Nautilus 2003 Annual Report Download - page 8

Table of Contents
Optimal Use of Direct Marketing Database
Since we initially developed our direct to consumer strategy in 1994, we have consistently invested significant resources to build a
comprehensive direct marketing database. Our database has allowed us to monitor customer responses and effectively utilize that information
to adapt our marketing techniques, thereby reaching consumers with ever-increasing effectiveness. We track the success of each of our spot
commercials and infomercials by determining how many viewers respond to each airing. We accumulate this information in our database to
evaluate the cost-
effective utilization of available media time. We believe the database enables us to predict with reasonable accuracy the levels
of product sales and inquiries that will result from each spot commercial and infomercial.
Furthermore, our compilation of consumer inquiries contained within our database represents a rich pool of marketing leads for additional
product sales. We believe this pool of contacts, a significant number of whom already have a proven and satisfied customer relationship with
the Company, provides us a competitive advantage when introducing new products.
Conversion of Direct-Marketed Product Inquiries Into Sales
Customer Service Call Center and Order Processing . We manage our own customer service call center in Vancouver, Washington. It operates
18 to 23 hours per day to receive and process the vast majority of all infomercial-generated and customer service-related inquiries. We have
developed a skills-based call routing system that automatically routes each incoming call to the most highly qualified inside sales agent or
customer service representative available. Using our highly integrated telephony, customer relationship management, and customized order
management systems, the appropriate sales professional 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 capturing the customer’
s order information. These sophisticated systems allow
us to most effectively utilize our customer service staff, prioritize call types, and improve customer service.
We contract with 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 collect names, addresses and other basic information from callers but do not
directly sell our products. During our own call center’s hours of operations, the outside telemarketing agents may transfer callers that show
immediate buying interest for our products to one of our specially trained sales professionals.
Internet
. We use spot commercials and infomercials, together with Internet advertising and search-engine placement, to lead consumers to our
websites, as we believe consumers who visit our websites are more inclined to purchase our products. 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 visits,
conversion rates, average sales prices and inquiry counts. Our eCommerce sales are an important component of our direct sales channel
representing approximately 26% of total direct channel sales for 2003, 24% of sales in 2002, and 22% of sales in 2001.
Consumer Finance Programs . We believe that convenient consumer financing is an important tool in our direct marketing sales efforts and
that the availability of financing induces many of our customers to make inquiries and purchases when they otherwise would not. For several
years we have offered
“zero-down” financing to approved customers on all direct-to-
consumer sales, and in the latter portion of 2003, we tested
a
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