How do you take a company from $500,000 in sales in 1991, double that in '92, soar to $25 million in '93 and be on track for $100 million this year?
There's really only one way, says Gary Smith: Cre-ate a marketing campaign that is so fresh and innovative that it lifts your product out of the competitive morass to where it seems to stand alone.That wasn't as difficult as it sounds for ExerHealth Inc., a Salt Lake-based company that has ridden its HealthRider exercise machine to the summit of the fitness craze.
In an industry where stationary bicycles, treadmills, stair steppers, cross country ski trainers, rowing simulators and circuit-training weight machines compete furiously for the fitness dollar, the HealthRider was like nothing else on the market when it was introduced in 1989.
The HealthRider uses a principle in which the user pushes on foot pedals and pulls on a handlebar, each time using his or her own weight for the resistance. Smith says the key is that it exercises all of the body's large muscle groups at the same time.
Smith says he knew the concept of the HealthRider was on target. It's the only exercise machine that nationally known author and Public Broadcasting health and fitness guru Covert Bailey has ever been willing to endorse, saying it best meets the principles he espouses for fitness and permanent fat reduction. All Smith had to do was convince the public.
For that, he turned to a relatively new marketing technique, the television "infomercial."
In an age when television remote control units allow viewers to "mute" commercials or quickly flip to a different channel when the ads come on, the idea that anyone would actually sit and watch a half-hour commercial - even one that had many of the elements of a drama or sitcom - seemed improbable.
But they work, or at least some of them do. HealthRider's sales figures - illustrated with a black line heading straight up the chart like the space shuttle on blast-off - are all the proof that Smith needs.
The basic concept of the infomercial is not new. Operators have been standing by for years to take your order for Ginzu knives, Ronco and Popeil gadgets that "slice, dice and shred," and various "golden oldies" music collections "not sold in stores."
But those late-show pitches were primitive by the standards of today's best 30-minute infomercials, many of which have production values higher than the movies and weekly shows against which they compete for viewer attention.
One of the best is the HealthRider video, produced by Salt Lake ad firm Stilson & Stilson and shot entirely on locations in Utah using local talent. It first aired in January and recently garnered the national Telly award for best informercial of the year - a major feat in a year that saw record numbers of them.
But before you can advertise a product you have to create it. The basic concept for HealthRider was developed about 15 years ago by Lloyd Lambert, an inventor based in Houston, Texas, who is best known for his invention of the Dyno Cam, the basic ingredient of the Nautilus fitness equipment, and also the Moon Walker, a treadmill used by NASA.
Originally partners with Lambert in developing the HealthRider, Smith and his wife, Helen, later bought out Lambert's interest. In 1989, they began building the machine in Salt Lake City, but as sales grew they contracted much of the molding, engineering and manufacturing work out to Parkway Manufacturing, a company in Phoenix for whom ExerHealth is its main client.
ExerHealth is a closely held company.
The Smiths are the principal owners along with a group of minor stockholders who include friends and some of the company's 175 employees, including a national sales staff.
Smith began marketing the HealthRider in 1989 using commissioned sales reps. Not long afterward, the machine was re-engineered to include some needed improvements. During that period Smith met Bailey, a nationally recognized expert on health and weight control who is best known for his best-selling book, "Fit or Fat," and for a PBS lecture series in which he urges people to forget about fad diets and get into a daily regimen of aerobic exercise.
Bailey agreed - for an undisclosed fee - to endorse the Health-Rider and "starred"in an informercial program that ran last year on various broadcast and cable television stations nationwide.
That infomercial was produced on the West Coast, and it worked as well as Smith had hoped, boosting sales dramatically in 1993. But in the "infotainment" business, there is no time to rest on your laurels. Today's hot infomercial won't get those 800 numbers ringing tomorrow. Thus, while Bailey was still touting the HealthRider's charms, Smith was already thinking about how to top that production.
Enter Eric Stilson of Salt Lake ad firm Stilson & Stilson. It was a natural linkup because they both occupied the same building. Stilson began doing local advertising for the company and then agreed to produce the followup to the national spot featuring Bailey.
Stilson assembled an all-Utah cast and crew. Taking Covert Bailey's place as spokesman in the production was Greer Childers, owner of the Body Flex fitness center in Salt Lake City, and as most viewers agree, as strong a presence in her right as Bailey was in his.
Even when produced locally, such infomercials are not cheap, but it's the air time that really costs, notes Smith. "We spend up to $1.5 million just buying air time on stations all over America, as well as radio and print ads." Stilson said television time can run as high as $50,000 for a single half-hour airing.
But producing an infomercial and getting it onto the air does not mean you will laugh all the way to the bank, cautions Stilson. "This is not a slam-dunk business."
Infomercials are rated on the basis of media costs vs. gross sales revenues. A ratio of 1-to-1 means you make enough to pay those costs and will probably succeed. A ratio of 2-to-1 is considered a good result. The Covert Bailey program produced from 1.5 to 2, so it did well compared to the industry averages.
The new show, said Stilson, has produced ratios as high as 24-to-1. The first Saturday that it ran in January produced 140 sales and 900 inquiries, three times the anticipated sales and some 800 percent higher than the expected number of inquiries.
That show will continue to be shown into the fall when it will be replaced.
Not surprisingly, ExerHealth's highest sales have been made in Utah where it has been marketing the longest. Salt Lake City, Sandy and Bountiful are among its top cities for sales in the country. Others include San Jose, San Diego, Dallas, Cincinnati, Pittsburgh, Chicago and Portland.
Meanwhile, nothing inspires like success, and the HealthRider is now faced with a dozen or so "knockoffs," many made in China. Smith is philosophical about these machines, many of which sell for hundreds less than the $499 HealthRider.
"There's no recourse for us even though the HealthRider is patented. We just have to outmarket them and produce the best machine. A patent is only as good as you are willing to fight for it, but there are so many ways they can go around you that it isn't worth it."
Meanwhile, ExerHealth has been developing its own new products, including a lower-priced version of the HealthRider called the AerobicRider, which is now being sold in stores. In the wings is a professional, heavy-duty model that will be marketed to gyms and spas. A child's version, intended for kids ages 4 through 7, will be introduced next year.