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Thursday
Mar242011

Flight Schools: Time to Think Outside the Box

He who would learn to fly one day must first learn to stand and walk and run and dance; one cannot fly into flying.” – Friedrich Nietzsche, 1844-1900

Friedrich Nietzsche, a controversial philosopher for his time, made this statement before the Wright Brothers even flew, so we may assume he was not referring to the business of training people to fly. However, this quote has much relevance to our FBO flight training activities today.

It wasn’t that many years ago that the majority of FBOs were defined as “full-service companies” offering flight school training, new and used aircraft sales, charter, maintenance, hangars, and terminal facilities.

The business model was to market to potential pilots, both professional and recreational, train them, sell them an airplane, hope they would trade up, maintain the airplane, hangar it and, of course, sell them fuel and various services. As the pilot grew in experience and need, the FBO could make a good living by selling the next biggest aircraft.

It was a cradle-to-the-grave concept, and it seemed to work just fine.

The Changing FBO Business Model

However, in the last 30 years, the business of running an FBO has become much more specialized. It has evolved to the point that a full-service FBO is almost nonexistent. We now have businesses that have become SASOs (specialized aviation service organizations) that specialize in primarily fuel, line services and real estate management.

On one hand, I believe this has been a healthy trend for the industry because it allows the owners to specialize in a narrow facet of the FBO business based on their particular talents and knowledge.

On the other hand, this trend has taken the emphasis away from developing a growing pilot population. The growth of aviation is directly tied to maintaining a high interest in training new pilots. The pilot population topped out a number of years ago and has been declining ever since.

We hear all the usual arguments: high cost (by the way, it has always been costly to learn to fly), poor flight instructors, old slow aircraft, etc. AOPA recently completed a study of the student pilot dropout rate, so there will be more talk of that in the near future. That is a subject for another time.

Because many FBOs have chosen not to provide flight school training for whatever reason, an important resource is vanishing in many communities across the nation.

That leaves primarily the specialized schools to fill the void. We have a few national chain flight schools, those schools specializing in instrument training and individual schools that target specific market segments. These segments may include foreign students, those interested in recreational flying, Type A business executives with the means and motivation, and colleges, as well as others.

Pilot Retention

Besides attracting new pilots to enter a flight training program, one of the major problems flight schools have is retaining the interest of the pilots throughout the process. Historically, there is a drop-off after soloing and again after finishing training.

When a new pilot, be it a private pilot, recreational pilot or even those who are starting a piloting career, passes the final flight check, the big challenge for the flight school is to keep this new pilot coming back for more advanced training! This is when the flight school owner, instructors, staff — the whole team — needs to think outside the box and get creative in the area of retention.

In other words, they need a dynamic marketing plan to develop pilot-specific programs to grow the new pilot, keep the interest level up, improve skills and generally have fun. Remember, for the most part, you are competing for discretionary dollars, which can go for flying, boating, golf, sport cars, etc. Here are some ideas for keeping pilots at your flight school:

  • Have pilots join the Wings Program, a pilot proficiency program that can be taken online as well as flying. Sign up at www.FAASafety.gov to create your own account, and educate your flight instructors. See the new Advisory Circular AC 61-91-J.
  • Tail Wheel endorsement: This will make your new pilot a better pilot.
  • Trip to ATC Facilities: Great for IFR and instrument rating trainees.
  • Trip to Altitude Chamber: This is good for all pilots.
  • Flight Reviews: Both VFR and Instrument Proficiently Check. Find the Instrument Proficiency Check (IPC) Guidance publication at  www.FAASafety.gov.
  • Weekend Ground Schools.

What’s most important is how you market these programs. You need to have a customer base from your existing pilots, a database of the existing pilot population from a radius of 200-300 hundred miles, advertising in the local/regional aviation publications, an e-newsletter campaign, social media presence and a sustained community outreach to the interested pilot population. All this should be part of your original business and marketing plan.

So what can Friedrich Nietzsche teach us? For all successful business enterprises, we “must first learn to stand and walk and run and dance” before we can fly. And how do we fly? We develop and use a well-matured business plan, spend some time thinking creatively with the team and remember to add a little fun along the way.

If you’ve had success developing a flight training retention program, I’d like to hear from you. Email me at jenticknap@bellsouth.net.

John Enticknap

John Enticknap 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.

