Nutrisystem 2014 Annual Report Download - page 13

structured programs if needed. We attract past customers primarily via our advertising vehicles,
targeted emails, and data-driven direct mail attempts.
•Customer Service
We are committed to the highest levels of customer service and manage our customer relations through
our in-house call center. Our representatives are trained to answer questions and solve problems once a
purchase has been made. Customers contact us via email and phone. Typical inquiries concern delivery
dates, reported missing or damaged items, and requests for credits or exchanges. For email inquiries,
we have a software system that scans the customer’s email for key words and automatically supplies
the representative with a response that is then reviewed, edited, and sent to the customer. We regularly
review customer satisfaction levels and improve our practices accordingly.
Public Relations
We conduct a proactive public relations program that is designed to garner positive coverage of Nutrisystem and
our weight management programs across all media platforms including television, magazine, print, online news,
bloggers and social media, particularly around the key dieting seasons. In addition, the public relations team
supports an executive communication program to broadly support the Nutrisystem brand.
Fulfillment
An integrated order receipt, billing, picking, shipping and delivery tracking system comprised of proprietary and
third-party components is utilized for our orders. This system integrates the front end, or website customer
interface, with order processing and shipping, and allows customers to access shippers’ order tracking numbers
online. Our computer-assisted picking system allows for virtually paperless order picking in all warehouse
facilities.
We utilize an integrated network of distribution facilities through an existing arrangement with our outside
fulfillment provider. We work closely with our fulfillment provider to drive out waste and continuously improve
processes. We currently utilize five outsourced distribution facilities. Three are located in Pennsylvania
(Allentown, Bethlehem and Chambersburg) and two in Nevada (both in Sparks). As of December 31, 2014, all
fulfillment was being handled by one outsourced provider.
We have a service agreement with our outside fulfillment provider which provides for storage, handling of frozen
and ready-to-go foods and other services, including pricing and minimum space commitments. The current
contract expires in 2020 but may be terminated sooner upon 180 days written notice. We believe that other
outside fulfillment providers could be utilized if needed and we continually evaluate the need for secondary
fulfillment services.
We continue to partner with our fulfillment provider to reduce the warehouse order turn-around time for
processing and shipping orders. In 2014, approximately, 98% of all customer initial orders were shipped within
three business days of the date the order was received.
Direct customers are not charged for their orders until the ordered product is shipped. We do not charge
customers for shipping and handling on Auto-Delivery food orders provided customers take receipt of their
second order. If a customer cancels before receipt of a second order, the customer will be charged for shipping
and the difference in pricing for an Auto-Delivery order versus a non Auto-Delivery order.
Product Development
All of our foods and supplements are currently outsourced from more than 30 manufacturers or vendors. We
have entered into supply agreements with some of these food vendors. Several of these agreements provide for
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