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AndyMan 7
QuoteNobody will want to pay $200+ for a tandem if they know they can wait and get it for $100.
The DZO of Chicagoland Skydiving Center tells me that since starting with Groupon, the number of people paying full price has gone up. This is secondhand, so take it for what its worth.
The PIA conference will be interesting for sure!
_Am
__
You put the fun in "funnel" - craichead.
You put the fun in "funnel" - craichead.
chuckakers 370
Quote$109
minus 2 airplane slots, about $36 leaves $73
minus tandem/I and packing, about $45 leaves $28
minus wear and tear on rig and maintenance, is at or about all that is left (explained in other threads) leaves ZERO or worse, negative
[sarcasm]At least everything else at the dropzone, like electricity, rent, taxes, staff is free[/sarcasm]
sorry dude, the $100K that you are talking about is a fantasy.
if 20% of them don't show up and I get to keep the money, well then there might be some profit in it, but I actually have a conscience and am not interested in ripping off that many people.
If I sell 400 tandems even somewhat below regular price, then I make just as much money and Groupon does not get a cent of it.
I do not have a problem with Groupon making a dollar - I have a problem with them making a dollar at my expense.
Not to mention, the Groupon sales guy here in Tampa that I was dealing with was/is a complete dick
TK, you and I part ways on this one. There's a lot more going on than simply doing low or no-profit tandems - if you choose to see and capitalize on it. Seeing only the immediate is selling yourself short as a businessman.
As a former DZO and current vidiot at a Twin Otter DZ that has done one round of Groupon tandem sales, I've had the advantage of seeing what it does to the overall picture at the DZ. I've also quizzed these folks and carefully observed the results of the program in total, not just how many additional tandems are being done. Here's what I've learned.
Cheap tandems tend to buy the (profitable) video package at a noticeably higher rate than full price buyers. Same goes with t-shirts and (presumably) other merchandise offered at the DZ - all of which have healthy profit margins.
Cheap tandems almost always bring at least one person with them, most of whom are buying a full price tandem. Often several people are with them. The cheapo tandem buyer turns into a recruiter because they don't want to come out alone. And of course with more customers comes more video and merchandise sales.
Cheap tandems increase overall volume, and that makes for happy staffers (maybe not a problem in Z-Hills, but most DZ's don't have the luxury of operating in a high traffic tourist area). I watched this summer as TI's and vidiots increased their paychecks by 30% or more.
Cheap tandems dramatically increase weekday business, as the weekend schedule fills up further out on the calendar, forcing some of the volume to shift to weekdays. Again, this may not be an issue at Z-Hills, but at the vast majority of DZ's the plane sits idle for much of the week.
Cheap tandems take advantage of the old adage "charge a dollar for the first jump and a thousand for the second and you'll have more skydivers". Obviously not possible to that degree, but the point is the same. Customers that don't make a first jump will never make a second, a 100th, or a 5,000th. Yesterday alone I spoke to a group of 3 and another group of 2 that are seriously considering (I can usually tell the difference) entering the student program. In the case of the group of 3, only one bought a cheap tandem. In the case of the group of 2, both were cheapies, but both also bought the (profitable) video package.
Next, you are way off when you say you have a problem with Groupon making money at your expense, because they aren't. They - like all the online couponing companies - provide a service you can't provide for yourself. Have you considered what it would cost your business to perform a marketing stunt that would result in selling 1,400 tandems in 24 hours (as my home DZ did with the program)? I'd bet it would cost a bundle, and would come with no gurantee on a return on that cost. Additionally, with the exception of any set-up fees they may have, the coupon company only make a buck when you do. They - not you - spent the money to find your customer. You are simply paying a commission for that, not unlike the ol' "bring a tandem, get a free jump" deal offered to experienced jumpers at many DZ's.
You also mention "ripping people off" when speaking about cheap tandems that may never actually make their jump, thus skewing the numbers to the DZ's advantage. With that statement (and including the caveat that you have a conscience) you are saying you believe selling someone a product they might not use is stealing from them. Nothing could be further from the truth. No where in the cheap tandem deal is there a bait and switch, a misrepresentation, or other issues that would cause someone "with a conscience" to feel they are ripping off the buyer. The expiration date of the certificate and restrictions (age, weight, etc.) are clearly stated up front, and no one is forcing the buyer to make a purchase. Using your logic, if I buy something with an expiration date of my own free will and choose not to use it before it expires, I have somehow been cheated. Does a concert promoter owe me my money back if I buy tickets and don't go to the show? That's essentially your argument. If I use a particular car wash because they offer a second wash free, but I don't use it before it expires, have I been ripped off? TK, Simply knowing there will be a percentage of cheap tandems that never show up at the DZ does NOT mean DZO's who use the program are knowingly ripping people off. The buyer made their purchase choice freely, and they alone choose to redeem it or not. That's simply free market capitalism at work.