Thursday
Mar172011

Building Long-Term Profitable Customer Relationships, Part 3: Don't Forget the Cheese!

In part one of this three-part series, Are You the Restaurant Owner? we talked about what makes a customer loyal and taking a hands-on approach to customer service. In part two, Do You Feel Lucky? we discussed the perils of lowering the price of fuel to attract new customers.

The following is the third installment:

Part 3: Don't Forget the Cheese!

“Here is a simple but powerful rule, always give people more than what they expect to get.” – Nelson Boswell

In the quest to build long-term profitable customer relationships, we can’t overlook the basic foundation of delivering exceptional customer service. At the end of the day, if you can’t walk up to a customer preparing to depart your FBO with confidence and ask the question, “Would you recommend us?” then please read on.

At Aviation Business Strategies Group (ABSG), we have analyzed various customer service training programs that help teach the basics. Many new customer service employees are not that familiar with general and business aviation and need a good understanding of the FBO business basics as well as the airport environment and flight operations. Mostly, these basic training videos and interactive teaching aids do a very good job of instruction on the mechanics of the job.

However, if your goal is to provide The Ultimate Customer Service Experience, you need to take your customer service training to a whole different level.

The Origin of “Don’t Forget the Cheese!”

While I was working my way through college, one of my jobs was at a restaurant that primarily served hamburgers. We always did a great takeout business, and one day a loyal customer stormed back into the restaurant with his sack of hamburgers in hand.

“I can understand not putting in napkins or forgetting the salt and pepper,” he huffed. “But when I order a cheeseburger, it would be really nice if there was cheese on it.”

Needless to say, we were all embarrassed, and the owner came out and apologized for the oversight and the inconvenience it caused. A few minutes later, the customer left with cheese on his cheeseburgers and a couple of coupons for a return visit.

Later that day, when we had a shift change, the owner pulled everyone together and made his point about carefully checking a customer’s order, especially the takeout orders. Lesson learned, as they say.

Then, as the first shift started to leave, a buddy yelled back to the cook and said: “Hey Charlie, don’t forget the cheese!” That comment kind of lightened up the mood and became our battle cry for the rest of the summer.

This experience stuck with me over the years, and when it came time to develop an advance customer service program for one of our client FBOs, it just seemed natural to brand it: Don’t Forget the Cheese!©.

Key Elements to Great Customer Service Training

There are several necessary elements in developing a good customer service program for your organization. Here are few:

  • Make it memorable. By branding a program with a memorable phrase, it promotes buy-in from the employees.
  • Make it fun. Let’s face it, customer service training can potentially be very boring.You can liven up the atmosphere with a little tongue-in-cheek humor to keep everyone focused and awake.
  • Make it relevant. Include some real-life customer service experiences that happened at your FBO. Use these in role-playing sessions.
  • Use three-dimensional teaching aids. For our Don’t Forget the Cheese! © on-site training, we have fun by introducing a variety of cheeses and of course crackers as well.
  • Make it sustainable. Does your current customer service program have any legs? In other words, are elements built into the program to serve as occasional reminders that make it sustainable over time? After the initial customer service training is complete, most employees operate in the halo effect of something new. However, that halo can fade over time, so make sure you have a vehicle to keep the elements of your program top-of-mind.

The Fundamentals

The use of Cheese in our proprietary customer service training course also serves as key reminders to CSRs, as well as other employees, to practice exceptional customer service. Here are just a few of the fundamentals to great customer service:

  • Smile. Remember to say, “Cheese,” to yourself, as if someone were taking your photo. Even when answering the phone, put on a smile and the customer on the other end will sense they are talking to a happy person.
  • Add a little extra when delivering customer service. Because cheese is often used as a condiment, it represents the added touch, the little extra that puts a smile on the customer’s face and makes them keep coming back.
  • Remember a customer’s name. In the FBO environment, adding cheese can be as simple as remembering a customer’s name. Most people react positively to being called by their name and are impressed when you remember. Are you the restaurant owner?
  • Go the extra mile. Going the extra mile could be something as simple as showing the customer where the pilot lounge is located instead of pointing in the general direction.

For our sustainable part of the Don’t Forget the Cheese! program, we use Cheese Bites© that are little reminders of some of the principles of good customer service. These are sent periodically to employees electronically by e-mail or through the use of social media by the FBO.

If you would like to share a customer service tip, please send them to me, and I’ll publish them in a future blog post. Send them to Ron@thejacksongroup.biz.

