Measuring Your FBO Customer Service Experience

What’s Your CQ™ (Customer Quotient)?

In the recent series on Building Long-Term Profitable Customer Relationships, we talked about what makes a customer loyal (Are You the Restaurant Owner?); the perils of competing on fuel price (Do You Feel Lucky?); and finally, how to deliver the best customer service experience (Don’t Forget the Cheese!)

Now it’s time to measure the effectiveness of all your good work to improve the Customer Service Experience!

Just as a good measure of one’s intellect is the Intelligence Quotient or IQ test, at Aviation Business Strategies Group (ABSG), we have developed the means to test your FBO’s Customer Quotient or CQ™. The results of determining your CQ™ is a good measure on the overall effectiveness of your FBO customer service initiatives.

The Customer Service Survey Tool

The first step in the process of understanding your CQ™ is to develop an accessible and meaningful customer service survey tool. By accessible, we are talking about the convenience of the customer’s access to the survey.

Obviously, you should have it in a printed form and accessible at your customer service desk and perhaps in the crew lounge. For the printed version, make sure the survey is formatted so it can be easily mailed, including a No Postage Necessary Business Reply indicia.

For further convenience, put up a survey box near the exit to the ramp where customers can drop the completed printed survey so they don’t need to carry it with them for mailing at a later date.
In addition to having the survey available at the locations mentioned above, consider including it as part of a customer receipt envelope or holder, similar to the kind of money holder you get when you cash a check at a bank.

Lastly, make the survey accessible online through your company Web site. Just make sure there is a space for the customer to enter the date of service and perhaps a customer transaction number if there is one on the receipt. This will help you determine the validity of the information.

Make the Survey Meaningful

Here are some basic tips to make the survey easy for the customer to fill out and meaningful to you as a true measure of the customer service experience.

1. Keep it simple and logical. Don’t overthink the questions.
2. Make the questions relevant. Ask only questions about the service experience.
3. Keep it short. If you have more than five or six questions, your response rate will be way down.
4. Make sure you ask the ultimate question: “Would you recommend our FBO?”

The last thing you should do is put together a point value system for each question so you can convert the results into a metric that can be plotted over time. For instance, say you wanted to measure the following where 1 is a low score and 10 is the high score:

• Quality of line service: Rate 1 to 10 points.
• Friendliness of staff: Rate 1 to10 points.
• Cleanliness of facility/restrooms: Rate 1 to 10  points.
• Pilot amenities: Rate 1 to 10 points.
• Passenger amenities: Rate1 to 10 points.

With this section of your survey, you could have a potentially high score of 50 points if your customers rated all these items at 10 points each.

Now, let’s throw one last question into the mix. It’s really the most important, so we give it a value of 50 points. Yes, it’s that important! It’s either yes or no. All or nothing!

• Would you recommend? Yes/No?
  • Yes = 50 Points.

  • No = 0 Points.

The Sum of All Parts

In a perfect world, your customer service experience could potentially score 100 points. In keeping score over time, create a chart using the data obtained for the first five questions.

You may want to do a chart on a weekly basis at first. However, creating a monthly snapshot over a 12-month period will probably give you the best idea of the way your customer service experience is trending.

Then, do a separate chart to keep track of the Would you recommend? question. State the results as a percentage of the amount of customer service surveys returned.

The last thing you may want to do is post the results for all your employees to see. Follow-up with an employee team meeting and encourage feedback from both your customers and your employees regarding how to improve your customer service experience.

©The terms/phrases “Customer Quotient™” and “CQ™” are propriety 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.

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.

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.

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.

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.

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.

Optimizing Your FBO, Part 1: Pay Your Front Line Employees More

“Hire the best. Pay them fairly. Communicate frequently. Provide challenges and rewards. Believe in them. Get out of their way and they'll knock your socks off.”