If your plane is full all day every day with full or nearly price tandems, this program may not be for you. However, the program seems to do one thing very well, and that's increase volume across the board. Rather than seeing the program as filling your already full plane with low or no profit tandems, why not see it as a way to add to your aircraft fleet by adding to your overall volume? After all, the airplane could care less what kind of customer gets onboard. It makes money on lift tickets alone, and the real money in this business is made building equity in expensive planes.
Do the math. If, after considering everything - the evil no-redemption rate, the increase in video and merchandise sales and purchase ratios, the increase in full-price business generated by the cheapies, the (assumed) increase in new experienced skydivers created by the increase in first-timers, the increase in staff paychecks, and the increased profitability of efficiency gains made by spreading fixed aircraft costs over more loads (which is very real) - I see the program as pretty darned smart for the average DZO.
If you can't get past feeling like you're ripping off the guy who chooses not to redeem the certificate and feeling like the coupon company is somehow ripping you off for taking a cut for their services, you probably won't crunch the numbers any further. But unless your business model is a hell of a lot different than most DZ's, I feel pretty confident your bottom line would improve using one of these programs to the extent necessary to maximize what you are already doing.
If your bottom line is better, you can do more to further the sport - and that is good for all of us.
Chuck Akers
D-10855
Houston, TX
D-10855
Houston, TX
tkhayes 126
sorry but I disagree with most of everything that you state - not everything, but most of it.
JerryBaumchen 1,048
Hi chuck,
Disclaimer: I do not have a dog in this fight & have never ran a dz.
But I do see your argument, from being a vidiot, as being biased ( at the end of the day, all arguments are biased 
)
You say:
QuoteI see the program as pretty darned smart for the average DZO.
and TK says:
Quote$109
minus 2 airplane slots, about $36 leaves $73
minus tandem/I and packing, about $45 leaves $28
minus wear and tear on rig and maintenance, is at or about all that is left (explained in other threads) leaves ZERO or worse, negative
Why would any businessman want to increase his negative sales as being part of his business plan?
There may be some money to be made from the ancillary stuff ( t-shirts, video's, etc ) but if TK says that it is a money losing proposition, I gotta go with him on this one.
And he does seem to be a rather successfull dz operator.
JerryBaumchen
Skydive2 1
I have to side with TK on this one. Selling a tandem for $99 is crazy! No doubt they are taking a serious(!!) loss every time that Twin Otter (or Cessna 182 for that matter) takes off. Sure you sell a couple of t-shirts and the outside video guys and tdm instructors are happy cause they've got a bunch more work and the most import thing is they don't have to take a pay cut like the DZ is. I would never run my C-182's for one load of $99 tandems let alone do it day after day. I don't care how many "friends" they bring with them and how many t-shirts they buy.
I bet if your DZO told you that he was now only going to pay you, lets say $20 to do a groupon video, as to where you get $40 for a a "fully paid tandem" you'd look at that group of 20 groupon customers you have next Saturday a lot(!) differently....
I bet if your DZO told you that he was now only going to pay you, lets say $20 to do a groupon video, as to where you get $40 for a a "fully paid tandem" you'd look at that group of 20 groupon customers you have next Saturday a lot(!) differently....
The thing about Groupon is there are no surprises. You can choose the maximum coupons that can be sold and the minimum it takes for the deal to happen at all. You set the expiration date too. You know ahead of time how much money you'll get for each coupon sold. They basically pay up front after the deal. The money is in your pocket whether or not the customers show up. It's not going to work for every DZ. You have to do the math and decide if it's a good deal for your DZ. I wouldn't consider it in the middle of our busy season when we're already running near max capacity. It wouldn't make sense. But run a deal when you're itching for business, and it's another story. My DZ did it to keep the Otter flying for the fun jumpers late in the season. I believe 100% of coupons were redeemed, which was a surprise. We turned our slowest month into our busiest tandem month in our history. We didn't make a killing, but the plane flew every weekend that month, 8am to sunset.
The numbers depend on the area and are somewhat negotiable. I can tell you my DZ didn't give away $99 tandems, and we didn't split the profit 50/50 either.
Dave
The numbers depend on the area and are somewhat negotiable. I can tell you my DZ didn't give away $99 tandems, and we didn't split the profit 50/50 either.
