Best of the Small Business Web: Conjunction Junction
Company: Compaero Inc.
Revenues: $2 million
Web address: www.compaero.com
Site launch cost: $3,000
Current technology profile: Microsoft Windows NT, Microsoft SQL Server, Allaire ColdFusion
Why we love it: This distributor makes its complex products a cinch to buy and quintuples its customer base
Categories of success: Utility & ROI
Al Gore might want to consider using Tim and Betsy Small in his campaign ads. Compaero Inc., which the couple started in their basement 10 years ago, embodies two of the presidential candidate's favorite themes: the need to nurture an ever-more-powerful Internet and the need to dismantle the Rube Goldberg-esque inefficiencies of government.
Compaero, in Midlothian, Va., sells connectors -- electronic components that meet military specifications and are used to build everything from space shuttles to naval warships. The company had been an exporter, servicing the same few overseas aerospace companies year after year. But after attending an AT&T seminar on E-commerce in 1996, Tim Small realized he could get tiny Compaero's face in front of thousands of new clients, including -- in a reverse take on the globalization trend -- domestic ones.
Among the prospects the Smalls sought were U.S. military installations and agencies within the Department of Defense (DOD). Historically, the DOD had been obligated to conduct all its procurement through a federal clearinghouse -- a time-consuming, expensive, and often frustrating procedure. But recently, the department freed its procurement officers from that obligation for smaller purchases and even issued them government credit cards to further streamline the process.
Those changes opened up a huge new market for the Smalls -- as long as they could get exposure to crucial purchasing officers. And they did. Since the company launched its E-commerce site in February, it has received more than $250,000 in orders from 100-plus new customers.
"The magic is that we are transforming ourselves from doing a lot of business with a small number of customers to having a very broad base," Tim Small says. Until 1997 -- the year Compaero fielded its first marketing-only site -- 80% of the company's business came from 40 accounts. Now, Small says, Compaero has more than 200 active customers.
About 20% of those new customers are naval, army, and air force facilities -- the "dot-mils," as Small calls them -- who find Compaero's site through its banner ads on AltaVista and other search engines. "Some of our older customers are not on the Internet," says Small. "But the navy is there. They find all the information they need and place an order using a government credit card." And instead of waiting 180 days, the typical turnaround time for customers using the government's clearinghouse system, "we have it to them in a week or two."
Although Compaero's site isn't much in the looks or personality department, it is the ideal tool for procurement officers who may need to buy many connectors at one time in order to build a particular custom part. The site links to a 200,000-item database of connectors, relays, circuit breakers, and switches that the Smalls know are readily available from their favored suppliers.
Each piece comes with a mind-numbing roster of specs -- size, material, how the material will perform at different altitudes and temperatures, polarization and rotation data, and so on. Compaero's on-line catalog presents logically ordered menus of options that allow users to configure their particular needles with almost complete disregard for the mountainous haystack in which they reside.
Once the part is created, the database returns its price in various quantities, its availability, and a list of accessories that accompany the component. Like any business-to-business site worth its salt, Compaero's site also offers password-protected order-tracking and account information.
One of the site's most impressive aspects is the way it deals with special requests. If a customer bypasses the menus and simply types in a part number, and if that part number doesn't exist or isn't listed in the database, the order automatically becomes a special request for quotation and is sent directly to Small. Then Small or one of his eight employees searches for the item in question and responds within 24 hours. (The researcher either suggests a substitute part or finds the item by calling around to manufacturers.) "No matter what, we take care of them," says Small.
In addition, each part is accompanied by a diagram so that engineers designing the cockpit of a 747, for example, can see what size and configuration connectors they'll need to wire together the instrumentation. Small is transforming all of those individual diagrams into libraries of PDF files (files that are easy to exchange over the Internet and that anyone with a free Adobe Acrobat Reader can view). By the end of the year, he expects to have more than a thousand such files posted on the site, making it even easier for customers to choose the right product.
Small anticipates that customers and noncustomers alike will use the PDF files for research, and since each one will be stamped with the Compaero name, he hopes to convert a large number of those researchers into customers. "Every time a customer downloads or views one of these sheets, they are seeing it in the Compaero format," he says. "So we are using the Web to brand the name."
In September, Small was expecting another spike in traffic, thanks to a stepped-up banner program. Compaero's ads run on Yahoo, Lycos, and AltaVista and appear whenever anyone types in the words mil spec, short for military specification. Compaero is also experimenting with its first print ad -- in an issue of the publication Connector Specifier, which is distributed at the industry's largest trade show. Finally, the site should benefit from the attention of a full-time marketing manager: the Smalls' son, Robert, who was swept up by the project while on summer break from Virginia Tech.
Tim Small's own enthusiasm is so intense that he just barely manages to retain an even keel. "If this turns us into a $50-million company, then I can sit back and say, 'Wow, isn't that great?" he says. "If it doesn't, I can still sit back and say, 'At least it's been very exciting."