Show Me The Money (Visit this link)
I want to come clean with a confession: Jerry Maguire is one of my favorite movies of all time. There, I said it. While I'm being vulnerable… I never miss a week of Survivor either. (Don't' judge too harshly). Now that I've totally opened myself up about my tastes (or lack thereof) let's roll into the opening scene of this amazing film.
The movie begins with super sports agent, Jerry Maguire (Tom Cruise) writing a mission statement (not a memo) entitled the "The things we think, but do not say." This mission statement was an inspired piece of clarity that brings to light that the company (Sports Management International) has lost site of its purpose. It became more about the money and less about the client. Jerry's mission statement actually suggested having fewer clients and making less money.
Of course, Jerry was promptly fired. So what does this have to do with the business of skydiving? Everything… except for the fewer clients and less money part.
There is a definitive shift occurring in the business of skydiving. USPA membership numbers indicate a slow and steady increase over the past decade, but student numbers appear to be decreasing at many DZ’s around the country. Many blame poor weather in 2013, and it was a factor, but it goes deeper. There is a hidden war raging in the game of search engine optimization (SEO) whereby third party organizations are rising within search rankings and picking off an ignorant public and overcharging them for their skydives. Mix this with the oversaturation of daily deals (in nearly every marketplace), an influx of newer dropzones and everchanging and inconsistent weather patterns and it’s little wonder that many established DZ’s are seeing a decline.
An Uneasy Panic
This change is being fueled by the way many DZO’s are reacting to conditions happening before our eyes. Similar to climate change, we’ve been aware of it, but the realities of what it actually means hasn’t conceptualized until now. Rather than pausing and seeking out correct action, many DZ decision makers are making quick, reactive decisions to try and boost volume. This reaction is being driven by the panic felt in seeing the numbers decline despite the economy actually improving.
In the case of daily deals (Amazon Local, LivingSocial, GroupOn) many DZO’s feel threatened that they are losing market share whenever a competing dropzone offers a deal. It takes discipline to not follow suit and offer a deal at a similar price. The majority of DZs do follow suit which decreases the demand for full-retail-priced student skydives which drives down the price significantly. This is scary when one considers the costs associated with running a DZ. The only way to offset these lower prices is to have very high volume in an extremely efficient operation. The model for high volume becomes compromised when more competitors enter the marketplace to get a piece of the action. The response? Continue to offer more daily deals, which forces DZO’s to enter a vicious cycle that they can’t get off of. This model that many DZ’s find themselves is not sustainable and will result in either more cutting corners to make the numbers work (which has the potential of elevating risk), going out of business or surviving long enough until others go out of business first.
What The Hell Do We Do?
So, the news above seems a little dire. I’m not an economist, but I’ve had the advantage of traveling around the US and different parts of the world looking at the industry from a business perspective. With a 13,500 foot view, here is what I would suggest:
1. Get Off The Train. At some point, the majority of DZs who are on the daily deal train will have to get off as they will recognize the lack of sustainability for the long term. The problem with getting off the train is the sudden cash shortage. Downsizing may be required whether it be with an aircraft, equipment or the size of staff, but it doesn’t have to be permanent. Decreasing expenses during this transition is key. Before pulling the plug from the daily deal cycle, begin making preparations for the cash shortage.
2. Normalize Pricing. Once off the train, begin normalizing pricing whereby each student jump made is profitable once again. Volume may not be as high, but the business will be more sustainable.
3. Win the Battle of Search. Amongst the price gouging, there’s actually some good news occurring. Third party vendors are charging up to $339 for a tandem skydive while offering lousy customer service and veiling a lot of truth to the customer. So where’s the good news? There are customers willing to pay a lot more than we’re currently charging to make a skydive! These third parties are pulling these customers in because they are winning the battle of search. Each DZ must invest in strong SEO practices to win this difficult battleground. Lately, more and more DZs have been joining these networks to offset the drop in business which only feeds this monster. Rather than join these networks, we must beat them.
4. Look a Million Dollars. Make the investment to have branding and website design showcase your DZ as a major attraction within the marketplace. Trading out jumps for the creation of a website with a local jumper will no longer cut it. Creating a website is one thing. Creating a functional website with great design is another.