©The terms/phrases Don’t Forget the Cheese! and Cheese Bites are proprietary in their intended use and considered intellectual property of Aviation Business Strategies Group.

Ron Jackson

Ron Jackson 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.

Thursday
Mar102011

Optimizing Your FBO, Part 2: Cross-Train and Outsource

In Part 1 of Optimizing Your FBO, we talked about analyzing your business and investing in your front line employees. It just makes good business sense, even in tough economic times, to invest your time and resources in your front line employees because they have the first and the most important contact with your customers.

In this post, Part 2 of Optimizing Your FBO, I want to share additional strategies that will help prepare you to weather any kind of economic environment and increase the efficiency of your operation.

Cross-Train

For most FBOs, employees must learn to multitask — a term that management gurus have coined. It’s really a new term for an old axiom. The best employees, who do the best jobs, can do many different tasks. Gee, what a concept!

For FBOs that are consistently successful, employees do many different job functions that result in a more efficient operation and better employee morale. A happy employee, a happy customer. It can be a very contagious working environment that results in better customer service. Cross-training makes all employees more valuable and better motivated.

Let’s look at some ideas:

  • Why not train your CSRs to meet and greet arriving aircraft? You’re already paying the Workers’ Compensation rate for ramp on the CSRs!
  • How about training your CSRs and building maintenance staff to be wing walkers? Tip: Having two wing walkers, especially in hangar movements, can decrease your incident rate and could help lower your insurance premium, another cost savings.
  • Get your accounting staff outside to learn about fueling and tank farm quality control. They might even learn about fuel quality control and inventory procedures.
  • When was the last time the executive staff worked the ramp or talked to arriving pilots and passengers?
  • Encourage ramp staff and the executive staff to walk the ramp for FOD and look at the FBO facility from the arriving pilot’s point of view.
  • Your A&P mechanics need to meet, greet and be part of the customer’s maintenance project. Once the inspection is completed, the A&P should be part of the discussion with the owner on what is to be fixed; obvious but rarely done.
  • In your flight school, when was that last time your chief instructor called and talked to the students before a check ride? Find out how the student likes flying and the learning experience.

Outsourcing

Many FBOs feel outsourcing is what big companies do, not smaller aviation service companies. The fact is, many services an FBO provides are not necessarily full-time, around-the-clock services. Outsourcing may actually save you money and help keep your front line employees focused on better serving the customer.

For instance, building cleaning, most especially restrooms. This service is not one most employees enjoy, so let’s outsource it. There are many vendors available to do this as well as provide the cleaning solutions, toilet paper, hand towels, etc. Get competitive pricing and monitor closely.

Another area is maintaining indoor plants as well as outdoor landscaping. This is a pain in the neck for most employees, but if you want a first-class FBO facility, you need to pay attention to interior details and keep the grounds well groomed. Get a number of bids, and again, monitor closely.

How about providing some extra services on an on-call basis? No overlapping costs while providing more services and a new stream of income. For instance:

  • Aircraft interior cleaning
  • Aircraft exterior services
  • Quick-turns cleaning
  • Customer car washing and detailing
  • Customer car valet service

In larger cities or communities, there are vendors you can source that specialize in aircraft cleaning and detailing. In smaller communities, you may be able to find a good auto detailer that you can trust and help train to provide on-call services such as aircraft cleaning services, auto valet, customer car washing and detailing services.

What are some other ideas for cross-training and outsourcing? If you have some ideas that have worked at your FBO, please send them to me and I’ll include them in a follow-up blog. My email is jenticknap@bellsouth.net.

John Enticknap

John Enticknap 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.

Thursday
Mar032011

Pricing Your FBO for Sale

Don't Get into the ‘Multiple’ Trap

As we start to see a small ray of sunshine peeking out from behind the lingering recession cloud, we find some encouraging news in the industry. Flight hours are increasing, used aircraft are starting to sell, and we see a resurgence in the continued consolidation of the FBO industry.

In the last couple of months, we have witnessed chain operators sell a couple of locations and sell one location to a competitor. We also saw the sale of a small chain to a larger chain. Therefore, I pose the proverbial question in the manner Harvard Business School types might ask: Is it time to “harvest” your business?

Only you can determine this. But if you’re getting into the sell mode, here are few things to keep in mind as you move forward.

