November 2009 – Cover Story: 35 Years of Direct Response

Well into its fourth decade of selling hair-restoration products and procedures exclusively through direct response, Bosley is a company that has evolved along with the DR industry as a whole. Bosley’s George Fettig reflects on the maturation of the DR industry and his company’s keys to success.

By Tom Dellner

In 1974, Dr. L. Lee Bosley wasn’t looking to build a business on a grand scale–he simply wanted to grow his personal Los Angeles-based medical practice and provide for his family. Today, Bosley is not only the global leader in hair restoration, it’s the largest cosmetic surgery practice in the world. Two dozen Bosley physicians practice in 72 offices throughout North America and the company is eyeing further expansion into international markets.

Vice President of Marketing George Fettig has headed all of Bosley’s marketing initiatives for the past decade, a decade which has seen the company double in size. With a 30-plus-year career bridging brand marketing (he’s worked with such household names as Dial Soap, Armour Meats and NordicTrack) and a stint working directly for business icon Lee Iacocca, ERA Board Member Fettig offers a unique and fascinating perspective on the direct response business, as well as candid insights into one of the industry’s most enduring success stories.

Electronic Retailer: So few companies make it to their first anniversary–to reach your 35th is beyond impressive. Could you take us back to the company’s earliest days?

George Fettig: Dr. Bosley would be the first to acknowledge he really didn’t have a “vision” in the classic sense. He simply wanted to take his personal interest in the emerging medical science of hair transplantation and build a successful local medical practice right here in Beverly Hills, to help patients and build a good life for his family. Thirty-five years, 200,000 patients and hundreds of millions of dollars later, it’s fair to say that he’s satisfied those goals.

ER: Why the interest in hair restoration?

GF: Dr. Bosley did have hair loss in his family and, as he says in his commercials, he is a patient, but I don’t think that’s what drove him. He’s simply an entrepreneur at heart. He’s a dermatologist and spent years in general dermatology before learning about this technique, which he then significantly refined and made his specialty.

ER: What was the competitive landscape like at the time?

Bosley also offers a full line of hair-growth products, including the Bosley LaserComb.

GF: When Dr. Bosley opened the practice, there were very few physicians offering hair-restoration procedures–perhaps half a dozen across the country. He was truly one of the early pioneers and one of the first to recognize that the artistry of the procedure was as important as the actual medical science. Producing a natural look was his forte and differentiator. Back then, the primary “solution” to hair loss was wigs or hair pieces; Sy Sperling’s “Hair Club for Men” was the only nationally branded solution.

ER: What were some of the company’s early challenges?

GF: When Bosley opened its doors in 1974, advertising in the medical industry was frowned upon. In fact, prior to the ’70s, doctors were prohibited from advertising by state laws. Advertising was seen as incompatible with a doctor’s professional status. This prohibition extended to attorneys, as well.

In the mid-’70s, the ban was challenged on First Amendment grounds, and overturned by a slim margin. But despite the change in the law, most doctors still shunned advertising. Negative sentiments about advertising among the medical establishment were deep-rooted. It was in this hostile environment that Dr. Bosley decided to advertise his new service to the public. And because of this advertising–and his commitment to providing excellent medical care–the Bosley hair-restoration practice grew rapidly. The growth has never stopped.

The other major obstacle in the early days was the public’s negative image of hair transplantation. During the ’70s and ’80s, many new doctors moved into the field, perhaps to capitalize on demand created by Bosley’s advertising strategy. But back then, the technology was quite different than it is today. Hairs were transplanted in unnatural groupings (as opposed to Bosley’s technique of transplanting much smaller groupings in an artistic way), with results that were anything but natural-looking. Of course, these were the transplants that were very visible to the public and created an enormous PR problem for the industry.

Dr. Bosley pushed forward, though. I guess it was the quality of the procedure and the consistent and compelling DR messaging that allowed the business to succeed in spite of this stigma. Dr. Bosley’s primary message is one we still use today: “When patients tell me they’ve never seen a good hair transplant, I simply tell them, ‘That’s because you can’t see a good hair transplant!’”

ER: Tell us a bit about your early marketing strategies. Did Bosley pursue a direct-response strategy from the start?

GF: Bosley employed direct-marketing practices from its very first newspaper ad in 1974. The company recognized that the tracking of individual responses, in order to maximize what was then a fairly meager ad budget, was essential to financial success. In the ’70s, with offices in a few major markets, local newspaper and Yellow Pages advertising was sufficient to drive local demand.

In ’80s and early ’90s, the company had become large enough and widespread enough to support ads in regional magazines as well as a few well-targeted national publications (primarily bodybuilding, fitness and airline magazines). But Bosley was 100-percent direct response–right from the beginning. In fact, we still use essentially the same offer 35 years later: a 45-page guidebook and free informative video (now a DVD, of course). Patients wanted to be educated and informed back then, and they still do today.

ER: When did the company first test the waters of DRTV?

GF: John Ohanesian–Bosley’s CEO for the past 20 years–had the initial vision to create a truly national cosmetic surgery practice. He reasoned correctly that television advertising could take the company and the brand to the next level. So in 1992, Bosley produced its first infomercial. John told me that many industry “experts” informed him that introducing a $10,000 medical procedure with a 30-minute late-night infomercial was paramount to corporate suicide, certainly risking the company’s reputation. But John believed that if the show was produced at a high quality, including honest patient testimonials with compelling results, and if it featured Dr. Bosley himself, it couldn’t miss. He was right. We’ve now been on the air continuously for 17 years.