-- Mary Ann Allison,
American scholar and futurist

During our FBO Success Seminars we put on for the National Air Transportation Association (NATA) we do a segment called Optimizing Your FBO, particularly helpful during downturns in the marketplace.

By "optimizing," I’m talking about the decisions you make as an FBO owner or manager that can have a positive effect on your physical operations as well as your bottom line.

Often, when FBOs, and other businesses for that matter, are faced with an economic downturn, one of the first places they look to make cuts is their payroll. That might work if you are operating a clothing or grocery store, but take a moment and think about the time that has been invested in training your employees, especially the ones who are out there on what I call The Front Line, marshalling, fueling, and, most importantly, meeting and greeting customers.

These are the employees who have built a relationship with your customers. There is a certain amount of trust and comfort that a flight crew feels when someone familiar is handling the company’s most prized possession, the corporate jet. And if you are looking to increase your fuel sales at the point of transaction, who is in a better position to positively influence the sale: you or the line service technician or CSR?

If we are relying on them to be our front line sales force, why do we, as a group, pay them the least? In retrospect, we should be thinking about paying them more, not cutting back their hours, pay grade or even laying them off.

Ouch! We know this sounds counterintuitive, but let’s step back and look at your business.

Analyze Your Business

For the past several years, we have all seen the significant reductions in fuel sales, lower operations and the serious advent of contract fuel suppliers. These events, much out of our control, have reduced operations, margins and the number of hangar and based tenants. As good managers, we have been trained to analyze our business models, reduced expenses, cut capital improvements and prudently operate our business to maximize revenues and minimize our expenses.

From personal experience, I have seen owners of top-rated FBOs out on their ramps parking airplanes; owners doing what they need to do to continue in business. Yes, fuel sales have dropped on the average of 25 percent to more than 50 percent and more in some cases. No doubt some FBOs will not survive this downturn. So what can we do?

Invest in Your Employees

The key ingredient to your service business is to give the best service. This is not rocket science! We should invest in our employees; not only with a reasonable living wage and benefits, but also to provide a good foundation, training and support to be successful.

When you invest in people, they respond and perform well. In the book Profit at the Bottom of the Ladder, author Jody Heymann presents a “well documented lineup of businesses that have flourished in large part because their management practices include respecting and empowering their lowest paid workers.” For example, Jenkins Brick, a major U.S. brick manufacturer in Alabama, credits higher wages and profit-sharing with increased productivity and quality, as well as reduced turnover and fewer accidents.

Along with paying your front line team a livable wage, train them, and respect them. They will pay you and your business back by taking care of your customers. Ultimately, the customers will welcome the attention.

We know what you’re thinking: “This is a simplistic magic formula.” Of course not! It takes a constant balance of monitoring your business, your team and your customers. But the evidence is clear, pay your employees a living wage, train them, challenge them, and respect them.

And then get out of their way, for they just might knock your socks off!

Next blog post on Optimizing Your FBO, Part 2: Cross-Train and Outsource

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.

Building Long-Term Profitable Customer Relationships, Part 1: Are You the Restaurant Owner?

As part of the FBO Success Seminars we conduct for the National Air Transportation Association (NATA), we discuss how to attract the right kind of customers and how to keep them coming back. 

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.

The following is the first installment:

Part 1: Are You the Restaurant Owner?

The lifeblood of any FBO is building loyal customer relationships. The success of these relationships can be measured in two ways:

Are they long-term, and are they profitable?

Studies on consumer behavior show a loyal customer:

• Keeps coming back
• Is willing to pay more, thus providing better margins
• Loves your FBO and tells other pilots, aircraft owners/operators
• Lowers your customer “churn” rate — you don’t have to replace a satisfied loyal customer
• Boosts your long-term revenue and prevents profit erosion so you outperform your competitors

In the end, the effort we put into building these kinds of relationships will pay high dividends year after year, so let’s examine the process.

Company Culture and Service Deliverables

Every FBO is unique in its approach to delivering its own brand of customer experience. You should have an idea of your company culture, which is the tone and demeanor by which your customer service is delivered.