Begin with the Business Plan

I’ve been involved in many FBO sale transactions over the years — both buying and selling various properties. The first order of business should always be to review your business plan. If your plan is in order, it will reveal the goals and objectives you have set for your business, which will help in the valuation of your assets.

Business plans we write for our clients include a section on exiting the business. Here the plan details a positioning strategy designed to maximize the value of your business whether you plan to leave a legacy to your family, retire with an income or just cash in with an outright sale.

Various sections discuss topics such as:

  • A full- or part-time retirement scenario
  • A succession plan to leave in place a strong management team
  • Capital needs for the future
  • Possible changes in the airport environment
  • New business or personal opportunity
  • Time to “cash in” — business has peaked

As part of the asset evaluation, you should be able to quantify the following:

  • Current condition of your operating systems
    • Fuel operations
    • Accounting function
    • Facility maintenance
    • Ramps and hangars
    • Efficiency of employee team in place
    • Stability and diversity of your customer base
    • Measure of profitability
  • Airport lease considerations
    • More than 10 years left?
    • Upcoming capital requirements for lease extension
    • Current lease is assignable to a new owner
    • Liability after sale on business and environmental issues
  • Tax issues
    • Capital gains tax
    • Taxes on the sale
    • Get advice from tax experts
    • Review tax issues of buyer
  • Legal and regulatory issues
  • Current and proposed airport environment
  • Identifying potential buyers

Sale Price Considerations

When consulting with clients who want to sell their FBOs, one of the first things they ask is: What multiple should I go for? Of course, they are referring to what the industry has conditioned them to expect: the “magic number” times the earnings before interest, taxes, depreciation and amortization (EBITDA). Or is it another magic number, such as EBIT, gross profit or even revenue?

I understand where they are coming from, but I caution not to get hung up on the multiple issue. Throwing around multiples like 5×, 10× and even 15× can quickly become a mental trap that often gets in the way of a true valuation of the business worth.

As our premise for this article indicates, the selling price of your FBO is not about the earning multiple but quantifying many of the questions we asked above. Some recent deals that have been consummated have no multiple. So what does that mean?

As you get into the pricing of your FBO, it’s imperative that you do a full-scale presale evaluation in order to further define and determine the terms gross profit, net profit and EBITDA. Because the eventual buyer will be doing his own due diligence, it’s important you do your own in advance so you can better understand the buyer’s valuation of your business.

Although you, as the owner, can have an understanding of the worth of your business, ultimately you can’t dictate what it is worth. Only the market can do that.

Develop a Selling Strategy

What is important to remember, if you decide to sell your business, is to seek professional assistance to walk you through the process, to help you properly position your business for sale. Also, an experienced professional can help you channel your efforts by identifying and targeting potential buyers.

For instance, one strategy would be to sell to one of your immediate competitors on your airport if one exists. Past experience says this will most likely give you the best deal.

Selling to your competitor allows the buyer to gain one of the most important business success factors: pricing power. (This can be a subject on its own merit and will be dealt with in another blog.) Suffice it to say pricing power will significantly increase the valuation of your business but cannot be so much that you make the transaction noncompetitive.

Ultimately, there are many factors that enter into the valuation decision. Businesses are sold for many reasons, and all those reasons affect the selling price. What both buyers and sellers must realize is that a satisfactory business deal for both parties must be concluded. Translation: Negotiate!

A purchase and sale agreement reached by the parties, if they succeed in reaching one, will be the result of bargaining. Depending on the relative bargaining positions of the buyer and seller, the purchase and sale agreement might reflect either compromise or capitulation, and, as a result, a valuation reasonable to the parties will be reached.

So don’t let the multiple trap get in the way. The multiple of earnings doesn’t really count in the transaction.  

Keep the goal in mind. The mission is not to simply conclude a transaction. The primary mission is to sell the business at a satisfactory price while guaranteeing payment is received when it is wanted and the way it is wanted.

John Enticknap

Before founding Aviation Business Strategies Group (ABSG) in 2006, John Enticknap was president of Mercury Air Centers' network of 21 FBO locations and has held executive management positions with DynAir Fueling and CSX Becket Aviation. He is an ATP- and CFI-rated pilot with more than 7800 flight hours, certified in both fixed- and rotary-wing aircraft, and the author of 10 Steps to Building a Profitable FBO.

Thursday
Feb242011

Building Long-Term Profitable Customer Relationships, Part 2: Do You Feel Lucky?

