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A Web Strategy Runs Through It
(this article is from the November, 2001 issue of Inc. Magazine)
Recipe for revitalization: Take one 40-year-old family-owned river-rafting business. Add the Internet. Shake well.
Man, that sky is blue. What a gorgeous day.
You are on the first mile of your trip down the North Fork of California's
Stanislaus River, but you're already in a section so rugged they call it
Rattlesnake. Cutting through the craggy beauty of Sequoia country, the North
Stan is a rafter's delight, offering miles of stair-step waterfalls and boulder
gardens like the one at your feet. You turn and see three rafts shooting past the
rocks.
Yet there's no spray on your face, no fresh river air to enjoy. You're not even
really there. You're gazing at this scene from the comfort of the Web, on the site
run by All-Outdoors Whitewater Rafting.
The site's coolest feature may be its variety of such virtual tours of the river
routes that the company serves. The sharp, three-dimensional, panoramic
photographs are produced in-house using technology licensed from Internet
Pictures Corp., in Oak Ridge, Tenn. With your mouse, you can look up, down, or
around each tour as if you were standing in a spherical snapshot. Pretty
sophisticated stuff for a business that to many is decidedly low-tech.
AO Rafting, as they call it, is a multigenerational family business started by a
schoolteacher nearly 40 years ago. It's a regional company in a seasonal
business, with about $2 million in annual revenues and fewer than 20 permanent
employees year-round. (The company employs more than 100 people during its
eight-month annual season if you count some 75 part-time guides.) Based in
Walnut Creek and Lotus, Calif. -- right by the mother lode that drew the forty-niners
out West for the Gold Rush -- AO Rafting seems isolated, deep in canyon
country. Yet it has built a Web presence that puts to shame a lot of other
businesses with more tech savvy and resources.
A business site doesn't win awards just because it has cool features, though. It
has to work for both the company and its customers. That's what distinguishes
www.aorafting.com. Sure, customers can tour the Klamath and Tuolumne rivers
through the site's virtual tours. They can also plan trips right on the site, check
the availability of tours, make reservations, access real-time information on water
conditions, refer the company to friends, and find discounts on trips. The site has
replaced almost all the traditional marketing that AO used to do.
It helps that AO is a tight little privately held business that is 100% owned by the
Armstrong family. Decisions can be made rapidly. The company is located within
easy driving distance of Silicon Valley, where despite the dot-com bust, there is
still an affluent, sophisticated customer base that will naturally look for the
company on the Web. Most of AO's staff members have been with the company
for years and know the business intimately. Almost all have been or still are
guides, experts at the sport that is the company's core competency.
CEO Gregg Armstrong, who with brother and operations manager Scott now runs
the company that their father founded, has always had an interest in marketing.
Despite limited company resources, he has given a free hand and precious
resources to Webmaster Jamie Low, a former guide who once had no other
ambition than to spend every day on the river.
So this is a company with a product that generates passion in both its employees
and its customers. It has a CEO who is committed to the Internet. It has very
little turnover among its employees, many of whom have been with the company
for years. The industry is well suited for presentation on the Web, where a good
story is best told in photos and short blocks of text. And it has been very, very
smart about the way it uses the Internet.
Patriarch George Armstrong was a real rafting pioneer. In 1961, when he and his
brother first dropped an old military raft into the river, the sport didn't exist. The
brothers were among a small group of enthusiasts who rode the rapids on
weekends -- early adopters, if you will, not unlike the first surfers who were then
bringing Hawaiian long boards to Ventura Beach.
Armstrong was a mechanical-drawing teacher in the public schools of Concord,
Calif. He organized something of an outdoors-activities club for the
underprivileged city teens he taught. He'd take them into the canyon, schlepping
surplus rafts and old Mae West life vests, and show them a hell of a time in the
country.
