Nautilus 2000 Annual Report Download - page 7

determined that television advertising and the Internet generate more immediate consumer responses at a lower cost per inquiry and therefore
have reduced the print media advertising expenditures for our direct marketed products. We will evaluate print media advertising expenditures
for other direct-marketed products on a case-by-case basis.
Conversion of Inquiries into Sales
Customer Service Call Center and Order Processing. We operate our own customer service call center in Vancouver, Washington, which
operates 16-17hours per day and receives and processes all infomercial-generated and customer service-related inquiries regarding our Bowflex
products and Nautilus Sleep Systems. 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, pro-actively educates the potential customer about the benefits of our product line, promotes financing through our private label
credit card, and typically upsells the benefits of higher priced models in our product line. 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 24hours
per day. The telemarketing agents for these companies collect only names, addresses and other basic information from callers and do not sell or
promote our products. Consequently, we do not need to train these telemarketing agents.
Internet. We use television and print media to lead consumers to our web sites as we believe that consumers who visit our web sites are more
inclined to purchase our products.
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 on a case-by-case basis, 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 credit company
pursuant to a non-recourse consumer financing agreement. Under this arrangement, our customer service agents can obtain financing approval
in a few minutes over the telephone and, if a customer is approved, immediately ship 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 Direct Focus private label credit card that can be used for future purchases of our products. There were approximately 131,000
private label cards with available credit of approximately $489million outstanding as of February28, 2001. During 2000, approximately 36.0%
of our net sales were financed in this manner, and we believe this program will continue to be an effective marketing tool.
NAUTILUS SALES AND MARKETING
We market and sell our Nautilus commercial fitness equipment domestically through a direct sales force, as well as a limited dealer network and
internationally through independent sales distributors.
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2002. EDGAR Online, Inc.