Dave
http://news.cnet.com/8301-13577_3-20023978-36.html
-I probably made 30 more weekday jumps this year because I was on light Otter loads;
-Yes, more videos were shot and more t-shirts sold. How does that affect the bottom llne?
HW
-I probably made 30 more weekday jumps this year because I was on light Otter loads;
-Yes, more videos were shot and more t-shirts sold. How does that affect the bottom llne?
HW
Skydive2 1
It does effect the bottom line, but very, very little. Do you know what the mark-up on a t-shirt is? $5-$10 at most. I'd have to sell each customer at least 5 shirts at a $10 profit per shirt (which is top dollar) to even try to begin to make up for the money I've lost flying my planes with $99-$129 tandems. Do you really think thats possible?
I do agree with Dave, its nice if you need some quick cash and/or customers to keep an airplane flying, or to overhaul that 182 engine or buy a hot for your turbine. but, if you've ran your business the correct way you should already have money for those things set aside in reserves....
If I had a pizza joint where I'm selling a large pizza for $15 when I might have $3 in ingredients (and zero(!) liability) I would use groupon all the time. But in skydiving profit margin is very low and liability very high, at best, so seems very counter productive to sell a tandems at $129 and lose money. Remember in business if your not making money.....your losing money!
I do agree with Dave, its nice if you need some quick cash and/or customers to keep an airplane flying, or to overhaul that 182 engine or buy a hot for your turbine. but, if you've ran your business the correct way you should already have money for those things set aside in reserves....
If I had a pizza joint where I'm selling a large pizza for $15 when I might have $3 in ingredients (and zero(!) liability) I would use groupon all the time. But in skydiving profit margin is very low and liability very high, at best, so seems very counter productive to sell a tandems at $129 and lose money. Remember in business if your not making money.....your losing money!
I know our guy that set us up with Groupon talked to a massage therapist that has used Groupon. Her business about broke even on each coupon sold. But they had a slow period and a bunch of employees sitting around. It kept them employed.
It's a marketing and business tool. It's not going to make or break a business, but it can be used effectively. I've heard about one DZ (mentioned by the original poster) that sold so many coupons through groupon that they had to fly their plane super light on weekdays, shutting down to pack between every load, just to try to accomodate all the business. I don't understand it. I can't see how they aren't losing their shirts on that deal. But I bet their full time staff loved the extra business.
Groupon isn't necessarily good or bad. It's a tool. Not that a comparison has been made, but it's nothing like skyride. You don't have to sign a horrible deal with the devil to try to compete against other DZs that have signed up. If the numbers they give you don't work, don't do it.
Dave
It's a marketing and business tool. It's not going to make or break a business, but it can be used effectively. I've heard about one DZ (mentioned by the original poster) that sold so many coupons through groupon that they had to fly their plane super light on weekdays, shutting down to pack between every load, just to try to accomodate all the business. I don't understand it. I can't see how they aren't losing their shirts on that deal. But I bet their full time staff loved the extra business.
Groupon isn't necessarily good or bad. It's a tool. Not that a comparison has been made, but it's nothing like skyride. You don't have to sign a horrible deal with the devil to try to compete against other DZs that have signed up. If the numbers they give you don't work, don't do it.
Dave
Skydive2 1
your right, don't get me wrong i'm not saying groupon is a bad thing at all. There are some business that have as much as a 50% mark up on products for them is something like groupon is a no brainier and I'm sure is an awesome marketing tool!! and the best part for them is in there not totally loosing there ass every time a customer walks into there business.
I've just crunched the numbers every way I could and from a skydiving standpoint I can't see where it pays off in the end. Even when factoring in no shows, t-shirt/video sales, ect (all of which are variables). If they all show up and everyone is too cheap to get a shirt or video and don't have any friends too bring...then your "gamble" is a total failure and you get sit around and watch your airplanes lose you money every time they start up.
I guess the only good thing is you don't have to listen to the staff whine about lack of work, you get to listen to them whine about too much work. Typical for a DZO though, when your winning your losing and when your losing your still losing....lol!
I've just crunched the numbers every way I could and from a skydiving standpoint I can't see where it pays off in the end. Even when factoring in no shows, t-shirt/video sales, ect (all of which are variables). If they all show up and everyone is too cheap to get a shirt or video and don't have any friends too bring...then your "gamble" is a total failure and you get sit around and watch your airplanes lose you money every time they start up.
