Case Study: eDiets
Can an Internet-based diet program be a moneymaker? The eDiet story says this is one of e-commerce's hot growth areas.
If there's a single factor responsible for making eDiets the leading weight loss/fitness site, it's the company's aggressive marketing. "We are very routinely, in any given month, one of the top 10 Internet advertisers," says eDiets chief strategist Alison Tanner. "We spent about $13 million on advertising in 2002, and that will increase significantly this coming year."
Florida-based eDiets began its advertising push in 2000, funded by a successful IPO. At that time it had just 33,000 members; in late 2002 eDiets signed its one-millionth subscriber. "Historically, our marketing has been limited almost exclusively to banner advertising," Tanner says, noting that response from banner ads has enabled eDiets to build an 11 million member e-mail list.
Yet the company is moving away from banner ads. "The trend has been fairly clear over time - people aren't clicking so much," Tanner says. Instead, eDiets will make greater use of its e-mail list, to which it sends out targeted e-mails throughout the week.
The site is also testing methods of acquiring members offline, including negotiating with insurance companies to underwrite memberships, and partnering with fitness trainers. eDiets is also experimenting with using Home Shopping Network, and "We're going to do some direct marketing campaigns using telephone and direct mail," Tanner says.
In short, the site's marketing blitz will both broaden and intensify. The strategy is working. EDiets drew the lion's share of the 8.6 million people who visited weight loss or fitness sites in November 2002, according to comScore Media Metrix. And eDiet's visitor figure of 5.3 million visitors dwarfed that of its closest competitor, WeightWatchers.com, which received 1.6 million visitors.
The Ultimate CRM
When users sign up for an eDiets' membership, they fill out a questionnaire. Based on the responses, eDiets provides members with a customized meal plan.
Each plan, Tanner says, takes into account "how much you want to lose, within our parameter of no more than two pounds a week, any health issues, food preferences - maybe you don't like eggplant - and lifestyle - how often you eat out."
The plans fit many different lifestyles. "If you're like me, and everything you eat is frozen and grabbed on the run, we can give you a plan," Tanner says. Even if a member eats periodically at places like McDonald's, there's a plan. "We call that the fast food option," she says. "It gives you an alternative that may be offered at that food outlet."
Members can also set up a customized workout plan. In September 2002, eDiets launched a companion site, eFitness.com, offering personalized exercise plans. Both sites share the same diet and workout customization technology, Tanner says. The chief difference between the sites is that eDiets is primarily women and eFitness is primarily men. "You'll see more things like six-pack abs over on the fitness site," she says.
Member to Member
Not surprisingly, Tanner believes Internet-based diet programs offer advantages over classroom-based plans. One of the chief advantages is privacy. "The typical recommended weight loss for our new members is between 45 and 60 pounds," she says. "Some people who have weight challenges don't want to go to a meeting and point that out."
Another key advantage is support, Tanner says. The site offers phone, live chat and e-mail support around the clock. "One of my favorite quotes from a member is 'where else can I go for support at 3 o'clock in the morning with bed head?'" she says. The staff of about 100 at eDiets includes registered dieticians, mental health counselors, and fitness experts, who offer online classes and correspond by e-mail.
And members support each other, via the site's plethora of discussion boards. "We have almost 100 message boards, organized by weight, family situation, single mom or new mom, spiritual preference, gender, favorite type of exercise, and geography," Tanner says. "A significant part of the support that members receive is from each other."
Members pay $45 for the first nine weeks, after which the membership fee goes to $10.95 per month. The average member stays for seven months, says Tanner, adding that "We're getting over $100 in revenue per subscriber per membership cycle." She says the site currently has about 200,000 subscribers. Subscriber fees generate 90 percent of site revenues, with the other ten percent coming from sales of related items, like books and tapes, and from advertising.
Losing Weight, Gaining Revenues
Tanner sees increasing revenue coming from sales of these related items. "Dieters like to buy things," she says, pointing out that the financial statements of classroom-based companies list healthy revenues from sales of books and food bars. "To date we've really focused on the service aspect of our business," she says, but adds, "We're implementing new technology that will allow us to increase e-commerce revenue." As members progress through their program, they may be asked for additional information that helps eDiets make targeted offerings.
The site is also expanding geographically, and has a joint venture operating in the U.K., eDiets.uk, with food choices geared for the British palate. The site will produce a little over a $1 million in revenue this year, Tanner says.
In a larger sense, Tanner says eDiets' goal is to grow into an all-encompassing destination for weight loss and fitness users - which may include diet approaches created by other organizations. "We have the infrastructure, the support, the software, the online advertising presence," she says. "We'd like to make sure that if there's a diet that's popular and healthy you can be supported in using it at eDiets." She notes that the market for diet education is approximately $3 billion, and continues to increase. "There are so many ways we can grow with this," she says.
Reprinted from ECommerce Guide.