Are you warm and fuzzy; cold and unapproachable; or somewhere in between?

Your customer service deliverables are the things you do every day to ensure a great customer service experience, including a provision for the safety and security of the customer and its aircraft.

And it’s not just having these policies and procedures in place. It’s how you choose to carry out the delivery to your customers. Thus, your corporate culture dictates how you deliver services to your customer.

Draw from Your Own Experience

Observe the workings of your favorite local restaurant — not the chains. If you frequent one particular restaurant, chances are the host or hostess knows your name, and the server knows your favorite drink and meal. “The usual, Mr. Jones?”

Chances are the owner or manager is on site and makes the rounds to the tables, checks on the quality of food and service, and personally thanks the customers for their loyalty.

And chances are you have a consistent dining experience and recommend the restaurant to your friends.

Another experience to draw from is when someone moves into your neighborhood. Chances are you or someone will recommend the following:

• Favorite barber/beautician
• Favorite car mechanic or service station
• Personal doctor/hospital system
• Favorite grocery, hardware store or clothing store
• Plumber, electrician, pest control company
• Church or social club

Why Do We Recommend?

Never underestimate the power of recommendation. We do it all the time without really paying much attention to the impact it has on our lives and the decisions we make.

For most of us, when we recommend a product or service, it’s really a way of validating our own process of selection. We all think we make good choices, and having someone else follow our recommendation is affirmation — it boosts our ego, makes us feel good!

We recommend product and service providers because:

• Their product or service is excellent
• We’ve always had a good experience
• We trust them; they offer good value
• They boost our ego; they know our name
• They may even know our children’s names, their birthdays
• We might even consider them a friend

That’s how we should view and nurture every FBO customer relationship we cherish. Know each customer has the power to cast a vote, the power to recommend.

An Investment in Time

Building long-term customer relationships is a process. It’s an investment in time. It’s hands-on customer care and a commitment to understanding a customer’s needs, wants and desires.

At the end of the day, ask yourself, are you the restaurant owner?  Have you made the rounds to the customer lounges, asked if everything is all right, thanked the customer for the business? Have you taken the time to check your FBO for cleanliness, listened to how your employees treat a customer and walked the flight line?

Lead by example. If your employees see you do this, then chances are they will also take ownership — ownership of the customer service experience — thus helping build long-term profitable customer relationships.

Ultimately, you should be able to go up to any customer and ask the question, “Would you recommend our FBO to other pilots, aircraft owners/operators, and schedulers and dispatchers?”

If the customer is hesitant to answer the question and doesn’t say yes right off the bat, you have some work to do.

Next Blog: Building Long-Term Profitable Customer Relationships, Part II: Do You Feel Lucky?

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.

FBO Fuel Pricing: Seeking a Silver Bullet

Ever since the Lone Ranger first loaded his trusty six-shooter with silver bullets, I’ve been intrigued with the idea of formulating a single straightforward solution for pricing fuel at FBO operations I’ve managed over the years.

This search for the silver bullet is a subject we discuss at our FBO Success Seminars, and FBO managers in attendance often voice their concerns about how to effectively price fuel. On one hand, they’re concerned about the bottom line. On the other hand, they don’t want to price themselves out of the market and lose valuable customers in the process.

Indeed, it’s a two-edge sword. The trick is to maximize both cutting edges. Let me explain.

Maximize Your Customer Value Proposition

FBO managers are no different than any other business manager that sells a service or product. The same rules apply. Every FBO sells fuel — both Jet A and 100LL are the same specifications from all the manufacturers — so trying to differentiate your business on product is almost impossible. Same goes for quality control: Either it’s done well, or you’re going to be out of business.

What you need to look at is maximizing your Customer Value Proposition (CVP) — the facilities, the delivery (customer service) and the selling price. We’ll discuss the delivery aspect in future blogs. For now, let’s concentrate on the one factor many managers forget, or do not consider enough, and that’s the pricing equation, which requires putting some effort into research and calculations.

