Readers of BKW may recall a set of reviews I did of Neuvation Cycling‘s R28 aluminum clincher and C50 carbon fiber tubular wheels. I was impressed by the wheels for their quality, performance and cost. I’d known Neuvation’s owner, John Neugent, since the 1990s and was surprised by his decision to launch a consumer-direct company. In the bike biz, consumer-direct was once viewed with the same jaundiced eye vanity press editions were seen by the publishing world—generally speaking, they were manuscripts too bad or offbeat to be picked up by any commercial publisher, and the determined author would elect to pay for his own print run. For me, the Neuvation wheels put to rest the idea that consumer-direct was the bastion of those who didn’t understand the market and couldn’t achieve sales by traditional routes.
Debate raged in the comments. Some readers thought the Neuvation wheels were anything but PRO; after all, they didn’t cost thousands of dollars and weren’t in use by a ProTour team. Radio Freddy and I thought they were PRO because of their particular combination of performance and value. A dollar well-spent is just that. And while some readers reported some spoke breakage, all were adamant about John’s good customer service. Since that review, several consumer-direct operation have entered the bike market; I decided to have a chat with Neuvation Cycling’s owner.
RKP: For RKP readers who aren’t familiar with your long resume, fill us in a bit on your background please.
Neugent: I started as a partner in a bike shop in 1973 and have since been a rep, product manager, and VPs of sales, marketing, and purchasing for various bicycle industry companies. I was president of Sachs USA for 10 years and worked with Lee Iacocca on his E-bike project. I’ve been in the industry my entire adult life.
RKP: Given your experience, someone with your experience must be in high demand at bike companies. Why did you choose to launch a consumer-direct operation?
Neugent: I wanted to live in San Luis Obispo. I also felt that job security in a big company is, at best, an illusion. After I was fired from my last job for telling the owners they would go out of business following their business plan (which did happen within two years after I left), I decided it was time to really follow my long term dream of starting my own company.
RKP: What was the attraction for you in deciding to launch a consumer-direct company?
Neugent: I can sum up consumer direct sales in a very short paragraph. For the first time ever, it’s possible to buy well engineered and designed product off the shelf from the same suppliers who supply the premier brands. That is not smoke and mirrors marketing. It’s a fact. Add to that the efficiency of the Internet, and consumers can save 40-60% or more on products of equal quality and design made from the manufacturers who make the “Gucci” brands.
Brands have always used and will be forced into more use of smoke and mirrors marketing – which I define as vastly overstating the benefits of their differences. Now more than ever, they have no choice.
The real challenge for us, as a consumer direct company, is to out perform other consumer direct companies. Customer service is one of the keys. Customer service is not lip service (“Have a nice day.” does not cut it). I define customer service as how efficiently we resolve problems. That is not to say everyone gets everything for free all the time but we go out of our way to treat our customers, and ourselves, fairly.
RKP: Is the emergence of consumer-direct sales in high-quality wheels and composite components and frames really just a matter of product availability overseas? Can it really just be chalked up to Taiwanese and Chinese companies doing more in-house engineering, or were there other market forces that permitted operations like yours to emerge?
Neugent: The emergence of Taiwan and China as good sources of not only engineered product but also well designed product made it easier but the Internet and affordable, easy to use, computer programs were also a major factor. One small case in point. I normally handle about 100 customer correspondences a day (sales or customer service). In a bike shop, it would take 4-5 people to make the same contacts. On all levels, the Internet is driving down costs, making better consumer deals possible. Given that much of Internet technology is less than 10 years old (what was life like before Google?) it’s only natural that most industries, including the bike industry, are lagging behind.
RKP: Are your primary competitors other consumer-direct companies such as Williams, rather than big wheel makers such as Mavic and Zipp?
Neugent: Anyone who sells wheels is my competitor but the two giants are Mavic and Zipp. Zipp now more so because of the increased sales of carbon wheels.
RKP: What is the driver for growth in your product line? Is it just opportunity—availability of product—or is it by design—are there items you have wanted to add to your line?
Neugent: Cash. There is tons of opportunity but you need to be able to pay for it and effectively market it. I have had multiple offers from people wanting to buy the company but it’s not for sale. I plan on doing this a long time. It’s my dream job. But because I want 100% ownership, the growth is limited by my ability to fund it. In terms of new products, I will have a vastly expended saddle line, a tri bike, cross bike, MTB wheels, single speed wheels, and a higher end carbon frame all in the works. Also some additional stems and bars and seat posts (some in white – one of the hottest colors out there). Most are due in 2-6 months.
RKP: What do you see on the horizon for the consumer-direct channel in terms of new products and new challenges?
Neugent: New products – you name it. It’s honestly hard to imagine something you can’t do this way. The fundamental problem companies have is that they focus on the wrong thing. They focus on having new “technology” they claim is better. They they market the heck out of it even though it’s really just different and not better. Don’t tell them this (they won’t listen anyway) but what they need to focus on is how to bring true quality products to consumers for a lower price. That’s what I do. It’s a totally different focus.
The challenges are honestly quite simple and can be summed up by asking “What do my customers want and how do they want to be treated?” It’s simplistic to say that it’s easy to answer those questions while making a fair profit but that’s all there is to it.
As a recent Dilbert blog said “By far, the most interesting thing to anyone, is themself.” Therein lies all real marketing.
Thanks for giving me the opportunity of the interview.