Nautilus 2002 Annual Report Download - page 10

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We track the success of each of our spot commercials and infomercials by determining how many viewers respond to each airing of a spot
commercial or infomercial. We accumulate this information in a database that we use to evaluate the cost-effectiveness of available media time.
We believe the database enables us to predict with reasonable accuracy how many product sales and inquiries will result from each spot
commercial and infomercial that we air. We also believe we can effectively track changing viewer patterns and adjust our advertising
accordingly.
CONVERSION OF DIRECT-MARKETED PRODUCT INQUIRIES INTO SALES
CUSTOMER SERVICE CALL CENTER AND ORDER PROCESSING. We operate our own customer service call center in Vancouver,
Washington, that operates 18 to 23 hours per day and receives and processes all infomercial-generated and customer service-related inquiries
regarding our Bowflex and Nautilus Sleep Systems products. We have developed a skill-based call routing system that automatically routes
each incoming call to the most highly qualified inside sales agent or customer service representative available. The appropriate representative
then answers product questions, proactively educates the potential customer about the benefits of our product line, promotes financing through
our third-party private label credit card, typically up sells the benefits of higher priced models in our product line, and closes the transaction
process by entering the customer order information. 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. The telemarketing agents transfer callers that show immediate buying interest in our products to our own customer
service call center.
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 various
web sites. We believe we successfully balance 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. Our eCommerce sales are an
important component of our direct sales channel representing 24%, 22%, and 19% of direct sales for 2002, 2001, and 2000, 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, 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 Nautilus Group private label
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2003. EDGAR Online, Inc.