Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Jerry Herman – Stifel Nicolaus.
Jerry Herman – Stifel Nicolaus
Let’s start with promotions if we can. I appreciate the feedback on that. You were good enough to quantify the impact of the promotional activity. Is there a way to quantify the volume impact? That is part A of the question. Part B is, you reference the possibility of doing some of that next year in the next diet season. Should we assume you are likely to do that throughout 2010 in the key diet seasons?
David Kirchhoff
The answer to your first question is as I mentioned during my remarks what we saw from a volume perspective, I mentioned two different metrics. One I mentioned is during the 7 weeks in which we are running a promotion we estimate that we saw about a 10-15% improvement on the enrollment trend line. So that was sort of an immediate like-for-like response to the promotional offer. That was the first metric we mentioned. The second metric we mentioned was we started paid week in the beginning of the quarter as running at roughly Minus 10% to minus 12% and we ended the quarter at minus 6% to minus 7% and most of that, if not all of that, was a result of the promotion. So that is the direct impact it had on volumes.
To answer your second question, we ran the BOGO knowing it was going to be a significant promotion and it felt like the right promotion for us to run during a typically slow season. We knew it had a relatively high hurdle rate in terms of overcoming the discount in terms of the amount of lift it would have to provide but we really wanted to get a sense for it because we hadn’t historically done promotions other than free registration. We really wanted to get a sense for how this new kind of promotion could potentially impact our business as well as how we would execute it through the field because it was something different than what our service providers were used to. So it was a significant learning effort for us.
While we were doing it, as I mentioned during the remarks, we were doing some pretty comprehensive market research in which we were testing 50-100 different potential promotional messages to understand which ones could potentially provide the most response to our business in terms of intent to purchase while also understanding the economic impact of each. So we absolutely planned on running new promotions with perhaps new promotion language that you may not have seen before as we get into 2010, it would be our expectation we could do that identifying promotion that would have hopefully, and should have, similar effect on volume that we saw with the BOGO promotion but without nearly as much revenue dilution. So that work is still going in terms of planning at the calendar for 2010. We do see that as a growth lever as we go into next year.
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