A Web Strategy Runs Through It

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.

FOUNDING FATHER: When George Armstrong first dropped an old military raft into the river, the sport of white-water rafting didn't exist.

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."

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