March / April 2006

Welcome to the latest issue of Nutraceutical News from IFS. In this issue you'll find the "Did You Know...?" column focuses on the growth taking place in the nutraceutical pet category. As for our other columns, getting a handle on your shipping costs is discussed in the Fulfillment Notes section. In our Marketing column, we'll tell you about the value of speaking directly to your target audience and in this issue's Customer Service Corner we talk about enhancing your customer service through personalizing your messages.

For more information about the content found here or about any of our products and services, you can always visit our website, www.ifssolutions.com. To share your feedback about this newsletter, please click here. To unsubscribe, please use the link at the end of this issue.

In this issue:

• Did You Know...?: Should you be tapping the nutraceutical pet market?
• Fulfillment Notes: Got a handle on your shipping costs? If not, read this!
• Maximize Your Marketing Effectiveness: Who are you talking to?
• Customer Service Corner: Who are you talking to? Part Two
• About IFS: For More Information, Contact Us

A few months ago, when we addressed the rapid expansion of the nutraceuticals industry, we noted particular growth in the pet category. With pets becoming more and more like members of the family, pet owners are looking for ways to keep their pets healthy and living longer. In fact, the March 2006 issue of Nutraceuticals World reports that supplements benefiting a pet's joints, skin and coat, and anxiety are showing the most growth in the pet category.

In particular, ensuring healthy joints is becoming one of the biggest issues for pet owners. A front-page article in the April 11, 2006 edition of The Wall Street Journal noted the rapidly increasing number of dogs suffering from cruciate-ligament (knee) injury. Until recently, this injury had only been associated with humans, but an estimated 1.2 million dogs a year will receive the surgery needed to repair the damaged ligament. That is five times the number of human procedures, and each procedure costs its owner an estimated $3,000.

Nutraceuticals have become vital to keeping pets healthy. Instead of relying on human anti-inflammatory drugs, which may cause serious side effects to animals, more pet owners are recognizing that a natural joint supplement is the safest approach.

So... are you tapping the pet nutraceuticals market before it passes you by?

If you don't know how much your fulfillment costs should be as a percentage of your sales, don't worry... you're not alone! Let me share how the Direct to Consumer Industry calculates this cost, whether you do it in-house or outsource these services.

In fact, your net fulfillment costs should range somewhere in the 8 percent to 12 percent range. So how do you reach that number? Here's a sample calculation used by the Direct to Consumer industry:

Assume your average order runs $35 before you add in shipping and handling collected from your customer. Now, assume that you charge your customers $5.95 for each shipment (not included in that $35), even though your actual fulfillment expenses and shipping costs combined may run (example) $9.50 (Call Center labor and telephone charges, plus packaging materials, warehouse labor and postage). Subtract $5.95 from $9.50 and you'll see that your actual net cost to get the product to your customer is $3.55.

Now, divide the $3.55 by $35 (the average order value), and you'll see that it's 10 percent. So, you're in the typical range of fulfillment costs as a percentage of sales. (Please note that this is an example, not an actual quote).

Of course, be aware that a number of factors will impact those fulfillment costs, including:

• volume of orders;
• shipping method;
• quality/quantity of packing materials required; and
• what you collect from customers for shipping and handling.

And don't forget about the level of customer service in your Call Center. It is an enormously important asset on which it's hard to put a price!

Trying to assess your true fulfillment costs? Let IFS help. Contact Keith Milburn via email at kmilburn@ifssolutions.com, or by calling Keith at 1-888-275-3000.

When writing marketing materials, it's important you talk directly to your target audience. Although you may think of your target audience as specific companies, in fact, it is people within those companies who actually make the buying decisions.

To help you with this, create in your mind a person who exactly fits your target customer's profile. For example, if you do business-to-business marketing, perhaps your target customer is a 36 year-old female Marketing Director who has a $500,000 annual marketing budget and believes that prompt turn-around and quality service are important. Then develop your "copy" (message points) to speak directly to her.

When you're writing your copy, don't forget to use "you" twice as much as you use "we." When you use the word "you" more often, you'll find yourself to be more conversational, you'll engage the reader in your copy, and you'll be more focused on your customer's benefits. "We," on the other hand, is more internally focused and can even sound rather self-serving.

Want to get even more targeted to your customers? Before you start writing, talk to them! Call a few of your best customers and ask them what's really important to them. Then start writing. You'll surely hit the right hot buttons once you know what you need to address.

No - we're not duplicating columns here! We're just pointing out that it's also important to target your customer service messages to your audience, too. Ask yourself who is on the receiving end of your fulfillment services. Is it primarily women over the age of 50? Or is it a mix of men and women who are mostly in their 20's? The way you speak to one group - through operators in your Call Center and/or through materials and messages enclosed in your packages - should be very different from how you speak to the other group.

Think about how you can differentiate your customer service communications to accommodate both (or more!) groups. Start by outlining who your customers are for each product in your line. Then, in your regular training classes, identify words and/or phrases that your operators can use that would make your customers feel at ease. Now, listen to how your operators use that language... do they sound like they are reading from a script or do they sound like they are speaking more conversationally, like they would with a friend?

Next, pull out all the materials that go into each package shipment and see if they "speak to" the people on the receiving end. Are they clearly addressing that person's needs? If not, start over and customize them for your end-user audience.

It's amazing how targeting your messages can develop a stronger bond with your customers and turn them into loyal followers of your products and your company for years to come.

IFS is a world class, full service fulfillment operation with a track record of success. A woman-owned business, we proudly serve some of the country's most respected corporations. With a special expertise in the fulfillment of nutraceuticals, we can help you run your nutraceuticals business more efficiently and more cost effectively.