While my business partner, John Enticknap, reveals in his blog posts the methods and tools used in building a more profitable FBO, I’ll be writing about the often overlooked but equally important process of building long-term profitable customer relationships.

My first blog on this subject, Part 1: Are You the Restaurant Owner? was published on Feb. 10.

The following is the second installment:

Part 2: Do You Feel Lucky?

We’ve all seen Clint Eastwood’s Dirty Harry scene when he aims his seemingly empty .44 Magnum, “the most powerful handgun in the world,” in the face of the bank robber and taunts, “You’ve got to ask yourself one question: ‘Do I feel lucky?’ Well do ya, punk?”

FBOs shouldn’t have to feel lucky when putting together their marketing plans to attract new customers, yet during our NATA FBO Success Seminars, I often sense the frustration FBO owners and operators verbalize when we discuss this very subject.  

Over the years, FBOs have tried all sorts of things to attract customers. Wine, steaks, bobblehead dolls, free this and free that. Sometimes they get lucky, but mostly they’re just shooting blanks!

Many FBOs, when facing seemingly stiff competition, have done the unthinkable to attract customers. They resort to lowering their price of fuel beyond reason. Yikes! 

To be sure, an FBO should always manage its fuel price in order to be competitive and as a component to provide a customer value proposition (CVP). However, nothing good happens when you subjectively lower the price of fuel just to attract customers.

Attracting the Wrong Customer

Besides messing up your profit margin when you arbitrarily lower your price of fuel, you ultimately attract the wrong customer.

Are there really wrong customers in this trusty world of general and business aviation? You bet your .44 Magnum there are.

In my first blog, I wrote that the lifeblood of any FBO is building loyal customer relationships. The success of these relationships can be measured in two ways:

  1. Are they long-term, and
  2. Are they profitable?

When you randomly lower fuel prices you get neither long-term customers, nor profitable customers. What you get are bottom feeders, looking for the deal of the day. They tend to flit from one deal to the next. Sure, you may increase your fuel volume for a short period of time, but over the long haul, you’ll be scratching your head, wondering where these newfound customers went.

If you divide your available customer base into thirds, you’ll probably find the following:

  • Upper third: Extremely loyal, likes your FBO, knows a good value and pays a fair price for fuel.
  • Middle third: Although loyal, is value-conscious, wants a good deal and keeps you on your toes to make sure this value is received.
  • Lower third: Bottom feeders. Price is everything. Complains about everything. Flits from one FBO to the next. Famous catch phrase: “What have you done for me lately?”

So where should your focus be? Which piece of the pie do you want?

First of all, getting Loyal customers to leave their present FBO is probably not going to happen in the short term. You may flirt with them a little, but getting a loyal customer to try something new is very difficult. An FBO competitor would have to stub its toe pretty hard to get a loyal customer to leave.

(Note: If you currently have a core of loyal customers, make sure you don’t lose them. Remember why they came to your FBO in the first place, and do everything you can to take care of their needs, wants and desires. Be the restaurant owner.)

Second, more than likely, you’ll get most of your customers from the Somewhat Loyal group. If you are looking to expand your loyal customer base, go fishing in the green pond, not the Bottom Feeder pond.

The Customer Value Proposition (CVP)

So how do you attract these Somewhat Loyal customers to your FBO? Give them a sense of delivering a real customer value proposition (CVP). Done properly, the CVP is the right combination of clean and attractive facilities, fair fuel prices/fees, and good old-fashioned knock-your-socks-off customer service. (We’ll further explore the CVP in another blog post.)

Lastly, it’s critical you get the word out about your CVP. And the way to do that is to deliver it consistently to every customer with whom you have contact. Let them soak it up and remember it, and they will faithfully spread the word.

The general aviation industry is relatively small compared to other industries. Word-of-mouth is a very strong channel of communications, and if you are “lucky” enough to have a customer recommend your FBO to another potential customer, you’re on your way.

Someone once told me you create your own luck, that luck is really the result of working hard, of doing something right consistently over the long haul.

I think that’s pretty good advice.

Next Blog: Building Long-Term Profitable Customer Relationships, Part 3: Don't Forget the Cheese!

Ron Jackson

Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and CSR training. He is the author of Mission Marketing: Creating Brand Value and co-author of Don’t Forget the Cheese!, the ultimate FBO Customer Service Experience.