Nutrisystem 2010 Annual Report Download - page 12

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Marketing
Marketing is a core competency that drives sales and builds the Nutrisystem brand. We have strong
expertise in all facets of both offline and online marketing and utilize an integrated marketing process to drive
profitable revenue in an efficient, effective way.
Offline Marketing. We believe Nutrisystem is one of the leading and most efficient offline direct response
advertisers in the industry. We deploy a hybrid of proven direct response techniques to: 1) build brand equity and
awareness; 2) encourage qualified customers to call or visit our website; and 3) deliver profitable sales. We track
response to each advertisement through unique toll-free numbers and URLs and we deploy multi-channel
campaigns to target new customers that include television, print, direct mail and telemarketing efforts. To
reactivate lapsed customers and upsell to those already on our program, we utilize a combination of direct mail
and telemarketing efforts which complements our other media advertising.
Online Marketing. Our online marketing strategy focuses on driving high-volume, cost-effective, qualified
leads to our website with an emphasis on increasing both front-end and back-end conversion through constant
testing and optimization. We are continually exploring new online opportunities as the market evolves, 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. The consumer and business media outreach programs accentuate Nutrisystem as a leader
and innovator in the weight loss category. Our public relations strategically complement offline and online
marketing to increase top-of-mind awareness for Nutrisystem, as well as to foster positive word-of-mouth, in
order to enhance purchase consideration of our product. The Nutrisystem brand, our marketing and product
innovations, as well as celebrities who have lost weight on our program are regularly featured in top-tier media
outlets such as: The Today Show, USA TODAY, People Magazine, Access Hollywood, E! News and Forbes.com.
We typically compensate our spokespersons based on their initial weight loss on our program and maintenance of
the weight loss over time.
Ecommerce
As a leading ecommerce company and brand, we constantly strive to employ the latest tools and technology
in order to drive increased performance of online customer conversion, retention and reactivation. We utilize our
ecommerce platform to drive a highly-customizable and personalized user experience, as well as to effectively
and efficiently manage day-to-day ecommerce business operations. In addition, we combine internal resources
with external agencies in the development of our website information architecture, user interface and user
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 4% of our revenue in 2010.
As of December 31, 2010 we employed approximately 97 weight loss counselors and 256 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 are paid primarily on commission while counselors receive an hourly wage.
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