Dietary supplement companies see ROI on their transparency initiatives: SupplySide West report

November 21, 2018

Traceability and transparency are keywords in the dietary supplement industry today as the market continues facing increased pressure and public scrutiny over the quality and authenticity of these products. Over the past few years, many suppliers have taken to launching their own traceability and quality-control initiatives. At SupplySide West, Nutritional Outlook spoke to a few experts about how companies may see returns on their investment.

 

NP Nutra’s Triple-T Verification Program

At last year’s SupplySide West show, botanicals supplier NP Nutra (Gardena, CA) introduced its Triple-T Verification program to fortify its traceability and product testing. The company strictly defined the standards, including for the growers it works with, for testing, validating, and controlling the quality of the ingredients throughout its supply chain, and has in place a strict vendor-qualification program, including audits, of its partners’ farms and manufacturing facilities.

A year later, the company announced that these efforts have paid off in dollars and cents. In November, the company reported that the Triple-T Verification program, which the firm says took five years to develop, has contributed to the extremely strong revenue growth, upwards of 35%, that the company expects to see by the end of 2018.

In a press release, Mark Campbell, the company’s COO, said: “This unprecedented growth is attributed in part to our Triple-T Verification program. This program, combined with the fact that our sales team is working more closely with valued clients to match our products to their needs, has led to an increase in the average number of SKUs sold to each customer.”

Margaret Gomes, NP Nutra’s director of marketing, discussed how expending the firm’s resources to enact the Triple-T program has resulted in efficiencies for its business. “The Triple-T Verification program was developed over a period of five years. It was an arduous process which involved a lot of time and research from our sourcing team as well as a strong collaboration with our approved manufacturing partners,” she said. “The vendor-qualification protocol that our partners are subjected to before approval can take months, but once they have qualified, it makes our job so much easier to be able to pool from a list of validated partners who share the same goals and objectives as we do.”

This extra layer of added security pleases NP Nutra’s customers, too. “Many of our existing customers really like the added assurances we have put into place,” Gomes said. “The Triple-T Verification program has been a big reason why we are projected to grow over 35% this year.”

All of this means NP Nutra is seeing the return on its investment in the program, she said. “How NP Nutra shows the ROI in the end is quite simple: Better supply chain validation leads to fewer problems and greater customer retention over time. We are able to grow relationships, which is NP Nutra's main focus, rather than having them damaged or destroyed. Customers trust us as they know that we have done our due diligence in sourcing premium products.”

“In summary,” she said, “it is very difficult to quantify intangibles such as increased customer satisfaction, trust, and traceability, but we know that it has certainly been an investment that is well worth doing and that will continue to be a contributing factor to our planned company growth.”

 

A New Report Looks at Transparency and ROI in the Supplements Business

Pure Branding (Northampton, MA), a strategic consulting, market research, and brand development agency, explored the topic of how companies are seeing ROI on transparency measures. The company has a new report out, “ROI of Transparency: A Consumer Market Research Study”, in which the agency surveyed more than 1000 Americans about their views on corporate transparency, including transparency related to dietary supplement products they purchase.

According to Pure Branding, “this new report confirms that a company’s level of transparency directly and positively impacts sales.” Specifically, 73% of survey respondents said transparency is valuable to them—so much so that a majority said they would be more likely or very likely to pay a higher price for products from companies they perceive to be more transparent.

Transparency is especially important in the dietary supplement industry, says Yadim Medore, founder and CEO, Pure Branding. “Consumers have a somewhat negative view of the level of transparency being provided currently by vitamin and supplement companies,” he tells Nutritional Outlook. “These companies are failing to meet current expectations, which are already higher than what is expected for most other industries, and these expectations are continuing to rise. The pressure is on for the vitamin and supplement industry to become more transparent.”

He points out, however, that companies sometimes need to be convinced that there will be ROI before they commit to bolstering transparency initiatives. “We consistently hear from brands—whether it’s from the CMO, operations director, or sourcing manager—that they need ways to assure senior leadership that new transparency practices will correlate to a positive ROI.” That’s why, he says, Pure Branding initiated this report in order to “better understand the impact of transparency on sales” based on consumer views.

And customers link transparency with quality, he says: “According to our 'ROI of Transparency Report,' for seven out of ten consumers, there is a strong perceived relationship between supplement company transparency and quality. Signaling quality via transparency is highly likely to drive consumer shopping loyalty.” And, he said, a supplement company’s transparency assurances may go a long way to getting a customer in the door to try their product.