Fitness is an expensive proposition in today’s world. This is due to the proliferation of gyms, fitness equipment, and supplements. The modern fitness industry is a multi-billion dollar market with ever-increasing costs. Noom, a subscription-based app, has taken the Internet by storm recently with its innovative technology plus psychology concept that helps its users lose weight and live a healthier lifestyle.
In this article, we’ll break down Noom’s business model and explain how they make money by discussing how their revenue stream works and the pros and cons of their business model.
Noom is a weight loss app that makes money by charging for access to its platform and through sales of its add-on plans. The platform uses behavioral science and delivers tailored weight loss plans to help customers lose weight.
Noom is a mobile application that helps users stay motivated towards their weight loss goals by providing innovative features to set goals, track progress, get advice from experts and stay engaged on the go.
The service was launched in 2008 by two best friends Artem Petakov and Saeju Jeong and currently has more than 45 million registered users.
The concept is very simple: the app keeps track of your eating, activity, and sleep. It helps you lose weight by suggesting what to eat or drink during the day, based on all the data that you enter into the app.
So far, Noom has helped around 200,000 men and women shed extra pounds, allowing them to live healthier lives without having to rely on medications or other begrudging weight loss products. And it just keeps growing.
This widely popular health and wellness platform is focused on applying psychology and technology to encourage weight loss and improve overall health for its users.
Recognizing that two-thirds of the United States is overweight, the company began its mission to help make health a big priority. In doing so, they carved a unique space for themselves in the industry, drawing a number of believers from all over.
This science-based application proved successful, as it quickly gained momentum in 2011 from users who reported seeing significant changes in weight loss and enhanced wellbeing.
Business Model of Noom
Noom operates on a freemium business model. It acquires users by offering a free basic program that includes calorie counting and meal logging. The company charges users who want to track their activity and exercise. It offers individualized plans for weight loss, healthy eating, and lifestyle changes.
Noom promises real results.
Their slogan is “Stop dieting, get life-long results”. The guarantee is that in addition to maintaining a healthy lifestyle, people who use their services will also see weekly weight-loss results of at least 1-2 pounds.
Although weight loss is a definite draw to the platform, Noom’s psychology-based system heavily focuses on weight management instead.
Founder and CEO of the 14-year-old company, Saeju Jeong started Noom with a clear mission to “helping people everywhere lead healthier lives through behavior change” according to an interview with Joe Vennare of Fitt Insider.
Considering four main areas of each user’s lifestyle: diet and nutrition, exercise, stress and anxiety management, and sleep, Noom determines the best, and most practical solutions to achieve overall health and wellness.
Diet and Nutrition
Noom prioritizes building healthy habits instead of following trendy diet plans.
The company seeks to empower users to understand the key difference between weight loss and weight management. Their personalized health and wellness plans are tailored to consider each user’s unique lifestyle and habits.
Noom’s plans offer an organized food list, food and exercise log, personalized coach, weight-loss tracker, access to informative blogs, a Noom community where users can gain and receive support from others also in the program and so much more.
The added benefit to these plans is that they are all satisfaction guaranteed. If a user does not reach their targeted goal weight in the time that Noom projects, their money including trial fees, will be returned to them.
And if that is not enough to entice potential users, Noom offers a 7-day trial for only $3.
Did you know that volunteering can burn calories? In an article posted on the platform, users are advised that there are plenty of fulfilling ways to become more active for a good cause.
Activities like shopping for those with limited mobility or the elderly, or volunteering to plant a garden are ways to incorporate more movement into our everyday lives.
Encouraging users to get up and get active is an important part of Noom’s weight-management system, and offering advice on how to get moving is another benefit that users can obtain through the company’s platform.
Stress and Anxiety Management
Noom understands that a bit of stress and anxiety is a normal part of life. These make up the body’s very own natural alarm system, alerting us to external threats in an attempt at self-preservation.
Life is filled with stressors that many times cannot be avoided. Chronic stress and anxiety, however, is not normal and can lead to a number of serious health problems.
Noom seeks to educate users on the importance of managing everyday stress by providing valuable advice related to combating it and improving mental health.
Users also have access to blogs dedicated to meditation, an introduction to the cardiac diet plan, and even foods that can help relieve anxiety, among others.
Recognizing the importance of sleep is a necessary part of the journey towards good health.
Noom stresses the value of a good night’s rest by educating users through helpful breakdowns on the science behind sleep including how not getting enough sleep can negatively affect the body.
The application provides a way to track the amount of sleep you’re getting every night, as well as a personal coach to encourage you and make sure you’re staying on the right track.
In targeting these four areas, Noom users naturally shed pounds on their journey. In a 2016 study conducted by Nature Research, 78% of 35,921 Noom users participating reported sustained weight loss over 9 months. The company’s business model commits to approaching weight loss in a healthy and holistic way.
