How Does Strava Make Money? Business Model of Strava


How Does Strava Make Money

Strava, a fitness-tracking application for athletes, is one of the biggest names in the fitness world, with over 85 million users. It has become the world’s largest running and cycling social network that features a global feed of athlete activity, direct messaging, live tracking, competition analysis, and much more. 

But how does Strava make money? That’s the question we’re investigating today. In this article, we’ll study Strava’s business model in detail and find out all of its revenue sources.

Strava operates on a freemium business model. It makes money through subscriptions, brand partnerships and user data monetization. The subscription packages start out as free, but compel users to purchase premium packages after the 30-day free trial period expires.

About Strava

Strava boasts two components, social networking, and personal performance insight. People can track their activities such as running, cycling, or skiing with Strava then share it to let their friends and family know what they’ve been up to. It allows you to follow and contact friends who also use it.

Strava is one of those businesses that has managed to not only survive during the COVID-19 pandemic, but also thrive. It is through their unique ways of marketing and making money that Strava has managed to provide a valuable service during the COVID-19 pandemic.

 

Business Model of Strava

The business model of Strava is a freemium meaning that gradually migrates its users to premium subscriptions. Its top competitors include:

  • Tonal
  • GOQii
  • iFIT Health & Fitness
  • Oga Fit

With their freemium model, new users are encouraged to try Strava. However, many of their features are community-oriented. Therefore, Strava waits for new users to become part of their online community. Once the users get comfortable, they have to either upgrade to a premium package or get kicked out of the community.

Most freemiums try to hook their new users with new features. What makes Strava different is that they combine this “hooking” with social pressure.

 

Product/Service

Strava is a health and fitness app with a variety of features. These features not only improve performance for users, but also act as a networking platform for those who participate in the health and fitness world.

Strava is available in over 195 countries and is used by 120 of the 176 Tour de France riders. While cycling is the sport that Strava originated in, Strava is used for 33 sports.

 

Marketing

Because Strava is compatible with a lot of devices, such as Garmin and TomTom, those companies actually become marketers for Strava. Garmin and TomTom customers get exposure to the Strava app through their devices and therefore become potential customers.

Strava also gets a lot of marketing through its community and its blog. Strava users rely on their Strava community to keep them motivated regarding their health and fitness. As they communicate about their different experiences with their different routes, many Strava users elect to post on the Strava blog, increasing exposure to and interest in Strava.

Strava is relatively secretive about their paid customer acquisitions, but it is easy enough to find out about their activities with Apple Search Ads.

Strava used Creative Sets to optimize Screenshots which eventually resulted in a 38% overall increase in App Store Conversion Rate, according to an Apple Case Study. Therefore, as a marketing tool, Strava’s paid acquisition program has been well worth the PPC. With Apple alone, the CRO was worth the spending.

 

Expenses

Because Strava is not a brick-and-mortar operation, its staffing and office space requirements are different than they otherwise would be. Strava probably has the same costs that one would expect any app business to have:

  • Functional services (SMS, Push Notifications, etc.)
  • Administrative services (to make updates to your app, manage users, etc.)
  • Infrastructure services (servers, CDN, etc.)
  • IT support services (updates to your app, bug fixes, etc.)
  • iOS and Android updates
  • APIs Images data
  • Data storage
  • App update submissions
  • App development tools, libraries and support
  • Social & chat integrations

 

Plan for Profit

Strava is still focused on growth, so profit is not their main concern. The COVID-19 pandemic, however, has given Strava a great boom in its business, and it should be able to maintain that edge for quite some time.

However, part of Strava’s strategy to eventually shift from growth to profitability, is to shift various free features into premium features. They have already begun doing this with some features, like the Leaderboard feature. Although this move is not popular with many of its users, it is necessary for the long term profitability of Strava.

 

How Does Strava Make Money?

Brand Partnerships

Somewhere between pure freemium and paid advertising is the concept of branded partnerships. Rather than simply bombarding the users with advertisements from sponsors, Strava instead decided to form brand partnerships.

In the case of Strava, these brand partnerships are “branded challenges” that involve contests where participants can win various prizes from health and fitness gear companies.

For example, Le Col has offered a prize worth 2500 GBP of Le Col winter gear, provided that the user can upload four hours of activity every day until the end of the month.

 

Data Monetization

Although Strava users own their data, users grant Strava license to use it. This is cited in the terms of service.

Of course, followers of the Facebook model understand the potential profits of user data. The advertising potential is also huge.

 

Public Services Partnerships

In additions to Strava’s subscriptions for consumers, through Strava Metro, Strava has partnerships in several cities with departments of transportation and city planning groups related infrastructure for bicyclists and pedestrians in manners regarding:

  • Planning
  • Measuring
  • Improving

According to Strava Support, “Strava Metro’s mission is to make cycling, running and walking in cities better.”

Technically, one could argue that Strava Metro does not contribute directly to the revenue stream, because it is a free service. One should be reminded, however, that Strava operates on a freemium model and it is understood that free services are marketing tools that attract customers willing to purchase premium services and Strava Metro is no exception.

Therefore, it can be considered a way that Strava makes money.

