CoachUp is a Boston-based platform that connects athletes with private coaches. It helps athletes find the perfect coach, and helps them get the most out of their ongoing training. Coaches rely on CoachUp to build their web presence, market their services, and manage their business. The platform is founded by Jordan Fliegel, a former basketball player who leveraged private coaching sessions as a child to become a professional player.(1)
The fitness and health industry is a growing business. Before the pandemic started in March 2020, the industry grew year-over-year up to a 37.46 bn in 2019. Increasing customer needs in terms of physical and mental health combined with busy schedules both at home and at work are the motor behind personal coaching sessions’ growth. CoachUp provides a flexible solution to answer these needs of athletes and supports coaches in running their business.
Coaches enrolling on the CoachUp platform benefit from a personalized profile with customizable URL, a stream of new clients to expand their business, a mobile app to communicate with clients and schedule sessions, insurance coverage and redeemable discounts for training equipment, apparel and gear. Athletes, on the other hand, get personalized coaching recommendations next to seamless booking and communication tools. Since all coaches go through a background check, CoachUp ensures a safe training environment for all athletes.
While the service for athletes is free, coaches do pay a $49.99 start-up fee and a $9.99 membership fee per year to be on the CoachUp platform. Next to that, there is a processing fee of 3% for every training booked and a CoachUp fee decreasing over time. (3)
CoachUp was launched back in 2012. In its first 6 months after go-live, the platform grew exponentially from 50 to 6000 coaches with monthly revenue growth of 40%. This resulted in a seed financing round of $2.2 mio in November 2012.(4) Today, the platform has more than 13,000 coaches amongst its customers and to date, 100,000 athletes have been using CoachUp to sign up for a training session.(1)
How can this success be explained and what are the threats and opportunities of the environment CoachUp is doing business in? As already stated before, the fitness industry is booming. Every day, new people are involved in physical activity. These new joiners are looking for professional support and advice, a service CoachUp is helping them to find. With 13,000 coaches and 100,000 users on the platform, CoachUp has a significant critical mass and does, as a result, benefit from indirect network effects. Both user groups do join the platform to find each other. Given a lot of users and coaches do have limited experience, which is inherent to a young and fast-growing industry, CoachUp strengthens these network effects by providing additional services to its users (e.g. suggestion of coaches, booking and communication tools…).
Nevertheless, in the last couple of years, Coach up could not maintain its growth rate of the first months. How come? First of all, the network of CoachUp is fragmented. Although the pandemic might have changed customer behavior in this respect, most coaches and athletes still prefer in-person training sessions. As a result, CoachUp networks are “city-based” which makes CoachUp vulnerable for competition by new local entrants into the market (e.g. Bark.com). Next to that, the personal coaching niche allows for multi-homing. Both coaches and athletes might choose to use multiple platforms to find athletes or coaches depending on their specific needs. A low start-up and membership fee for coaches is lowering the barrier to entry for new users but keeping the sunk cost for existing users low at the same time. Differentiation from the competition, requiring continuous software and technology investments, is key to maintain a competitive advantage. The combination of both low prices and relative high costs do lead to a significant risk for the long-term profitability of CoachUp.
Last but not least, there is the risk of disintermediation. Since coaches and athletes do physically meet in many cases, nothing hampers them from making follow-up arrangements while bypassing CoachUp. CoachUp manages this risk by charging low service fees and decreasing CoachUp fees over time but will have to acknowledge disintermediation remains high on the chief revenue officer’s agenda.
The only way out for CoachUp is to further increase its perceived value. Niche sports brands like Rogue or UnderArmour might be interested in a partnership. Offering services so athletes can find each other to share a personal coach is another exciting feature. Contactless payment through the app will further decrease the administrative workload for coaches. These unique selling propositions will increase the barriers to entry for new players and reduce the churn rate of both athletes and coaches. Moreover, it is a solid foundation for CoachUp to further expand geographically.