Nutrisystem 2007 Annual Report Download - page 13

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optimization. We are continually exploring new online opportunities as the market changes and grows, but focus
the majority of our efforts on search optimization (paid and natural), affiliate management, portal relationships,
large ad networks, strategic partnerships, targeted display media and internal/external email campaigns.
Public Relations. We have generated brand awareness for our program in a variety of media including
television, magazines, newspapers and on the Internet. For example, our media relations success includes
receiving favorable mentions in national consumer media such as: People Magazine,Ladies Home Journal,
Entertainment Tonight,Good Housekeeping,The New York Times,US Weekly,Women’s Day,Access Hollywood
and The Tonight Show.
Moreover, we have promoted our brand and product through celebrity spokespersons who also appear in our
advertising, such as Marie Osmond, Tori Spelling, Joey Fatone, ANT, Tony Orlando, Dan Marino, Mike
Golic and Coach Shula and third party endorsements that have appeared on television shows including, Dancing
with the Stars, VH-1 Celebrity Fit Club, The Today Show, Larry King Show, NFL Today and CBS Morning Show.
Sales and Counseling
A majority of our direct business sales occur on our website. The remaining sales are by telephone, and our
call center processes virtually all of them. Our weight loss program is also sold through QVC, a television home
shopping network, which represented 5% of revenue in 2007.
As of December 31, 2007, we employed approximately 130 weight loss counselors and 215 sales agents.
Staffing levels for counselors and sales agents are largely a function of the volume of revenue and orders. Sales
agents are responsible for in-bound sales calls and will initiate out-bound sales calls to our leads and other
targeted potential customers. Counselors handle some in-bound sales calls but primarily focus on in-bound
counseling calls, email and voicemails. Counselors also handle online web conversations from new visitors and
appointments with existing customers. Sales agents and counselors are available 24 hours per day, seven days a
week. Sales agents are paid primarily on commission while counselors receive an hourly wage.
We seek to hire counselors with backgrounds in psychology, sociology, nutrition, dietetics or other health-
related fields and with suitable temperaments to talk with our customers. Our counselors are more experienced
and have more training than our sales agents. Counselors are trained in our meal plan, our Internet chat service,
email, voicemail, motivational techniques and customer service problem solving.
Customer Service
As of December 31, 2007, we employed approximately 120 customer service representatives. Customer
service representatives are trained to handle in-bound calls and email from customers who have questions or
problems with an order after the sale transaction is completed. Typical customer inquiries relate to arrival date of
their order shipment, report of missing or damaged items and credits and exchanges. For email inquiries, we have
a software system that scans the customer’s email message for key words and automatically supplies the
representative with a form response that is reviewed, edited and sent back to the customer. Customer service
representatives are typically available from 8 a.m. to 12 midnight, Monday through Friday, and 8:30 a.m. to
5 p.m. on Saturday and Sunday. Customer service representatives are paid an hourly wage.
Fulfillment
We operate an integrated order receipt, billing, picking, shipping and delivery tracking system comprised of
proprietary and third party components. This system integrates the front end, or website customer interface, with
order processing and shipping, and allows Internet customers to access shippers’ order tracking numbers online.
Our computer-assisted picking system allows for virtually paperless order picking in all warehouse facilities. In
2006 and 2007, we engaged in multiple projects designed to increase processing capabilities and provide greater
operational flexibility and control within this integrated shipping system. Management believes these
improvements provide reasonable assurance that our growth will continue to be supported.
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