 

Subscriptions

The majority of Strava’s revenue is still generated by its subscriptions. New users are given a free-trial period of one month. Then, users are charged $7.99/month or $5/month when billed annually.

The free subscription has the following features:

  • Activity Recording
  • Device Support
  • Social Network
  • Beacon on Phones

Activity Recording is one of the most basic features of any H&F app. Activity Recording for Strava is enhanced by specific capabilities:

  • Compete on Segments
  • Accelerate Training

Compete on Segments allows the user to challenge himself or herself against their past efforts, their friends, and millions of other athletes.

The user can also do this specifically in regards to his or her favorite portions of roads or trails. Furthermore, the user can match runs and rides on the same route, so he or she can see how their performance changes over time.

Accelerate Training allows users to import their HR and power data and then allow Strava to analyze how much exercise has been performed and at what quality. Moreover, Strava accepts data from nearly every type of fitness device.

Through Accelerate Training, users can set custom goals related to time, distance, performance, and progress. They can also analyze their training through viewing past activities and finding connections between training patterns and performance.

Device Support allows Strava to be compatible with a growing list of devices:

  • Garmin
  • Suunto
  • Fitbit
  • Bryton
  • Magellan
  • TomTom
  • Polar
  • Wahoo
  • Timex
  • Sigma
  • Soleus

 

In addition to all of the features of the free subscription, the premium subscription has the following features:

  • Beacon on Devices
  • Route Planning
  • Segment Competition
  • Training Dashboard
  • HR & Power Analysis
  • Advanced Metrics
  • Goal Setting
  • Training Log
  • Compare Efforts
  • Personal Heatmaps
  • Partner Perks

 

While the free features are still very good, the premium features allow for some more advanced options. Here are some further descriptions from the Strava website of some of the premium features.

The Beacon On Devices feature gives you live location tracking from Garmin and Apple Watch devices. You can use it for safer activities and peace of mind for friends and family.

The Route Planning feature lets you plan and discover routes. You can get suggested routes for runs and rides in seconds, from any location and based on past activities from other Strava athletes.

The Training Dashboard feature allows you to see how your fitness is building over time and whether you are training effectively.

The Personal Heatmap feature allows you to get an interactive visualization of your runs and rides everywhere in the world.

Within Compete on Segments, Strava has launched a new, ultimately premium feature, the Local Legends. This feature includes film-quality promo videos, like the ones you usually see in mobile game promos. The person who has the most “efforts” over a 90-day period on a specific route becomes a local legend of that route and receives a digital laurel crown.

Strava’s free trial lasts only 30 days. This means that those who use the free trial to take part in the Local Legends challenge cannot complete the 90-day challenge unless they upgrade to a premium subscription. The implementation of this new feature enabled Strava to generate 39% of their annual revenue in just 47 days.

The SOLOdarity Challenge has been created as a direct response to the COVID-19 pandemic. Designed to help users “stay active and connected while socially distancing,” it has ended up amassing nearly 1 million new users.

It was Strava’s awareness of the pandemic that allowed them to shoot to unicorn status. By using Strava’s app, users were able to maintain their fitness and their sanity, all while maintaining social distance. This response to the pandemic was to make Strava more than just a health and fitness app. It becomes a solution in a time of crisis.

 

Strava Funding, Valuation, and Revenue

DateFunding
Jul 27, 2011$12.6 M
Mar 7, 2013$7.3 M
Oct 29, 2014$18.5 M
Nov 17, 2020$110 M

Total funding to date is $151.9 million. They have had seven rounds so far with TCV as the lead investor. Over the course of nine years, their ability to raise funds has increased 9x.

YearValuation
2019$350 M
2020$1.5 B

Strava’s valuation has skyrocketed, increasing over 4x within just a year’s time. The COVID-19 pandemic was a big part of the boost.

YearRevenue
2017$34 M
2018$45 M
2019$60 M
2020$72 M

Strava’s revenue has more than doubled within a three-year period. Many of these revenue increases were due to Strava’s ingenious marketing and creative strategies for making money.

 

Is Strava Profitable?

Strava is steadily growing, but it’s not profitable at this time. However, they are always striving to deliver value to their users and investors by accelerating their growth towards profitability.

CEO Michael Horvath has said that Strava is not currently profitable because it is currently focused on growth but is “on a path to profitability”.

 

Conclusion: How Does Strava Make Money?

To finish up, Strava operates on a freemium model and makes the majority of its revenue with premium accounts and brands that advertise through Strava.

Well, we have reached the end of this article. We discussed Strava’s business model in detail and listed all of its revenue sources.

Overall, Strava is a great mobile application for cyclists, runners, and other sportsmen who want to organize their rides and runs and accurately track athletic activity via GPS.

On top of this, the app also shows the athletes’ rankings alongside their friends in relation to distance covered, speed reached, calories burned, and other important information. This way, users can set personal goals in relation to their training sessions to be the best in their area.

Strava is a brand that is built around its community. It has been able to build a loyal following which automatically makes it a valuable brand from the get-go.

Thanks to you, our visitors, for reading this post. We do appreciate that! If you have anything new to add or some extra information on this topic, please drop us an email. We’ll be glad to hear your thoughts.

Have a wonderful day!

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