ambassador program could work by incentivizing users to make others join – either by giving them ‘status’ in the community or by offering them something more tangible – such as merchandise or financial rewards. There have been signs that Zwift reaches and supports selected members in the community – which makes sense – but they will probably want to wait until the natural growth slows down before starting an ambassador program which incentivizes people. The reason being that it may take away some of the site’s community feel.

Successful launch?

So, has this been a successful launch? From a marketing perspective, it certainly seems so. Zwift can claim a continuous growth in active users, a vibrant community, and some powerful partnerships. But whether it has been successful really depends on the expectations the founders and investors had before starting the journey – and this is pure speculation.

We can also only speculate on their key metrics, such as their churn or conversion rate.

Conversion rates vary greatly from company to company and while it is not uncommon to have conversion rates in the 1-2% range (trial users becoming paid members), conversion rates on upwards of 40% have been reported by some companies.

From the outside, we have no way of knowing.

The churn rate (users canceling their subscription) also varies greatly -and for a solution such as Zwift – only having offered a paid solution for a few months, this is something they will be monitoring closely. How this evolves over time will have a great deal to say about the company’s staying power. For instance – what happens when it becomes summer and most cyclists train outside? Will they cancel their membership – and will they come back once the weather forces them indoor again. Only time will tell.

For now, what we can do, is to look at how many Strava users use Zwift – and that figure seems to have grown from about 20,000 in December to about 27,000 in January. These figures obviously include trial users and exclude those Zwift users who do not use Strava.

If we assume that the conversion rate is high (people who try Zwift have already bought an expensive bike, an expensive trainer and a decent PC, so compared to that, the cost of the Zwift subscription is very low) and that most users link to a Strava account, this could mean the following:

27,000 users in January – 7,000 of them being trial members – 40% of them convert – and 80% of users use Strava. 2% churn. – Zwift subscription costs $10/month.

20,000 existing users + 2,800 new users in January= 22,800 + Non Strava members (4,560) = 27,360 – Churn (550) = 26,810 members

= $ 268,100/Month

Of course, if the conversion, Strava or Churn rate is significantly different, the result may not look as good.

And while $268,000 may sound like a lot, remember that Zwift was operational (with operating and marketing expenses) for more than a year before they had any paying subscribers.  Zwift most likely also have a secondary income stream – in that they likely charge some of their partners (bike manufacturers, etc.) for the opportunity to get in front of the Zwift community. The size of this secondary income is unknown.

Conclusion

Zwift seems to have made a real dent in the market in a very short time – and they have done so by meticulously building a community around itself. This has been done almost to perfection.

It is always easier to conclude on things once we know the results, and Zwift has probably spent a lot of time and many external consultants (and probably still do) refining the concept and testing ideas. The fact is that where training indoor on a stationary bike trainer used to be done in solitude – while fighting boredom or watching videos/Netflix – Zwift has made it into a competitive and fun environment.

The marketing challenges going forward will be to keep the momentum going. Optimize sign-up rates (testing, testing and testing the sign-up process), conversion rates and minimizing churn, while continuously finding new partners to work with and alternative ways to go to market.

Close partnerships with those trainer manufacturers (like Wahoo) who do not make their own software seem a logical next step. As does Strava competitors and reaching out to cycling and triathlon clubs.

As already mentioned, an affiliate and/or ambassador program should also be considered at some point.

There is also a growing movement among SaaS companies to be very open about their numbers. Conversion rates, churn, number of users etc., etc.

Admittedly, this can be difficult for Zwift if they are venture capital backed – and most companies choosing this strategy are those who target entrepreneurs (who by definition are interested in these things), but Zwift could make cycling related statistics available such as their user number of users, countries and cities with the biggest user base (heatmaps could help build relationships between the users outside the Zwift platform), preferred equipment, miles ridden, average ride length etc. etc.

They could even just use some of this information to revive their blog. Interesting cycling related blog posts could help spark debates in the community and get them more traffic from other sources.

To wrap up: In the short time Zwift has existed, it has made a big impact within the cycling community. Their attempt to transform an (often) boring activity (indoor cycle training) into a fun, competitive environment appeals to a lot of cyclists. Their launch has attracted a lot of cyclists – more than 120.000 cyclists have already created an account with Zwift – and for now, their gamification elements seem to keep them engaged.

The question is; can Zwift keep the momentum going, continue to grow the platform and their partnerships once the novelty has worn off.

Only time will tell, but for now it looks promising.

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GrumpyCMO

GrumpyCMO is where I air my thoughts on marketing. I'm Bo Ekkelund, and I have been in the marketing field for more than 15 years. The blog is called GrumpyCMO, as I call it as I see it. I see a lot of hype in marketing and I see a lot of very basic mistakes being made in marketing and this is where I tell the world about it. Oh, and I also air my thoughts on marketing strategy, marketing's place in the organization and the changing challenges of CMO's. Some of the articles on this site have also been published on other sites, such as Marketcommunity and LinkedIn.