I guess the only good thing is you don't have to listen to the staff whine about lack of work, you get to listen to them whine about too much work. Typical for a DZO though, when your winning your losing and when your losing your still losing....lol!
how many groupon customers return for AFF or more tandems?
Its not all about the initial sale, its getting people in the door and experiencing skydiving, then they get hooked.
Its not all about the initial sale, its getting people in the door and experiencing skydiving, then they get hooked.
Moriuntur omnes, sed non omnes vixerunt.
QuoteIts not all about the initial sale, its getting people in the door and experiencing skydiving, then they get hooked.
No, it really is about the initial sale. The VAST majority of tandems never come back to the DZ, and a slightly smaller VAST majority of AFF students never come back to the DZ. Of the slight few that return for a second jump (of any kind) even fewer actaully return for the thrid. Just consider for a minute how many students earned an A license at your DZ this year, and compare that to the number of first jump tandem or AFF students.
There must be a profit for every first jump student that comes through the door. With the high probability of they will never be back, 'investing' in their jump by selling it under cost is a losing propositions. That's not to say that you can't cut the margins to a slim profit, and use the excess business to fill out slower times in your schedule or keep your staff and airplanes busy, but there has to be a profit involved in every one.
There will always be unexpected expenses in business, so you have to be ahead money to account for that. If you're losing $20 a head on a group of 5 tandems, and somebody loses an altimeter or has a cutaway and loses the freebag, that load just cost you $300. Even if everything goes right on the load, you still lose $100.
If you were making $20 a head on the deal, that same load would only cost you $100, becasue you'd be up $100 on the tandems and out $200 on the loss. Of course, if everything goes right, you (and your staff) all make money.
My DZ did almost half as many A-license check dives this year as Category A jumps. Insane retention rate like nothing I've ever seen. About 77% of Category A students made a B jump, and close to half made it to Category H. And we still have a couple students trying to finish before it gets too cold. I think we have almost as many new A-licensees this year as we had jumpers last year... well almost.
So based on one data point, you're completely wrong! 
Seriously though, you're right that when you take a low profit margin business and cut the profit down to nothing, you're really taking a chance at getting bitten. But some of the numbers in this thread are a bit more scary than they might be in real life... we brought in more per coupon than lodi does on a regular tandem.
Dave
chuckakers 370
QuoteHi chuck,
Disclaimer: I do not have a dog in this fight & have never ran a dz.
But I do see your argument, from being a vidiot, as being biased ( at the end of the day, all arguments are biased)
You say:QuoteI see the program as pretty darned smart for the average DZO.
and TK says:Quote$109
minus 2 airplane slots, about $36 leaves $73
minus tandem/I and packing, about $45 leaves $28
minus wear and tear on rig and maintenance, is at or about all that is left (explained in other threads) leaves ZERO or worse, negative
Why would any businessman want to increase his negative sales as being part of his business plan?
There may be some money to be made from the ancillary stuff ( t-shirts, video's, etc ) but if TK says that it is a money losing proposition, I gotta go with him on this one.
And he does seem to be a rather successfull dz operator.
JerryBaumchen
Yes, TK does run a successful drop zone. And so do many DZO's that have used online couponing. And the ones I've talked to plan to continue. Apparently it's better than a net zero for them or I doubt they would be going back for more.
As I said to TK, if the DZ is running at capacity or nearly so, these programs won't do much for them because the DZ would only be replacing high gross tandems with low gross ones. However, if there is extra capacity - and nearly every DZ has some - taking slim profits on a controlled basis can be used to spur traffic, promote the DZ, and keep staff paychecks up.
I have seen the results for myself and I can tell you the cheap tandems seldom walk in alone and often come with several full price customers. That fact changes the math entirely, and the DZO's using the program seem to understand that.
When a cheap tandem walks in with 2 or 3 full priced tandems and some or all them buy a video package, T-shirt, etc., it makes selling one cheapie a pretty smart move.
Either that or retailers have been using price point marketing incorrectoly all these years.
Chuck Akers
D-10855
Houston, TX
D-10855
Houston, TX
Skydive2 1
Quotehow many groupon customers return for AFF or more tandems?
Not enough to justify selling tandems under $140
AndyMan 7
QuoteThere may be some money to be made from the ancillary stuff ( t-shirts, video's, etc ) but if TK says that it is a money losing proposition, I gotta go with him on this one.
I've said this before, so I'll say it again, only more bluntly.
