Nutrisystem 2009 Annual Report Download - page 13

Download and view the complete annual report

Please find page 13 of the 2009 Nutrisystem annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 80

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

experience. In order to optimize the key online business drivers, we continually perform usability testing and are
constantly optimizing our website using a variety of sophisticated third party testing tools. Finally, we measure
our online interaction with customers, along with broader website performance, via web analytics platforms and
tools.
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 our revenue in 2009.
As of December 31, 2009 we employed approximately 95 weight loss counselors and 274 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 initiate some out-bound sales calls but primarily focus on in-bound calls
and email. 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 speak with our customers. Counselors are trained in our meal
plan, our Internet chat service, email, motivational techniques and customer service problem solving. Sales
agents are well-versed in explaining our program and working with our customers to determine the program that
would best fit their needs in helping them reach their weight loss goals.
Customer Service
As of December 31, 2009, we employed approximately 114 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 the arrival
date of their order shipment, reporting 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 available from 8 a.m. to midnight E.T., Monday through Friday, and 8:30 a.m. to
5 p.m., E.T., 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.
We operate an integrated network of distribution facilities that consist of two outsourced facilities. In 2008
and 2009, we undertook a complete review of our entire supply chain management function which enabled
detailed studies on product cost improvements, vendor productivity, warehouse efficiencies and key cost center
opportunities. This effort resulted in improvement in our inventory management and allowed for the reduction of
our outsourced distribution facilities down to two – one located in Chambersburg, Pennsylvania and the other in
Sparks, Nevada. While 100% of our fulfillment operations are currently outsourced to a third party provider,
during 2009, more than 85% of our fulfillment was handled by this outsourced provider.
We have entered into a service agreement with our outside fulfillment provider, which provides for storage,
handling and other services, pricing and minimum space commitments. The current contract expires on
9