Jeong’s intention for the platform has always been to heal from the inside out, meaning that physical change comes by way of adopting a healthy attitude towards what it truly means to be in shape.
The company believes that weight loss is only a part of overall wellness, and is best achieved through fine-tuning the four aforementioned areas affecting one’s lifestyle.
The goal is to educate. “We actually want our users to graduate from our platform,” says Jeong, taking with them the knowledge “that they can have a very healthy lifestyle”.
While more than 45 million users across the globe have committed to Noom’s behavior-based approach, and over half have found some level of success in the program, Noom recognizes that this is an idealized goal.
“We are human…So while life goes on, they may need to pause. They may need to come back and do it again”. The platform is modeled as a lifestyle-changing tool, rather than a temporary fix.
How Does Noom Make Money?
The company’s revenue comes from two main sources: charging for access to its platform (through downloading apps or purchasing plans) and the sale of its add-on plans.
The company makes most of its money through subscriptions to its weight-management plans.
On the heels of a global pandemic that kept so many idle for more than a year, it’s no wonder that a great many people have developed unhealthy habits and put on weight. Eager for a dramatic change, many look to Noom for help.
Weight Management Plans
Users have access to Noom’s weight-management plans through their website and mobile application.
The system asks users a series of detailed questions, using psychology and science to create a profile in order to determine the best plan customized to each individuals’ goals, behaviors, and lifestyles.
These assessment questions are also used to determine a projected date by which an individual should reach their weight loss goal.
Noom promises that by sticking to their personalized plan, users will not only reach their goal but maintain it as well.
The company entices potential users with a 7-day trial for only $3. This includes an added personalized coach, a real community of supporters, and the option for additional perks like meal plans.
While there is a free version available that includes a food and fitness log as well as weigh-ins, only those with a paid subscription can have access to the above-mentioned benefits.
Once the 7-day trial has ended, there is the option to fully commit to a monthly subscription for just under $67, or up to an 8-month subscription for $179.
However, users can save money by purchasing an annual subscription for only $200. They also have the option to add on a workout or meal plan if they so choose.
In addition, all subscriptions include an added automatic payment option.
Weight Management Add Ons
The business makes money by selling add ons to its customers, such as custom meal plans, custom workout plans, and weight loss DNA tests. Noom has found that about 1/3 rd of customers purchase at least one add-on.
Each add-on is priced between $80 and $100. This is an additional source of revenue for the company.
Noom Funding, Valuation, and Revenue
Financially, the company continues to expand, boasting an earning of more than $200 million dollars in revenue in 2019, and more than double that figure just this year, according to Jeong.
In an article by MarketFinder, the company is reported to have grown their international revenue by 80% due to localization on Google Play, with 480% growth in Japan alone.
Furthermore, reports from Crunchbase cite the platform having routinely increased its funding since its start. Backed by a number of heavy investors, including Silver Lake, Sequoia Capital, Samsung Ventures, and even world-famous tennis star, Serena Williams, Noom has been able to raise several hundred million dollars since its inception.
That number has steadily increased, with even more investors clamoring for a piece of the company.
The company raised $2.6 million in its very first funding round in its early beginnings, a stark contrast to the $540 million in Series F funding that they were able to raise just last year, thanks to Silver Lake among others.
In total, Noom has earned close to $700 million in funding since 2011.
During the funding round, Noom reached a valuation of $4 billion ahead of a planned public listing set for the near future. While they currently sit at $4 billion, they expect a $6 billion increase in valuation, putting them at $10 billion sometime this, or early next year, according to a Bloomberg report.
Is Noom Profitable?
Remaining true to its original mission of helping people lead healthier lives has helped the company earn and maintain a trusted reputation, boost exposure, and stay profitable.
The company is most definitely one of the larger movers and shakers in the industry. Noom continues to grow exponentially with over 300 full-time employees at New York headquarters and over 3,000 coaches across 39 states employed through the platform.
The company’s profitable business model has proven to allow for a great return on investment with Noom consistently converting each dollar earned into bigger and better business. “We earn our effort back by returning users from the market”, says Jeong.
Boasting over 50 million and counting user downloads, the platform is on an upward trajectory, with no foreseeable plans of slowing down.
Conclusion: How Does Noom Make Money?
With the information that we have discussed above, we are sure that you could now understand how does Noom make money.
Noom has been a big success over the past several years. The company’s impressive growth is one of the greatest testimonies to its product. They offer a combination of price plans and packages.
It is clear that Noom, like many other SaaS products out there, uses a freemium model coupled with in-app purchases and upgrades. If you don’t have a premium account, then you will get only basic services for free in one plan. If you want to have a different and advanced set of features then you can use the premium plans.
Noom accomplishes this by offering value to potential customers: an effective weight management system that has changed the lives of thousands of people who have previously struggled with their excess weight and unhealthy eating habits.
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