5. Win the Customer. Throughout the last several decades, the skydiving industry has focused more on the skydive and less on the overall customer experience. DZs must focus on utilizing word of mouth marketing and transforming customers into joining the marketing team of the dropzone.
Be an Ambassador of Quan
When Jerry Maguire learned that he was being fired, he rushed back to his office and called every client he could to try and get them to stay with him as their agent. Only one demanding client stayed… the venerable Rod Tidwell (Cuba Gooding Jr). Jerry would eventually have to rebuild his business doing things the right way by being professional and focusing on the details. The same holds true for our industry. We must be flexible enough to change as the skydiving industry of today is vastly different than the industry of ten years ago.
It is not enough to build a great Web Site, that sight needs to be refreshed and maintained on a regular basis. I am amazes at how DZs go years without updating content and don't even keep their events listings current.
I run a DZ in Kansas, so not in the same boat as someone in Florida! Nobody in Kansas earns their living solely from skydiving, not even the DZOs. There are only three DZs in Kansas (fourth one gearing up), and we're spread out enough that we don't really compete. We tend to corporate as opposed to trying to cut each other's throat. For the last 10 years, no DZ in Kansas has been so short sighted to "feed the beast" that are the third party boiler room booking agents. Nor have any of us agreed to do what we do for a fraction of our posted prices, by engaging in daily deals.
The last conversation I had with a Groupon sales lady I asked her a simple question. "If your boss offered to double your working hours, and pay you the additional hours at 1/3 your normal hourly rate, would you do it?"
While I agree with much of what you have said, I think that you neglected to add the fact that increased competition (more DZ's) will have the affect of decreasing prices, even with out resale sites. Laws of supply and demand my friend!
It is time for DZ's to actively and professionally market, and sometimes re-brand their business, to remain competitive. But in the end, some will lose, just as the mom and pop shops have lost to Wal-Mart and Home Depot. Those that are going to be successful now will need to work toward growth and expansion.
I'm interested in the exact numbers as well--as someone who is wanting to begin AFF training, and is doing their first Tandem here soon, I'm really interested in learning about the market nature of Skydiving as well as the fun stuff!
In my view, #5 Win the Customer is most important. Coming back after being away 40 years, but did work at a skydiving center full-time in late 60's. I was surprised that less than 5% of tandem jumpers comeback for further instruction. However, when I see them sitting by themselves, after doing the waiver paperwork, and just waiting for their turn to be called it does not surprise me. They see canopies and their single freefall and think that is what this sport is about. Show videos in waiting area, encourage staff but most importantly other regular jumpers to engage these folks in conversation and make them feel welcome-- give them a glimpse of the sport on the ground and in the air. I don't know exactly how to change this aspect of the customer experience, but that is where I would start if operating a DZ. Less than 5% of tandems coming back for more is shocking. Just like a job seeker--every regular jumper at your DZ needs a short "elevator pitch" ready to share at the drop of a hat with anyone they think is a future AFF customer.
Two things have to happen: First, what skycat says about engaging the tandems. Only rarely at a couple of DZs in the NY metro area, where I jump regularly, do I ever see instructors and experienced skydivers talk to the waiting tandem throngs. I try to do this, mostly to show them that skydiving has a brotherly (and sisterly) vibe you can't find in most sports. You hope they think a little about this when they come down from the adrenaline high. Second, DZs need to reward fun jumpers (not just comp teams) with frequent jumper rewards. Loyalty should be encouraged. Not just on cheapo $21 Wednesdays and Fridays when things slow a bit during season. But...how's this... Make 10 jumps in two weeks and we give you a freebie? We have to get out of this mentality of discounting at the beginning stages (tandem). It's like the freakin' phone companies paying you to switch, and not giving you anything for being a long-time customer.
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- Show Me The Money - by James La Barrie (Posted: 2014-06-17)
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- The Daily Deal Dilemma - Dynamite Marketing or Industry Destruction - by James La Barrie (Posted: 2013-11-14)
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