No slimming down of Weight Watchers digital vision with new CEO appointment

Profile picture for user slauchlan By Stuart Lauchlan May 3, 2017
Summary:
Weight Watchers has found its new CEO and she's someone whose background suggests digital innovation will remain on the menu at the slimming firm.

mindyhoffman
Mindy Crossman

Weight Watchers has been generally regarded as a digital transformation success story, but the ousting of its CEO Jim Chambers late last year had raised questions as to whether his digital enthusiasm would continue with his replacement.

Since his departure, the slimming firm has been managed by a triumverate of executives while the hunt for a new CEO was carried out. That’s now over and Chambers successor is someone who brings demonstrable digital credentials with her.

From July, the new Weight Watchers CEO will be Mindy Crossman, who’s been CEO at digtal TV channel Home Shopping Network (HSN) since 2008. During her time at the firm, she’s introduced a series of innovations to grow its subscriber base and will leave at a time when digtial sales now account for approximately half of the HSN annual revenue of $3.6 billion.

So it’s pretty safe to assume that digital innovation is going to continue to be on the Weight Watchers agenda moving forward. Director Chris Sobecki, one of the caretaker CEO triad, says:

Mindy was the board's number one pick. I think we're aligned with her. Weight Watchers as a company is only touching a very small fraction of the market that we're going after. I think what we see, and what she sees, is the opportunity, now that we have a solid foundation, we have a positive mix, and we have a pipeline of innovation that's there is how do we take this company forward and move it to a whole new level.

Crossman is going to have her work cut out for her. Despite turning a small first quarter profit of $10.7 million this week, as opposed to a loss for the same period last year, Weight Watchers long-term turnaround has been taking, well, a long time. And as anyone trying to slim knows, it’s easy to yo-yo between success and failure without the appropriate discipline.

That said, Sobecki reckons that things are getting better:

Versus where we were, our program is better, our digital products are better, our Meeting experience is better, and our members recognizing it and they're benefiting from it.

I think the digital product, the experience to our members, improved significantly over the last year or so. I think that's certainly part of it. When you have a better product, people are going to be more receptive to it.

Certainly there are enouraging numbers to be found in the revenue breakdown, with online growth coming in at 17% year-on-year against meetings-based revenue growth of 8%. But then that’s the challenge for Weight Watchers, as articulated by Sobecki:

We are focused on turning around not only the online business, but the meeting business as well. But I think the online is kind of a leading indicator of where we're going.

Engaged

Fellow Director Thilo Semmelbauer points to overall improvements, from sign-up and on-boarding through to ongoing engagement:

Our strong online performance in Q1 with paid weeks up 17% year-over-year, coupled with the strong online usage and engagement metrics that we're seeing, validates our offerings in a market filled with countless free apps.

In addition, we're pleased to see the strength of online across most of our international markets. It gives us confidence in our technology strategy, which combines a vastly improved global technology platform with localization and customization. The agile process that's now in place is all about continuous improvement, incorporating feedback from our members, testing and rolling out enhancements and new features.

That 17% paid week growth number is a good indicator of how much better the online proposition is now, he adds:

I think, the bottom line, it's a much better product than a year ago. We've made improvements, not only in conversion from the visitor side, but in on-boarding new users to learn the program and our tools. It's easier to track, it's easier to find recipes. For our members, we now have a streaming platform for video, which we're using for Connecting with Oprah [Winfrey].

There's been a tremendous improvement in the stability. The result is that the ratings of our apps in the US and in other markets are consistently now 4 stars to 4.5 stars, where a year ago, it was much lower. And while we don't disclose our engagement metrics, we're really seeing strong engagement with the product. That's very gratifying and I think, again, it shows that the value proposition of our offering is very sound.

One recent development has been a partnership between Weight Watchers and Apple, which provides subscribers to a Weight Watchers OnlinePlus plan with an Apple Watch. This can then be used to access Weight Watchers SmartPoints food plan, tailored activity goals, a personalized program, support from a trained coach and access to the members-only Connect community.

It addresses, in part at least, a missing element of Weight Watchers business model in 2017 - the lack of a fitness wearable. That’s seen as a weakness by some analysts, such as Ed DeForest, vice president and senior credit officer with Moody’sDeForest in a recent report to investors, although the Weight Watchers management seem phlegmatic, with Sobecki stating:

Our apps will connect with, I think, most of the leading activity monitors out there and it ties into the app and helps them track Fit Points. We feel that for many people, an activity monitor tied to our program is big benefit to them. That continues to be the case. We're tying those through approaches and tie-ins with a number of those providers and our members choose which route they want to go.

Semmelbauer goes further:

It's highly complementary to our offering for those members that find wearables helpful. We also believe that wearables by themselves are not the solution, and we see more and more of our members frankly doing both.

For his part, in his report, DeForest believes that the Apple deal will go some way to appealing to a particular demographic:

The premium-priced subscription bundle could broaden the company’s appeal to include a wealthy, mostly male, fitness-oriented demographic that has been abandoning Weight Watchers over the past five years, as well as younger subscribers.

But he remains concerned that the overall turnaround of the firm isn’t guaranteed:

So far, the recovery has been heavily weighted toward digital subscribers in the US, with subscription gains centered around occasional users and new trial members.

My take

Over to Mindy! In recent years, the most public female face of Weight Watchers has been Oprah. All that’s about to change.