The popular American diet program Nutrisystem is not broken, but it may need some fixing in areas that are causing it to under-achieve, especially in areas such as the stock market and the returns it is giving investors. While that may be of little or no interest to dieters who are relying on this program to help them lose weight, or to those who are seriously considering signing up for a diet plan that they hope will turn their problems of increasing weight around, it probably should be. For there are cracks in the woodwork and they need to be repaired sooner rather than later.

First of all, let’s make one very important thing clear. The diet program itself is still one of the best in its class and there is no denying it gets results. Thousands of successful Nutrisystem dieters cannot be wrong!

The problems that are associated with a lack of confidence in the company as far as investors and the stock markets are concerned are related to decreasing performance figures and a drop in the value of their stock from a high of over $72 in 2006-2007 to the current figure (as at July 2 2012) of just $11.61 (*see below). Clearly things are not as good today as they were just five years ago, so what happened to cause such a huge drop in the value of the company?

We can’t really speculate on what is happening behind close boardroom doors, so there is not much point in bandying theories around as they could be false. But what we can see is customer reaction to certain aspects of the diet program from the many customer complaints and concerns that are registered in a variety of online forums and blogs that provide Nutrisystem reviews. While many complaints are made by people that are complainers by nature, there are a whole load more that are articulately written by people with a genuine grievance or a story of an unsatisfactory experience that simply cannot be discounted or ignored.

Canceling Nutrisystem Diet Plan

One of the more common complaints is not with the diet itself, but with the customer service department especially when people call to cancel their diet plan. While there are many good reports of customer service experience, there are many bad ones and it is these that potential customers read and find difficult to ignore. The result is a drop off in the number of new customers who choose other diet plans (which may or may not be better or more suitable for them), on the strength of a negative report they read on the difficulty in canceling and the penalties that are incurred.

What is the answer?

A big part of the problem is that customers who sign up for diet plans and take advantage of whatever current discount or special deal promotion the company is running, do not realize that if they cancel before accepting and paying for their second month’s supply of meals, they will incur a penalty for early cancellation and be charged the cost of shipping the food. While this information is published on the official Nutrisystem website, it is not as clearly marked as it could be since many people sign up and do not bother to read the FAQ or look at the terms and conditions they are signing for.

Let’s face it, who wants to read through several long paragraphs of boring, legal sounding text? Not many people, that’s for sure.

So in general, when a customer sees a great deal on their first month of food, they immediately think that they can order it and cancel the subsequent month’s delivery and save themselves a load of money by not having to pay full price for that second shipment of meals. But when they phone up to cancel, they are met with the harsh reality that they are going to have their credit card charged a cancellation penalty as well as be billed for the “free shipping” they thought they were getting for the initial shipment.

What do you think the reaction of most people to this news is?

NutrisystemThey get angry, for sure! And in the heat of the moment, it quite often happens that the customer gets loud and abusive and the customer support person has to endure a lot of verbal abuse which they do not deserve to put up with. Most are well trained and will try to calm the customer down, but that’s a very difficult thing to do over the phone.

Let me ask you something: How do you think you would react to an angry person on the other end of the phone shouting and probably swearing at you because they think they are hard done by and you are to blame? Maybe you don’t know because it has never happened to you. Maybe you think you stay calm and be a heroic rock or something. Let me tell you, I’ve been there and you do NOT stay calm for very long, especially when you’re being abused verbally. All the training in the world will not help you when you’re being threatened with physical violence by a customer who says they are going find out where you live and do bad things to you and your family.

OK, point taken? Good.

Greater Transparency?

So what is the answer to this real and ongoing problem? Well, its simpler than you might think. But its one that few big companies have the guts to implement because they believe it will harm sales more than it helps their reputation.

The short answer is not just greater transparency, but full disclosure right there on the main page of the official Nutrisystem website and also on the page where customers are signing up. Tell them in clear and understandable words that they can’t just have the first month and then cancel, but that if they want to take advantage of the special deal, they MUST commit to ordering a minimum of two months supply of meals. Make that crystal clear to customers and you improve the trust factor of customers while removing any ammunition from potential cancelers who are aiming to get the deal and not continue with the diet after that. That’s because they can’t claim they didn’t know about the consequences of canceling early!

Loss of Sales

Will full disclosure result in loss of sales? Possibly. But the majority of sales that would be lost would be from potential customers that were aiming to enjoy the cost saving of the discount and then cancel early anyways. Does any company really need those kind of customers? You could argue that many customers will change their minds about canceling and stay on the program, paying for their second month because it is the lesser of the two evils of being charged the cancellation fee and shipping costs. Sure, but then you have an unhappy dieter on the plan and guess what they’re going to do at some point?

They’re sure to write a scathing review on how they were manipulated by the company into paying for a second month they didn’t want. They will tell of how unhelpful the customer support were (although they are sure to leave out that part where they verbally abused the person on the other end of the phone). They will rant on about how they are disgusted by big companies using such strong arm tactics to fleece customers with bait and switch tactics. But most damaging of all is that they will warn other poeple to stay away from the program.

People are easily swayed by opinions. Opinions are the cheapest commodities on the planet and everyone has an opinion on something or other. People like nothing better than to put they opinions on anyone who cares to listen. The problem is that people do listen!

While the current setup may bring in a sizable income from customers “forced” to stay on the program, the numbers of lost potentially new customers is something not factored into the equation. Could it be that in attracting these “lost” new customers through a more trustworthy full disclosure policy might very easily balance out the loss of customers only out for the first month discount? I don’t know and I’m pretty sure the marketing people at Nutrisystem don’t know either. Because they aren’t trying it.

Success in business is all about taking measured risks. At the present rate of decline in Nutrisystem’s stock value, maybe its time to take a measured risk and try and attract a whole new demographic of customers who know what they are signing up for before they sign up.

There might be some pleasant surprises in store. Or it might not work. Either way, Nutrisystem need to do something to attract (and keep) more customers and get them writing more positive reviews to attract even more customers. Food for thought? I’d say so!

Terry Didcott

*Source Google (NASDAQ:NTRI)