How is the ad performing for you?
In these first few weeks the results have far exceeded our expectations. We are getting more people calling the 800-number or going online and buying the product than we anticipated. There are two metrics in the infomercial world. The first one is calls per $1,000 spent: how many calls you get for every $1,000 you spend on television. The second is conversion: how many of those who call actually end up buying. Our response rates have been very strong. Over time, we will start editing the infomercial into shorter versions. As you go shorter with the commercials, you tend to drive fewer people to website and call center and more to retail. That will be the second phase.
What do retailers need to do to maximize sales of your products? How are you helping them do this?
We have launched a national multi-million dollar infomercial campaign aimed at driving education, brand awareness, and trial. Think about Cue as a Keurig-type of model: the more devices there are in the market, the more replacement cartridges people will look to buy in stores. Cue wants to make life simpler for consumers, and for retailers, too. We have a dedicated field sales force and category management team that will work with retailers to make the best usage of their e-vapor shelf and maximize profit.
We’ve talked about your infomercial, but what are you doing at the store level to help educate consumers?
We are working with our retail partners on different options. Every retailer is a little different. In some discount tobacco stores and even vape stores, you can work with clerks to educate them about the product and provide them with educational tools and leaflets. So we do that. With some less human-touch-based retail formats like c-stores, it is in point-of-purchase display material, leaflets and coupons. We are launching a mobile tour where we will have a Cue lounge truck that visits different festivals and Indy 500 and NASCAR races so people at those events can come into the mobile lounge and learn about the device, try it, and even buy it. Education is really the key component of our communication package.
Are you working on a next-generation product? Or is all innovation on hold now?
Because of the Deeming Rule, innovation is over when it comes to products on the U.S. market. The product we are selling now, Cue, was in commerce before the Deeming Rule, and there is no modification or innovation possible that we can do to it. So for now we are really focused on our PMTA process for existing products.
A company like Swisher had an edge over newer companies in coping with FDA compliance. Are you looking at acquiring competing companies that may be ill-equipped to navigate the regulatory environment?
EAS’s relationship with Swisher is helpful in many ways. Since EAS was created two and a half years ago, my team and I spent months testing products and talking to entrepreneurs and established companies until we found Digirettes, which had the best technology on the market with Cue. That is why we put our resources behind it. Can there be others out there? Absolutely. Would we be interested in looking at those? Absolutely. However, if a product is in the market and that product wanted to continue to exist—barring any deadline change from the FDA—that product will need to go through all the testing [that] the FDA requires within the next one and a half years, which is a short time. With Cue, all of that has already started. So any new technology that hopes to continue to exist after 2018 will need to speed that process up.
– Story by Jennifer Gelfand
This story first appeared in the May/June 2017 issue of Tobacco Business magazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.
