If you’ve never heard of Beachbody, that’s OK—neither did its CIO, Eduardo Frias, until he interviewed with the company nearly three years ago. As he discovered, the Santa Monica, California-based exercise and nutritional supplement company has a lot more going on than you’d think.
Surprise: Beachbody’s biggest competitors aren’t gyms and nutritional supplement vendors. They’re you and me, and our tendency to give up, slack off, or just plain lose interest in following an exercise regimen.
Data analytics is helping Beachbody executives uncover viable new business ideas. (Photo courtesy of Beachbody.)
“Probably our biggest competitive threat is to get people to do something they don’t want to do,” Frias says. “The key is to keep people engaged until they start seeing results. Once you see the results on yourself, then you’re going to get into it.”
Staving off that initial dip in interest is why the company needs to continually innovate and reinvent itself.
Beachbody’s core products include fitness programs such as P90X, sold via DVDs on the company’s website and via streaming media that subscribers can download on-demand. It also sells nutritional supplements and meal-replacement products, such as Shakeology, which alone generates a significant portion of Beachbody’s revenue.
Customers can also sign up for online coaching, training, and counseling, and can even work with one of Beachbody’s trainers in person at non-affiliated gyms.
Technology Is the Business
Not only does Beachbody rely heavily on IT for web-based transactions and webcasts, but its online network of 450,000 independent consultants (the company calls them coaches) complement its more than 1,000 employees, helping the company generate annual revenue of more than $1.3 billion. “There is not a single dollar of revenue that comes in that doesn’t go through technology,” Frias says.
Data analytics is helping the company discover new ways to improve customer conversion rates on upselling opportunities.
For example, the company has discovered surprising information about how its customers use various online and on-demand products that will allow it to increase retention and even create new revenue streams.
“Buried” business data is thus helping executives uncover “viable new business ideas,” Frias said. It may also lead Beachbody away from emphasizing simple transactional relationships with customers by creating more longer-term and inherently more valuable points of connection with them. “Retention [will become] more valuable than customer acquisition,” he said.
The Cloud’s Virtues
Even with its reliance on technology, running IT operations can’t be a significant part of Beachbody’s business plan, Frias says, which is why cloud computing is becoming more important as the company grows.
Beachbody’s private cloud architecture supports member sign-in, transaction, and customer service systems, and it connects customer transactions with the company’s general ledger system. The company is also tapping cloud services as it expands internationally. “I can do software releases once, I can patch once, I can do backups all at once,” he says.
Beachbody also uses mobile and cloud tools to help its independent consultants manage their own schedules and businesses. “We think of them as small-business owners,” Frias says. “They want to know what their sales have been, what their leads are, and we provide them tools to manage their business on the move.”
Some 2,000 customer service agents worldwide use a central cloud-based knowledge base to help them answer questions, such as whether a given supplement could cause a woman in her second trimester of pregnancy to feel dizzy. “Agents are not medically trained professionals, but they have to be able to answer these kinds of questions,” Frias says. Coaches, meantime, can answer questions about supplements they’ve sold without having to direct customers to an 800 number.
While it’s well documented that most IT departments spend about 80% of their budgets on merely running their technology stack, leaving a modest 20% for new innovations, Frias says his organization spends a more substantial 38% on innovation—and has management’s support to increase that percentage even further “to go after other business ventures.”
Beachbody management also likes the fact that cloud resources can scale quickly to support the company’s rapid growth at home and abroad, as well as shore up information security. And given the challenge of finding top IT talent, it makes even more sense to offload certain IT functions to cloud providers, Frias says.
“Again, every single dollar goes through one of our technology systems,” he says. “If our systems are not ready, if they’re down, then there’s no international expansion. There’s no new flavor of Shakeology. There’s no new product launch.”
Furthermore, as the company grows, “we have to protect our entrepreneurial nature while getting more sophisticated and disciplined about how we do technology work and not allow it to become a burden,” Frias says. “I want people to think of technology as an enabler as opposed to a barrier to whatever we’re trying to do.”
