Advanced Marketing Systems, a nutrition-supplement marketer, is using telemarketing to convert its customer base to new products after last month's announcement of an upcoming federal ban on supplements containing ephedra.
The company has been moving away from supplements that contain ephedra for a year, but 5,000 of the 17,000 customers who get automatic product shipments monthly still receive items containing the substance, said David D'Arcangelo, president of AMS, Oklahoma City.
On Dec. 27, the Food and Drug Administration said it would ban ephedra products within 60 days. AMS will be out of the ephedra business within that time, D'Arcangelo said.
A state ban on ephedra products in California took effect Jan. 1. In November and December, AMS conducted a telemarketing campaign to its customers in California and converted 70 percent to a weight-loss product that does not contain ephedra.
“The whole ephedra thing has been coming for a long time,” D'Arcangelo said. “The only question was who was going to regulate it and how were they going to regulate it?”
The company also is using the opportunity to upsell a new product. Consumers who accept the offer of the AMS ephedra-free weight-loss supplement also receive an offer for Prime One, a supplement that promises increased energy and vitality, D'Arcangelo said.
AMS offered Prime One as part of the California campaign, and the company is still calculating the results of the upsell, he said. It hopes to upsell 25 percent of its customer base on Prime One in the national effort.
“How often do you have the chance to call back thousands of people and give them the benefits of your newest product,” he said.
In addition, AMS uses network marketing to promote its products, which means it recruits individuals to buy its products and resell them to other consumers. In the California effort, AMS called its “associates” or resellers and all agreed to switch to the non-ephedra products.
Despite reassurances to its investors, AMS appears to have been hard hit by the FDA's ban. The company's stock, which was at $5.80 a share at Christmas, dropped when the stock market reopened after the FDA announcement, but was hovering around $4 last week.
Nevertheless, the nutrition-wellness industry of which AMS is a part does $200 billion of business a year and is growing, D'Arcangelo said. Consumer interest in nutrition alternatives is at an all-time high, he said.
“Everybody is looking for alternatives to products on the market, without side effects,” he said. “They're looking for a natural alternative.”