Nautilus 2001 Annual Report Download - page 10

through our third-party private label credit card, and typically up sells the benefits of higher priced models in our product line. This
sophisticated system allows us to better utilize our agents, prioritize call types and improve customer service.
We employ two large telemarketing companies to receive and process information requests generated by our spot television advertising 24
hours per day. The telemarketing agents for these companies only collect names, addresses and other basic information from callers and do not
sell or promote our products.
INTERNET. We use television spot commercials and infomercials to lead consumers to our web sites, as we believe that consumers who visit
our web sites are more inclined to purchase our products. Our ongoing Internet-related goals include improving the capabilities of our Bowflex
and Nautilus Sleep System web sites. In 1999, we used our web sites to generate interest in our products but limited the information we
provided to potential customers in an effort to induce them to initiate a telephone inquiry. In 2000, we believe we achieved a balance between
our goals of finalizing sales and capturing consumer information by strategically designing our web pages and carefully analyzing web page
hits, conversion rates, average sales prices and inquiry counts, which we continued to enhance in 2001. Our eCommerce sales are an
increasingly important component of our direct sales channel and have grown from 8% to 19% to 22% of direct sales for 1999, 2000 and 2001,
respectively.
RESPONSE MAILINGS. We forward a "fulfillment kit" in response to each inquiry regarding our direct-marketed products. Each kit contains
detailed literature that describes the product line and available accessories, a marketing video that demonstrates and highlights the key features
of our premium product in the line, and additional information about how to purchase the product. If a potential customer does not respond
within a certain time period, we proceed with additional follow-up mailings that convey a different marketing message and typically offer
certain inducements to encourage a sale. The specific marketing message and offer at each stage will vary, based on what our statistical tracking
indicates is most likely to trigger a sale.
CONSUMER FINANCE PROGRAMS. We believe that convenient consumer financing is an important tool in our direct marketing sales
efforts and induces many of our customers to make purchases when they otherwise would not. Currently, we offer "zero-down" financing to
approved customers on all sales of our Bowflex Products and Nautilus Sleep Systems. We arrange this financing through a consumer finance
company pursuant to a non-recourse consumer financing agreement. Under this arrangement, our customer service representatives can obtain
financing approval in a few minutes over the telephone and, if a customer is approved, immediately ship the ordered product without the need
for cumbersome paperwork. The consumer finance company pays us promptly after submission of the required documentation and subsequently
sends to each approved customer a Direct Focus private label credit card that can be used for future purchases of our products. There were
approximately 220,000 active private label cards with aggregate available credit of approximately $118 million outstanding as of December 31,
2001. During 2001, over 41% of our net sales were financed in this manner, and we believe this program will continue to be an effective
marketing tool.
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2002. EDGAR Online, Inc.