Improving FBO Productivity in 2012: Business Strategies for Better Success
/(Part 3 of a 3-Part Series: Planning a Successful 2012 FBO Business Strategy)
By John L. Enticknap and Ron R. Jackson
Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort. —P. J. Meyer
In the first two installments of this three-part series, we discussed “Our FBO Business Outlook for 2012” and “Decreasing FBO Costs in 2012.” In this third part of our series we discuss ways to improve FBO productivity in 2012.
First of all, the key to executing any business initiative is to set realistic and achievable goals supported by workable strategies to accomplish these goals. As the P.J. Meyer quote suggests, intelligent planning and a focused effort are required. Here are three goals and supporting strategies we recommend to put you on the right productivity track for 2012:
- Increase Line Service Productivity
a. Avoid ramp and hangar mishaps
b. Create a credible audit system
c. Increase fuel sales at point of connection - Produce Better Financials
a. Fine tune your financial dashboard
b. Watch your fuel margins
c. Cash flow analysis and financial ratios - Build Long-Term Profitable Customer Relationships
a. Be the restaurant owner
b. Communicate your Customer Value Proposition
c. Don’t forget the Cheese
Goal No. 1: Increase Line Service Productivity
Strategy a: Avoid ramp and hangar mishaps
In the FBO business, there is perhaps nothing more perplexing than a mishap on a ramp or in a hangar involving a customer’s aircraft. It not only costs the FBO money and possible loss of business, it costs the customer valuable time and causes, needless to say, customer dissatisfaction.
The truth is, most mishaps can be avoided through proper training and adherence to a comprehensive Standard Operation Procedure (SOP) manual or document. Initial line service training and diligent recurrent training programs are essential. Following simple rules such as always using multiple wing walkers, especially in hangar situations, is vital. We recommend the NATA Line Service Training (LST) program as a great way to train your line service employees.
Strategy b: Create a Credible Audit System
As we noted previously, extra training keeps ramp and hangar mishaps to a minimum. However, we need to make sure training and management systems are monitored, utilized and policies and procedures maintained. An internal audit is one way to evaluate your training programs, but it’s hard to eliminate bias. Only an external audit can give you a true benchmark measure of policy adherence and performance.
There are a number of qualified professionals you can hire to evaluate your training programs and review OSHA compliance as well as environmental, SPCC plans and other internal/external operational procedures. In addition, an outside audit can verify and establish your business’s credibility with your insurance underwriters, which can often result in lower premiums. It also aids in keeping your line service team sharp and focused on safety and quality.
Recently, NATA established an industry-leading Ground Audit program. It is a nationally recognized audit program developed by and for the FBO industry. It uses trained and accredited auditors, including this blog post’s co-author John Enticknap. It’s a good program, but not easy to qualify for or complete. You may want to be one on the first FBOs to register and use it in your marketing campaigns.
Strategy c: Increase Fuel Sales at Point of Connection
Since your line service personnel are often the first FBO employees to come in contact with customers, they all should take part in any customer service training afforded to Customer Service Representatives (CSRs). In addition, they should be totally aware of any fuel promotion you have in place and should be capable of “suggesting” extra fuel at perhaps a volume discount.
Once you have your refueler hooked up to the aircraft, there are no additional fixed costs. Therefore, this is a great opportunity to pass along a fuel volume discount and add more fuel to the sale. Incremental sales of this type really add up and help improve the bottom line.
Goal No. 2: Produce Better Financials
Strategy a: Fine tune your financial dashboard
When you review your daily sales and productivity reports or dashboards, do you act on the information or just take it in stride? You should make sure the reports are giving you the information you need to make your business more efficient.
When you review your maintenance shop productivity, do you make sure the numbers match your targets? If you want 89% productivity from your technicians and don’t achieve it, even for a day, do you act on the information? If you lose even a few days out of the month, it’s easy to lose a month of reasonable profitability.
It’s the same thing on your fuel sales. If you’re having a soft month, run a fuel promotion. Use some demand pricing to stimulate sales.
Strategy b: Watch your fuel margins
During our NATA FBO Success Seminar we talk about fuel margins. This is no doubt one of the most popular subject matters at our seminars! Without a decent fuel margin your business doesn’t go anywhere.
With requests or demands for lower prices from your customers and contract fuel programs, there is increased pressure on your margins. We would like to recommend you institute our $2.00 management plan, another strategy we teach at our NATA FBO Success Seminars.
