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Vulcan Inc. is a wellness chain with HQ in Bangalore. Vulcan’s mission is to unleash a wave of healthy
lifestyle through a holistic combination of group crossfit, martial arts, boxing, Zumba, whole body
check-ups, preventive healthcare counselling, healthy meal subscription, yoga and mental illness
preventive intervention. This 360 degree approach created a disruption in the fitness industry 4 years ago
and the company went on to raise US$ 100 million in the latest Series C round which valued the company
close to US$ 1 billion. However, of late the company has experienced churn in its core offering of group
fitness classes. Customer rating and feedback revealed that most customers struggle to achieve their
desired fitness goals, lose motivation and refrain from renewing their membership plan. Customer
retention rate has dropped and growth rate has slowed, raising concern among existing investors.
Management believes that customer experience has above average so far, but still there are ample scope
of improvement.
How will you and your team advice the management to improve customer experience?
Solution Approach
Deployment of
~3 to 4 weeks Pilot solution
Monitoring of key
Key Cognitive tech outcomes and
~3 to 6 weeks identified for results for the pilot
customer retention on an ongoing
basis
Primary research Important
~2 to 3 weeks in the form of upselling/cross-sel Full scale
customer survey, ling opportunities deployment post
focus group identified pilot success
Building initial set interviews,
~1 to 2 weeks of hypotheses stakeholder Budget planning,
interview product roadmap
Finalizing the built
Detailing final & scope of the Prioritizing areas
project of intervention to Actionable insights
as-is state.
improve overall generated +
Secondary customer recommendations
Finalizing the
research to experience proposed
objectives and
desired outcomes validate the
of the project. hypotheses
Assumptions
● For the sake of simplicity assumed that hypotheses has been validated with primary research
● Cognitive tech powered solution has been identified as a way to fix the customer churn issue.
● The existing tech stack has been built out by the client in-house product dev and engineering team
and the management wants to keep anything related product dev in-house.
● There are other tactical plans like offering targeted discounts to customers to avoid churn. LinkedIn
Premium offers it at 50% off on the regular price when the algorithm senses a likelihood of churn.
Management and consulting team feels that these are temporary fixes and will not solve the
fundamental issues of maintaining the consistency of experience for existing customers.
● Vulcan Inc. positions itself as a wellness tech platform with everything in the activity chain powered
by a deep technological footprint. This is critical in building a wide economic moat prior to IPO in
next few years.
Recommendation
Viable All or part of a task, job, or workflow Moderate levels of skills and involvement required for
requires low or moderate level of skill plus building customized workout plan.
human perception
Large Data sets 100+ centers with 4 sessions/hr with 20+ members in each
session in a 10 hr window generates millions of data points
Expertise can be expressed as rules Target muscle specific workouts are standard and rule
based, requiring minimal human intervention.
Valuable Business process has high labour costs. Having instructors conduct 1:1 sessions across 100+
centers and 1000s of members is unsustainable and
expensive.
Value of Improved performance is high Alignment of workout plan and recommendation of adjacent
services increases CLV by 3x and leads to increase in
retention rate by ~50%.
Vital A service cannot scale relying on human Having instructors conduct 1:1 sessions across 100+
labour alone. centers and 1000s of members is unsustainable and
expensive.
Implementation Steps (aligned with 3Vs framework)
● Process Maps: User journey maps from the time member login, books a class to the point where he/she
completes the session. Process maps can highlight tasks that rely more on human perception than special
skills, are costly where scarce expertise might be able to be encoded as rules for use in an automated
reasoning system, or where the value of improved performance is high.
● Staffing Model: Review your staffing model to identify roles where cognitive skills and training may be
underutilized or where expertise is in short supply.
● Perform a data set inventory to uncover operational data sets that may be under-utilized and insufficiently
exploited. User class attendance, approximate calorie burn data is available smart watches worn by members in
the class. Additional data may come in the form of user entered tracked attributes (reps, cycle and weight)
● Conduct Market Analysis to validate the hypotheses and uncover deeper insights and root cause behind loss
in member motivation and subsequent spike in churn.
● Humans in the Loop: A promising approach for making effective use of cognitive systems is designing them to
work hand-in-hand with people, leveraging the strength of each. Fitness format heads is expected to coordinate
the drafting of baseline workout plan and its variants along with rules that power the heuristic engine.
Investment Deployment considerations
Build Buy
Any of the above 2 approaches will work as long as the payback period for the investment is ~2
years. I.e. Increase in sum total of customer LTV over 2 years is greater than the investment in
deploying the Recommendation Engine.