His own kids -- Mark, Sherri, Gregg, Randy, and Scott -- would spend summers
and weekends at their riverside cabin. By 1964, when Armstrong officially
established All-Outdoors Adventures in Nature for Youth, his older children were
already experienced guides. The whole family spent a lot of the 1970s bringing
tour groups into the waters. The company grew slowly, traditionally, by word of
mouth.
Although their father carries the title of administrative supervisor, it's Gregg and
Scott Armstrong who run the company on a daily basis. The two brothers each
manage one of the company's primary locations -- the reservations office in
Walnut Creek and the operations headquarters in Lotus. Siblings Mark, Randy,
and Sherri serve as advisers. All of them have other lives but still spend days on
the river guiding groups of customers. AO has always been the first workplace of
choice for the Armstrongs. "Everybody has a stake in the company, some more
than others," says Gregg. "Me, my dad, and Scott are the majority shareholders."
Scott and Gregg trace the evolution of the Web site back to a conversation they
had on their parents' lawn in September 1993. It had been a very good season
for rafting, and 1993 became the company's first million-dollar year. "We made a
decision to hire some employees and grow," Gregg says. "Dad had never thought
of it so much as a business. He enjoyed it as a way to teach people about the
environment and how to enjoy the outdoors.
"The first thing we did was to immerse ourselves in the growth culture of Silicon
Valley," says Gregg. "I cold-called interesting companies. I wanted to know how
they ticked and to figure out who would make decisions about river trips. Our
whole goal was to grow by getting corporate customers. We sold packages as off-site,
team-building exercises."
It worked. In the 1980s, revenues ran between $500,000 and $750,000 a year,
depending on the season. Since the mid '90s, "we have been steadily increasing
to the current $2 million," says Scott. The biggest single factor: the Web.
When AO hit $1 million in annual revenues, it was spending more than $150,000
a year on marketing, which consisted of glossy print catalogs, display ads in the
yellow pages, regular direct-mail campaigns, and discount programs for
individuals and corporate groups.
It was too much for the tiny company. "I felt like I was managing a whole train of
marketing programs," Gregg says. "My hours were climbing to 60, 80 hours a
week. Instead of 10 avenues at once, I wished there was one way to reach
everyone."
Needing help, he turned to Jamie Low, then a guide. Low had studied marketing
in college, and one day Gregg talked to him about doing some marketing work for
the company. "I was reluctant, I can tell you," says Low, who didn't want to come
indoors and give up his days on the river. "But they kept telling me that guiding
was too simple, that I probably would want to do something that would help with
my career."
Gregg brought Low in as his right-hand man, helping to run the reservations
office and do the marketing. At the same time Joe David, the company's graphic
designer, was telling Gregg that AO needed to jump on the Internet. "And I was
saying, 'What Internet?'" Gregg says. "One morning in '95 or '96, I hooked up the
computer and spent 10 or 15 minutes looking around. I turned to Jamie and told
him our future was on the Internet -- and he was the guy who was going to take
us there."
Gregg knew that Low had done some work as a graphic designer and had a
methodical way of approaching problems that seemed suited to the Internet.
Once Gregg gave the word, Low made the Internet his project for the next six
months. "The first thing we did was set up an E-mail address," Low says. "We
were cautious, asking, 'This Internet thing -- is it a fad or will it take off?'"
Gregg was more confident. "I was so used to looking at a computer screen and
seeing nothing but monochromatic text," he says, "and suddenly I'm surfing and
seeing these companies presenting themselves beautifully. The Internet could
express everything I was trying to pack into all of the other marketing materials.
A print brochure was so expensive to produce that I had to live with it for five
years. The Internet was much easier to update. It could replace this marketing
monster we had built."
AO locked up its URL right away and set goals for the site that it would build. "It
had to be more than an advertisement," Gregg says. "It needed to be functional
so that people could get what they needed. It needed to work as a virtual call
center."
