The Web site has also sparked other, less obvious, strategies for generating customer loyalty. Among them is the company's insurance program. Neckel knew how difficult it was for customers to find insurance for their houseboats and how prohibitive the premiums were once they did. So he negotiated with United Marine Underwriters, headquartered in LaGrange, Ky., to create a specialty houseboat-insurance product, which Sumerset now markets over its site. Both Sumerset and its customers appear to be happy with the deal. "Customers who were paying more than $3,400 for their previous insurance are now paying $1,200," says Neckel. United Marine pays Sumerset a set fee to market its product on the Sumerset site. "That fee alone pays for the connectivity of our site and more," says Helton.
Warm-and-squishy aspects of building a customer community notwithstanding, what Sumerset is really trying to do when it aggregates past and potential buyers is sell them stuff -- and as much stuff as possible. "In the grand scheme, this is still a niche market," says Helton, who notes that Sumerset builds only about 150 boats a year. "There's only so far it will ever grow. So you have to maximize the profit on the sales you make."
But with the Web site, the company has an opportunity to sell a lot more than just boats, Neckel says. To that end, Sumerset entered into an agreement in June with iiCaptain.com, a third-party online marine store, through which Sumerset's customers can select from thousands of boating accessories, from depth gauges and fish finders to ropes, anchors, and engine parts. Sumerset gets a 20% commission on sales generated by the link. "We've probably done about $10,000 in sales, which isn't a lot," says Helton. "But that's $2,000 we made without really doing anything."
Whitecaps along the way
Of course, beyond the equipment cost of setting up the new site (which Neckel pegs at around $10,000), the company must factor in the cost of staffing it. In addition to Helton, three other employees contribute regular content.
For Neckel, the biggest challenge to being a wired business in Kentucky is, well, being a wired business in Kentucky. With Lexington (the closest large city) 65 miles to the north, Somerset is hardly a nexus of Internet connectivity. "We have more T1 activity here than in the entire town," says Neckel. He reports that it's a battle just to keep the company's Internet connection going. "We once had the site go down because someone hit the wrong switch at the local Dairy Queen," he says. Neckel explains that the wires through which Sumerset used to connect to the Internet passed through a repeater switch in the rear of said Dairy Queen, with a piece of tape over the switch warning the soft-serve jockeys not to turn it off. "It wasn't very professional," he says. "We had to educate the provider on setting up multiple routes and doing maintenance."
Despite such minor setbacks, Helton has big plans for the future of the Sumerset site. He's considering using video in addition to the digital photos to showcase the boat-construction process. But there are more stumbling blocks. Although the company has ample capacity for such a system, Helton is concerned that customers with a dial-up Internet connection will get frustrated waiting for the immense video files to download. And he and Neckel are also concerned about competitors' looking in and stealing manufacturing ideas. Closer to fruition is an online houseboat-rental system, in which customers will be able to sign up for floating vacations aboard a boat from selected marinas with the option of putting the rental cost toward the price of a new boat. "We hope to have the whole thing up by the first of the year," says Helton.
But even if future enhancements don't pan out, the Web site has already had a significant impact on Sumerset's business health. Last year the company sold 44 boats through off-line broker-dealers -- a system in which the boats are heavily discounted. "Now we've completely replaced those brokered sales with Internet sales," says Neckel. "Cutting out the middleman increases our profits on those sales." And overall sales just keep growing. Neckel projects that this year's sales will nearly triple those of 1997.
And all that from a simple URL and a little ingenuity.
Christopher Caggiano is a senior staff writer at Inc.
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