So let’s do the math. There are generally four types of pricing:

• Cost-Plus pricing
• Demand pricing
• Competitive pricing
• Mark-up pricing

Before we decide which type of pricing methodology we use, we need to determine our costs. We need to know what it costs to get the fuel truck with clean fuel to an aircraft on our ramp with a trained line service technician. (Let’s not get into a discussion here on fixed and variable costs. That’s another blog.)

Next, let’s look at our fuel cost from our supplier, including mark-ups over Platts (or rack price), plus transportation, plus fed taxes, plus flowage fees, plus state fees (not sales tax) and any other local fees. In today’s marketplace, that number is greater than $3 per gallon for Jet A.

Now we need to look at your cost of labor and overhead and covert the number to a per gallon rate.

After that exercise, let’s say we have our fuel cost at $3.10 and our cost of labor and overhead of $0.55 per gallon. So our cost is $3.65/gallon. (This example is for Jet A.)

But before we start talking about which pricing method to use, we need to do some research on your FBO marketplace. If we look at various publications and web sites, like acufuel.com, we can determine local and national fuel selling prices.

One current survey for national and regional pricing shows the following:

• Average high selling price: $6.66/gal. (range of over $7 to just under $6)
• Average low selling price: $3.64/gal. (range of over $5.40 to a low of $3.16)

This translates to a national average selling price of $5.05. In addition, find out what the local posted fuel pricing is at your competitor FBO and within a 50-mile radius of your base.

The other research question you need to tackle is: What are the contract fuel selling prices in your local area? Once you have this data, then we can look how we put a retail price on the fuel.

Maximize Your Profit Position

One of the most important tasks we must keep in mind is maximizing our profit position.  Profit is our friend. Profit is our goal.

In order to maximize our profit position, we rely on a standardized fuel pricing method. We think it is fair to say most FBOs use either cost-plus pricing or mark-up pricing. Cost-plus means you want to make a certain “plus” above your cost. For example, your cost is $3.65, and you want to make $1.00 per gallon. Selling price would be $4.65; a profit of 21.5 percent on sales.

Mark-up pricing, on the other hand, says you want to make $0.90 per gallon. Your selling price would be $4.55 or just short of a 25 percent mark-up on cost.

Both of these methods are common in the manufacturing business arena. The difference in these two methods lies in the difference in margin and mark-up. This can be a lengthy discussion, but suffice it to say, a thorough understanding of your costs of operation to include labor, facilities, other income, overhead, etc. affects what margin you use to show a profit, which in turn, allows you to calculate what mark-up percentage you must use to get to the intended profit level.

Demand Pricing

We might suggest a demand pricing method. Service industries use this pricing methodology consisting of:

1. Labor & Material
2. Overhead and
3. Profit.

You start by knowing what goal you have for gallon sales for the month. Establish your competitive average sale price within the range of the market of, say, 50-100 miles. Look at your fuel sales, each day, each week, and adjust your pricing on a daily, monthly or discount-per-individual-sale basis to meet your goals at the end of the month. Keep in mind, of course, what your financial break-even point is so you don’t end up selling for below cost. Demand pricing models are very complex and are used by firms such as airlines, cruise lines, freight carriers and others who sell perishable services.

Competitive Pricing

Competitive pricing comes into play with the contract fuel market. This trend has accelerated in the last couple of years. It has led to decreased margins on fuel sales. Has it increased your fuel sales to make up for the lost margin? That is always the claim from the contract fuel suppliers, which now include the major retail suppliers — a building dilemma for the FBO. At the FBO Success Seminars, we have a complete class on this important issue.

What’s Your Silver Bullet?

In the end, the Lone Ranger always prevailed and got his man. He did his homework, scouted the trail and, of course, he had his trusty six-shooter loaded with silver bullets.