It works like this. When you price your retail Jet A fuel, set a two dollar margin as a goal. For example, in today’s market the price build-up would be approximately $3.30 GCPM-Platts—plus 65 cents for Federal taxes, transportation, and flowage fees, etc.—plus a $2.00 margin. Therefore, the total retail price would be $5.95. Most FBOs are above this retail market price already! Remind yourself, every time you have to spend $2.00 on overhead, you have to pump another gallon of Jet A. We suggest you keep a $2.00 bill on your desk to stay focused!
Strategy C: Cash Flow Analysis and Financial Ratios
We think it is fair to say most of your financial reviews involve looking at your profit and loss statement and balance sheets. As a reminder, you should also look at your Cash Flow Statement. This statement summarizes the operating, investing and financing activities of your business as it relates to inflow and outflow of cash. This translates to either positive or negative cash flow. With a focus on liquidity rather than profitability, it’s one of the single most important financial tools for your business. The statement provides a clear picture of how quickly cash is leaving the business compared with how promptly it is coming in. Have your bookkeeper/accountant provide this statement at least monthly.
There are two types of financial ratios which generally measure two areas within a company:
- Liquidity ratios indicate your company’s ability to meet current obligations on time. With problems in this area, you have trouble paying your bills on time. It helps identify needs for more capital, more sales, better management or all of the above.
- Profitability ratios measure your performance regarding your ability to generate revenues, net income and acceptable return on investment.
These are handy tools to use in your business to spot trends both good and bad. With these tools, you can have a better handle on cash management and forecast the effect on operations and profitability.
Goal No. 3: Build Long-Term Profitable Customer Relationships
Strategy a: Be the restaurant owner
In a previous blog, we discussed in length the concept of being the restaurant owner in managing your FBO business. Simply, this means getting out from behind your desk and managing by wandering around. Observe the workings of your FBO first hand. Praise your employees for the job they are doing.
But most importantly, just like the restaurant owner, meet and greet your customers from time to time. Show your CSRs and Line Service personnel, by example, how to create long-term profitable customer relationships by listening to the customer, calling them by name, and above all, thanking them for their business.
Strategy b: Communicate your Customer Value Proposition
Do you know what your Customer Value Proposition (CVP) is? It’s basically what you would tell someone about your business in a short ride on an elevator. It’s usually no more than a sentence, but it becomes your business mantra, your call to action.
As an example, here is one we developed for one of our clients, Heritage Aviation in Burlington, VT:
At Heritage, we are committed to quality service, the comfort of our customers
and a safe environment for their aircraft…and that’s Service You Can Fly On!
Not only is the CVP important for customers to understand, it also serves as a short, daily reminder about the level of service and commitment requested of all employees. In other words, it’s a service standard. Don’t be afraid to display the CVP in your FBO, publish it on your website and post it on your Facebook page.
Strategy c: Don’t forget the Cheese!
One of the customer retention strategies we touch on at our FBO Success Seminar is the concept of developing a memorable way for FBO employees to deliver an exceptional customer service experience. While most FBOs don’t tolerate mishaps on the ramp, why should they tolerate miscues with customers?
By standardizing your customer service training, you can consistently meet the needs of your customers, increase retention, and build the long-term profitable relationships you value.
At Aviation Business Strategies Group, we’ve developed a standardized training approach we call Don’t Forget the Cheese!
Simply, it’s a memorable way to help employees remember to do the simple things, like smile, even when they answer the phone; be professional yet personable; and above all, add a little something extra to each transaction. That’s the power of not forgetting the cheese!
Read Part 1: Our FBO Business Outlook for 2012
Read Part 2: Decreasing FBO Costs 2012
Let us know what you think! Please email John Enticknap at jenticknap@bellsouth.net or Ron Jackson at ron@thejacksongoup.biz.
Ron Jackson
Ron is Co-Founder of ABSG and President of The Jackson Group, a public relations agency specializing in aviation and FBO marketing. He has held management positions with Cessna Aircraft and Bozell Advertising and is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese! the ultimate FBO Customer Service Experience.
John Enticknap
John founded Aviation Business Strategies Group in 2006 following a distinguished career in aviation fueling and FBO management, including as president of Mercury Air Centers. He is the author of 10 Steps to Building a Profitable FBO and developed NATA’s acclaimed FBO Success Seminar Series.