Neither Rook Nelson(chicago), nor Doug Smith (chicagoland), nor Keith George(midwest) are in the business of selling tandems at a loss. They don't do it. Period, end of story. I don't speak for any of the DZO's, but I'm pretty sure every tandem sold on Groupon for all three DZ's has been profitable. When the volumes have come in, it's been tremendously profitable. And just in case you're wondering - Midwest doesn't own their airplanes.
Every Groupon tandem they do makes money. If they don't make money, all 3 men are smart enough to stop doing it. None of them do tandems for charity.
If Chicago, with its 8 month skydiving season can somehow make money on a cheap tandem, you can bet your firstborn the biggest DZ in south Florida can too. Same goes for Texas (yup, successful there too), and So-Cal.
The explanations have been made frequently - including the high no-show, the high full price tag-along, and the video sales. I really can't comprehend why people are ignoring this. Do you really think the collective owners of 3 of the country's busiest tandem dropzones are doing this at a loss?
_Am
__
You put the fun in "funnel" - craichead.
You put the fun in "funnel" - craichead.
Dean358 0
What seems to be getting lost in discussing Groupon is that – for better or worse -- the original model for their Groupons was not to make money for the participating business. Rather, it is a “pay-for-performance” advertising model. Much like Google’s Ad Words are a "pay-per-click" model for the web, Groupon is a "pay-per-customer-who-shows-up" model for the real world. I believe that’s a big component of why Google is interested in purchasing them.
Consider: a small business could hire an agency, creates some ads, buy some media time and hope that new customers show up. The total cost of the advertising divided by the number of new customers = the cost per new customer. And the business doesn’t know what this will be until after they’ve invested their money. With Groupon, the business knows up front what the cost per new customer will be.
What makes this controversial is: 1.) What’s the quality of the new customers that show up, i.e. will they become repeat customers or are they just there one time because of the Groupon? And 2.) This model only works for certain types of business. In their pursuit of growth, Groupon has expanded into high cost per unit businesses, such as aviation, where their model may not work very well at all.
Consider: a small business could hire an agency, creates some ads, buy some media time and hope that new customers show up. The total cost of the advertising divided by the number of new customers = the cost per new customer. And the business doesn’t know what this will be until after they’ve invested their money. With Groupon, the business knows up front what the cost per new customer will be.
What makes this controversial is: 1.) What’s the quality of the new customers that show up, i.e. will they become repeat customers or are they just there one time because of the Groupon? And 2.) This model only works for certain types of business. In their pursuit of growth, Groupon has expanded into high cost per unit businesses, such as aviation, where their model may not work very well at all.
www.wci.nyc
QuoteIn their pursuit of growth, Groupon has expanded into high cost per unit businesses, such as aviation, where their model may not work very well at all.
Just to add to that comment, there was a Groupon offering in the Cleveland area for an introductory flight at a local flight school (actually not that local, about an hour from town). Either way, the deal was for something like $110 or $120 for the flight, which they listed as a '$180 value'.
Meanwhile the fine print revealed that you would have a 30 minute 'ground school', followed by a 30 min flight with an instructor in a 152. Just for reference, you can rent a 152 at another local flight school for about $80/hr, and that's an hour of actual in-air flight time. Add in about $20/$25 for an instructor.
So what you have with that deal is the 'double whammy', where they inflated the regular price to beef up the gap between it and the Groupon price, and then reduced the flight time to lower the operators cost per coupon. It seems that for higher ticket items like this, it does take some special circumstances to make to work.
Again, if you can maintain a profit of some sort, and control the flow of these low-margin tandems into your schedule so they're working for you by filling in the excess capacity you have after you've booked as many full price tandems as possible, then Groupon may be a good fit. If you're close enough to capacity that you (as a DZO) and your staff are happy, then giving away tandems for close to cost makes little sense......
.....HOWEVER, how long before Groupon turns into a Skyride type fiasco, where DZ A starts to use Groupon, and then DZ B, who declined to use Groupon at first, has to also make a Groupon offering becasue DZ A is cornering too many customers with the program. You end up with both DZs fighting to rope in these discount tandems, where if both of them had just declined (assuming there are only two DZs in town), they would both still be competing on a level field for the same pool of customers, just a higher profit per customer when they let Groupon in on the deal.
IanHarrop 37
Just FYI to everyone, saw this in the news today
Title "Google's $5 billion offer for Groupon is no discount"
http://www.itbusiness.ca/it/client/en/home/News.asp?id=60362
Title "Google's $5 billion offer for Groupon is no discount"
http://www.itbusiness.ca/it/client/en/home/News.asp?id=60362
"Where troubles melt like lemon drops, away above the chimney tops, that's where you'll find me" Dorothy
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