For the FBO owner and manager, the silver bullet is knowledge. Know your customers, and know your business. It’s a thorough and detailed understanding of your FBO cost structure.

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.

Welcome to AC-U-KWIK's FBO Connection Blog

We would like to welcome you to AC-U-KWIK’s FBO Connection, a source for discussion, ideas and general conversation on the FBO business. Here you’ll find weekly contributions from seasoned FBO professionals, sprinkled with bits of wisdom and peppered occasionally with some hot topics. We like to call it “Sage Advice for the FBO Community.”

When AC-U-KWIK approached myself and business partner Ron Jackson about writing a blog for their new, enhanced electronic AC-U-KWIK Alert newsletter, we both felt honored to be able to contribute to the AC-U-KWIK heritage as the definite industry resource for Fixed Base Operation information worldwide.

After 40-plus years of working in the aviation fueling and FBO industry, including as president of Mercury Air Centers’ 21-location network, I was eager to share my knowledge of the industry to the FBO community. This was the genesis for establishing our company, Aviation Business Strategies Group, as a means for sharing, teaching and consulting with FBOs to help them become more successful.

Besides sharing our FBO expertise and experiences in this blog, Ron and I regularly teach a seminar for the National Air Transportation Association (NATA).

Nearly three years ago, NATA approached us about teaching a seminar based on our proprietary 10 Steps to FBO Success. So in the fall of 2008, we taught our first seminar on-board a cruise ship as it sailed the Caribbean to the Bahamas. This first seminar has now evolved into NATA’s acclaimed FBO Success Seminar Series, and we have conducted several “dry land” seminars with the next one scheduled for Indianapolis in April.

For AC-U-KWIK’s FBO Connection Blog, we’ll touch upon many of the winning strategies we teach in our NATA Seminars and a whole lot more. Each week we’ll peel back the onion to reveal what we consider to be seasoned FBO insider knowledge — the legal kind — aimed at educating and motivating FBO managers, supervisors and employees. To that end, we hope we don’t disappoint.

Since my expertise is in FBO Operations, I’ll be blogging on a variety of topics that fall out of our 10 Steps to Building a Profitable FBO. Included will be winning strategies and tactics you can put to use immediately and over time in the operation of your FBO. Subjects range from Managing Your Fuel Pricing and Margins to finding “free money” hidden in you operation — and I’m not talking about the nickels and dimes found in the lounge sofa.

Ron, who has a considerable aviation public relations and marketing background, will be blogging about:

• How to Build Long-term Profitable Customer Relationships
• Making the Customer Your Best Friend
• and Marketing Your FBO on a Limited Budget, among other topics.

In addition, we have developed an FBO Customer Service Training Program titled The Ultimate FBO Customer Service Experience: “Don’t Forget the Cheese!” This is not your entry-level customer service training curriculum, which teaches the basics like Introduction to General Aviation and The Basics of Airport Operations. Instead, we teach members of your organization common sense customer service and how to add value to each transaction by simply “Adding a Little Cheese!” Sound intriguing? Stay tuned as we feed you some interesting cheese nibbles along the way.

Lastly, we will invite some guest bloggers in various areas of expertise including:

• FBO Law: Minimum Standards — Current Trends from Airport Leases
• FBO Insurance: Insurance Issues and Risk Management
• FBO Web Site Enhancement & Social Media: Developing Streaming Videos, Optimizing Your Site and the Value of Communicating via Social Media
• FBO Finance: FBO Accounting: “The Good, Bad and Ugly”
• FBO Construction: Keeping on Time and Within Budget on Hangar and Terminal Projects

Ron and I look forward to reaching out to you each week through this blog and connecting on everyday issues that affect the bottom line of your FBO operations. If we happen to hit on a subject that you’d like to comment on, or if you want us to address a certain issue, please let us know by sending an e-mail.

One thing is for certain, we’ll add a little spice to your FBO life and maybe some sage advice along the way.

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.

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.