BOSTON — When Jill Woodworth, CFO of fast-growing exercise bike company Peloton, looks at how well her company is doing, she focuses on only three metics: engagement, subscriber growth and churn.
That approach keeps her focus on the long-term growth trajectory of the company, whose September initial public offering (IPO) raised $1.2 billion after the stock price opened at $27, a small dip from its target price of $29.
Woodworth talked about the metrics she tracks as part of a panel discussion, hosted by The Wall Street Journal's Nina Trentmann, on leadership in the direct-to-consumer evolution at the MIT Sloan CFO Summit in Boston last week.
Woodworth’s bottom line was that the finance team at Peloton is "entirely about their members," because "they needed to control every single touchpoint."
Woodworth characterized Peloton, the $2,245 at-home stationary bike, as being "borne out of wanting to create a great experience," she said. "Everything we do at Peloton helps us refine our product."
At Peloton, finance relies on knowing the customer to form its strategy. Woodworth's team asks, "What things do our members like? What intensity? Which instructors?" Woodworth says the finance team is "constantly looking at everything consumed, so that we can see engagement rise."
"That’s the north star, because if engagement is rising, that means customers are happy," she said.
Peloton’s financial strategy, she said, starts with engagement data measurement. Throughout the organization, they test "everything" before presenting it to users. And because Peloton can track how often its consumers are using it, they can straightforwardly observe what works and what doesn’t.
Other than workouts, Woodworth says that across the organization, there are "hundreds" of key performance indicators (KPIs) to track. "We’d ultimately like to evolve more into using that data to create new programming," she said. "What will be great in the future is us getting better at predicting what our users will want."
Woodworth cited Netflix’s algorithm of pairing consumers with promoted content that it believes matches their taste. "We want to get to that level of engagement with our members," Woodworth said. "Over time, I think we’ll get better and better at predicting what that will be."
The KPIs that matter
Among the hundreds of options, Woodworth said, she only engagement, subscriber growth and churn really matter.
"Those are the ones we put out in the public market," she said, "[As far as] growing and retaining the subscriber base, we think those metrics are most highly correlated."
Use is the biggest indicator, she said, and her team focuses on keeping it accelerating quarter over quarter. Additionally, maintaining these KPIs relies heavily not just on finance but on marketing.
"We have a pretty big marketing department with several responsibilities," Woodworth said. "We have brand and performance, as well as a member experience team."
Woodworth told the crowd that before Peloton, she was an investment banker for 24 years. "I suppose there’s elements of the CFO job that are like the back of my hand, a native language," she said. "What I really needed to learn were the operational aspects of the job. Even as an investment banker, I really loved mentoring people, and wanted my teams to be happy."
Woodworth leads an 85% female team. "You tend to hire a team of people like yourself," she said.
She characterizes her experience at Peloton as "phenomenal," saying that many exciting things have happened, and people feel very connected to what the company has been doing.
"But at some point, when you’re working hard, you’re not really taking care of your culture and your people," she concluded. "You have to make sure you’re doing that."