We learned a lot from those early infomercials. Creatively, we learned to always keep the production values very high (we shot on film for the first 15 years or so), the testimonials real and compelling and to deliver the message in a professional, informative way. We were promoting an important medical procedure. There was no place for cheesy scenes showing women falling all over guys with their new hair–that became clear to us early on. Our customers needed real information about a serious medical decision. The show had to reflect–and respect–that.

We also discovered the value in having an in-house call center with thoroughly trained patient-service representatives. Ours is a particularly complicated process, requiring a lot of listening, consultation and education–and a long call time. The callers, mostly men, can be nervous and apprehensive. Training, monitoring and mentoring of our patient services team was a key to success. When we brought the function in house, our conversion rate doubled. Dr. Bosley would frequently walk the floor himself and provide on-the-spot training.

ER: What are some of the most important ways DRTV has evolved over the time you’ve been on air? How did you adapt?

GF: After more than 25 years of watching direct-response infomercials and commercials (and frankly, being duped by many!), the consumer has grown more jaded, skeptical and suspicious, and at the same time more savvy, educated and intelligent about the purchase decision. The direct-response industry–for the most part–has responded with better products and more honest, intelligent and effective advertising. The ERA has played an important role, encouraging self regulation and, when necessary, taking action to remove offending advertisers from the Association and reporting fraudulent product claims to the FTC.

Another way the industry has evolved is in the sophistication of response analysis. We’ve always tracked leads, of course, and calculated media efficiency ratios, but today’s technology allows us all to be so much smarter in the ways we allocate media dollars. For example, we now use a hosted call-center solution that allows us to integrate our toll-free numbers directly to our database through computer telephony integration. So we no longer have to rely on our agents to enter campaign codes; the system does it in split seconds, with near-100-percent accuracy. The end result is more efficient agents and more efficient media buying. With 800 different 800 numbers in use–and 30,000 to 40,000 calls every month–you can only imagine how valuable this technology is to Bosley.

ER: Yours is truly a multichannel marketing strategy–would you mind outlining some of the elements for us?

A new line of Bosley Professional Strength products will be available in more than 30,000 salon locations.

GF: Bosley utilizes all of the major DR channels, and we are testing emerging technologies, as well. Bosley’s primary channel remains DRTV. Infomercials still deliver very well-qualified leads with high conversion rates. However, the infomercial strategy is not totally scalable for us. We also run short form to increase brand exposure, but more importantly to generate more leads. As you might expect, those leads are a little less informed and convert at a lower rate, but then again, they cost much less to acquire. At the right cost-per-lead, we are pretty much agnostic between infomercial and spot.

Of course, online marketing has become critically important to the overall acquisition strategy. In fact, nearly 50 percent of Bosley’s overall revenue is tied to an online lead in one way or another. The majority of our website traffic is generated by liberal promotion of Bosley.com in all of our offline advertising (TV, radio and print).

While the Internet provides countless advertising formats and opportunities, not all are appropriate for Bosley. For example, mobile advertising, while technically exciting, is not yet appropriate for us, because of its inability to deliver an information-intensive ad to a broad consumer base. Likewise, community-based social media platforms may not work for Bosley, since hair-restoration patients are not as likely to share their successful results with the community. That said, we are testing the waters.

Our remaining web efforts include SEO–optimizing our website to maximize quality traffic and conversion–PPC advertising, cost-per-lead advertising (generating leads through e-mail and affiliate marketing), social media (including our own “Battle Against Bald” blog) and display advertising, which we use sparingly.

The final strategy is mining our database of over one million names. The decision cycle for hair restoration is lengthy–several years, in many cases. It’s critical to our business that we stay in constant touch with these patients and leads, through a well-coordinated, constant flow of telephone, e-mail and direct-mail communication. It takes powerful CRM software and a dedicated staff to manage the process. We have both.

ER: How do you pull the right levers to keep all of these channels working together synergistically?

GF: We hire the right people. Our marketing director, Steve Aquavia, has the perfect balance of creative and analytical skills. Steve and his staff constantly monitor results from every lead-generation category. We look at cost-per-lead, mix ratios, conversion rates and cost-per-procedure. Steve reports weekly and we discuss what shifts need to be made to maximize short-term results. We constantly test, evaluate and then re-set the dials. It never stops.

ER: I understand that you’re launching a line of branded products. Could you tell us a bit about this initiative?

GF: We’re taking the Bosley brand to new channels of distribution. Earlier this year, we reached a licensing agreement with a salon-products company to produce a full line of “Bosley Professional Strength” products. Our plan is to have these products sold in over 30,000 salon locations over the next several years. Salon stylists are the most trusted source (other than a doctor) for information and advice on thinning hair. This expansion to retail will further expose the Bosley brand name to millions of men and women with thinning hair. The synergism with our base business is clear.

ER: To what do you attribute Bosley’s longevity?

GF: As a company, every Bosley team member, from the patient service representatives to our senior counselors to our incredible medical staff, strives to meet or exceed the consumers’ expectations set in the advertising message. When you do that, you create satisfied patients, generate repeat procedures and stimulate positive word of mouth.

ER: What are some of the other future plans for the brand?

GF: With the economic downturn, we’ve had to focus on cost containment, improved efficiency and more effective advertising. However, we’ll continue our efforts to extend the Bosley brand to relevant product categories. Beyond that, I think you’ll see the company turning its attention to further expansion internationally.