There were a few false steps. An early version of the site made heavy use of
frames, an annoying and now rare device that many browsers couldn't handle at
the time. Early on, the site's three navigation buttons were on the bottom of the
home page, so customers had to scroll down to see them. "That's when we
realized we needed to place the navigation bar on the left, so it would be visible
when you opened the site," Gregg says.
In the spring of 1997, Low launched a new iteration of the site, one that had
basically the same architecture it uses today. "It wasn't long before we realized
the time and energy he was putting into the site was reaping huge dividends,"
Gregg says. "In a few short months, we went from zero to generating 55% of
new revenues on the Web." Other costs came down right away. "Counting labor,
we had been spending 20% to 25% of our revenues on marketing at one point,"
he says.
"With the Web, it's now about 5% to 10%," Scott adds, completing his brother's
thought. "Between labor costs and marketing, we're spending almost the same
amount of money, but our revenues are much higher."
From the beginning, Gregg, Scott, and Jamie figured that the site had to be easy
to run, easy to find, and easy to navigate. Using such tools as a software package
called Wordtracker that helps choose useful keywords, AO pursued good
placement on search engines, registering on all of the majors. (Gregg's favorite is
Google. Using it to search the word rafting, he is only a tiny bit disappointed
when AO comes up as the second listing, not the first.) Now something like 70%
of the company's new business on the site comes through search engines,
according to Low.
With so much information listed on the site, AO has been able to limit the money
it spends staffing a call center. "If we were still doing this the old way, we'd have
to spend twice as much as we do now," says Gregg. Although the company is
spending about the same $150,000 a year in marketing as it did at the height of
its traditional programs, the site now accounts for roughly 90% of that expense.
And it delivers far better results -- and ones that are easier to track.
Long before AO got on the Web, Gregg Armstrong and company had created a
custom-software system for tracking reservations. Once the site was up, AO was
able to feed a lot of new data into the software. Today Gregg is able to generate
reports that parse customer information into fine detail. He can tell just how
much of his business comes through the site -- 84% in 2000, according to the
numbers -- and exactly where those customers are coming from.
The reports break out exactly how much revenue comes from corporate
programs, word of mouth, yellow-pages ads, AAA referrals, personal referrals, or
-- just in case the CEO missed anything -- a category called "Other." For a
numbers guy like Gregg, that kind of data is better than gold from Sutter's Mill.
"The whole key is that I can get the information I need to make smart decisions,"
he says. "Without that we'd be screwed. We'd be running on instinct."
You might think AO is constantly sinking money into Web development. Not so.
The site is mature now. It works, so there's less need for experimentation. "This
is a time to step back and evaluate," Gregg says.
Besides, it was a tough season this year. A light snowpack lowered river levels.
Worse, California's energy crisis crunched the entire industry. "The majority of
our business is on rivers that provide hydroelectric power," says Scott. "The
allowances of water for recreation were very low."
Still, the company has plans to further refine its Web site. For example, Low
wants to get a site map up soon. AO is also pursuing some co-branding outside
the industry. "We have 12 other sites driving traffic our way, but I won't tell you
what they are," Low says. Doesn't want to alert the competition, you know.
AO continues to pursue traditional marketing, although nothing like it did in the
old days. "When we started the site, we thought we'd eliminate the printed
materials in three years," Gregg says, "but you really need both to support each
other. The printed materials have to be as good as they ever were to compete
and build credibility."
"We once thought the Web would be a onetime investment, like a catalog," says
Scott. "Put up the site and lean back, and it will work for you over time. But that's
not the way it works. In the '70s and '80s, our customers were people on the
edge, real enthusiasts. Now our customers are people who will do something else
if they don't go rafting."
The company's Web strategy has done more than prove itself. According to Gregg, revenues from the site alone were $55,000 in 1997, $260,000 in 1998, and $600,000 in 1999. In 2000, the site brought in $760,000. "When I look at $760,000 from the Web and compare it to $34,000 from ads in the AAA magazine, I know it's well worth the investment of resources," Gregg says. In fact, he's sure it's the best investment AO has ever made.
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