Marketing Tools to Give Independent FBOs an Edge

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1 Marketing Tools to Give Independent FBOs an Edge Executive Summary Independent FBOs (Fixed Base Operators) face numerous challenges that impede their ability to effectively compete in today's marketplace. In addition to competition from other independent FBOs, they face national and international chains with more robust and comprehensive marketing resources at their disposal. Increasingly, many independent FBOs must also contend with direct competition from their airport sponsors, which can gain an unfair advantage over their FBO tenants by using tax dollars to subsidize their operations. Despite these obstacles, independent FBOs can win in this challenging marketplace if they can build a loyal clientele of repeat customers, while expanding their share of new customers. To do this requires a marketing program which effectively communicates a strong value proposition that appeals to an independent FBO's target customers and is tailored to work within its market, budget and business objectives. Challenges for Independent FBOs To say independent FBOs face stiff competition is an understatement. According to John Wraga, Executive Director of the Independent Fixed Base Operators Association (IFBOA), there are approximately 3,600 FBOs in operation in North America. 1 In dense urban areas, several competitors may be situated at the same airport or one nearby to say nothing of through-the-fence operators. Of those 3,600 FBOs, approximately 400 operate as part of regional or national chains. A 2009 report by the National Air Transportation Association notes that consolidation has reduced the number of these chains by half in the last 15 to 20 years. 2 However, these chains can leverage their established brands, marketing resources and buying power that independent FBOs are hard pressed to match. Then there's the trend of airports also offering refueling, maintenance and repair services that are traditionally outside airports' core duties and responsibilities in effect putting themselves in direct competition with their tenant FBOs. 1 John Wraga, message to the author, October 19, Paul Seidenman and David J. Spanovich, "General Aviation in the United States," National Air Transportation Association, May Accessed October 27, 2013, Harrison, NY Page 1 of 7

2 This sets a dangerous precedent as public airports can rely on government funding to subsidize their operations. Because of these subsidies, airports can often provide services cheaper than privately owned FBOs. Combined with airports' power to set lease agreements and fees, this provides an unfair advantage over its tenant FBOs. To compete, independent FBOs must often lower prices and accept a lower profit margin to stay in business. While subsidized airport operations can operate at a loss, the independent FBO does not have this luxury. Price is a key consideration for general aviation consumers when choosing an FBO, especially as fuel prices continue rise. One FBO's recent promotion highlights this fact. Redbird Skyport, of San Marcos, Texas, ran a two-week promotion selling avgas at just a dollar a gallon. Normally they would sell 2,000 gallons during a two-week period. During the promotion, they sold 90, times their normal volume! Almost a quarter of the pilots surveyed said they had not flown into San Marcos within the last year, and the dollar-a-gallon price played a large role in their return. Interestingly, the promotion seems to have had a "pump-priming" effect with flight activity at the FBO increasing threefold after the promotion ended, perhaps in part because of the goodwill Redbird's promotion engendered. 3 However, while fuel pricing is an important consideration in FBO selection, service was equally, or more important, in the minds of many pilots. Each year, Aviation International News (AIN) asks its readers to rate FBOs. When asked to name the single most important factor in choosing an FBO, 86% said "excellent customer service." That answer beat out fuel pricing, amenities and cleanliness. Likewise, poor passenger service was cited as the leading reason to avoid an FBO (74%), along with unprofessional or poorly trained Customer Service Representatives (43%). 4 Shaping Customer Perceptions with Marketing In order to surmount these obstacles, FBOs must build a loyal clientele who will keep coming back, while also fighting to expand their share of new business. As Gene 3 Paul Bertorelli, "Redbird Cheap Gas Experiment: A Lasting Effect?" AVweb, October, Effect html. 4 Curt Epstein, "AIN FBO Survey 2012," Aviation International News, ey2012pdf.pdf. Harrison, NY Page 2 of 7

3 Condreras noted in an article for Professional Pilot 5, your customers probably aren t aware of the cards stacked against you. And they don t care. What matters is how they perceive your business, and how you shape that perception is crucial. While cost is a significant factor, an FBO's customer service efficacy, amenities or reputation for providing a particular service can all demonstrate value to consumers above and beyond price. The role of marketing is to help FBOs tell their particular story and position themselves in a way that will attract more of their best customers. A marketing firm or consultant with aviation experience and FBO marketing in particular can develop a marketing campaign that addresses the particular challenges of FBOs and unique demands of pilots and flight departments within the aviation marketplace. Having this specialized knowledge is vital to identifying the marketing tactics that will yield the best results and greatest return on the marketing dollars an FBO invests. There's a wide range of tools independent FBOs can use to promote themselves, from simple, low-cost tactics to broader integrated programs. An effective marketing plan should be tailored to suit the particular market, budget and goals of each individual FBO. Brand Development and Positioning A marketing program should begin with a clear understanding of your FBO and what it brings to the market. What do you provide that your competitors can't or won t? What do you do better or different than the competition? Consider starting with a S.W.O.T. analysis identifying your Strengths, Weaknesses, Opportunities and Threats in the marketplace. How do your strengths and weaknesses compare to your competitors? What opportunities exist in the marketplace that can enhance the viability and growth of your business? What factors or threats lie ahead that may negatively affect your business, and what steps do you need to take to address them? Next, create a profile of your "ideal customer" the customers that are most profitable for your business, who are most inclined to want your services, and who are easiest to sell to. Consider what factors motivate them to buy from you, both logical and emotional. Even business-to-business (B2B) transactions are often driven by emotion and later rationalized with facts. 5 Gene Condreras, Can FBOs remain competitive in their local markets? How will the actions of airport sponsors affect the industry? Professional Pilot, September, Harrison, NY Page 3 of 7

4 Finally, take time to identify the core values and principles that are important to you and define the way you do business. Incorporate those values into every aspect of your business, from the name you choose, the logo you design, the marketing materials you create to how you train your customer service staff. These make up the essence of your brand image and what your business stands for. A brand is much more than just a logo it's the sum total of how customers perceive you. In these ways, you can create a brand image and competitive positioning that truly reflects your business, its values and its mission. This will form the foundation for all of your marketing efforts. The following are some tools independent FBOs can utilize in their marketing campaigns. Public Relations Public relations (PR) is one of the most cost-effective tools available to any business. PR allows you to quickly spread the word about your business, products and services building awareness for your FBO at relatively low cost. Aviation publications and blogs, as well as traditional news outlets, are always on the lookout for an interesting story to tell. Make a point to write and distribute press releases on a regular basis. Topics can include awards you've earned, special events being held, promotions and giveaways, renovations and upgrades to your facility, and other news the press may find interesting. A consistent public relations campaign will keep your FBO in the news and many times results in highprofile feature articles. Advertising Advertising can be a powerful tool for increasing brand awareness and generating leads. Look for opportunities to place print ads in trade and local publications that reach your target audience. Be sure to research the publication to make sure it reaches the right audience, and don't be afraid to negotiate rates. There are a few important considerations to remember when planning an advertising campaign. First, your ad will need to run frequently, as research has shown your customers must see an ad three times before it makes an impression and seven times before they ll buy. It's also important to track an ad's performance by incorporating unique phone numbers, addresses or codes to measure response. Lastly, the key to effective advertising is crafting a creative concept that is visually powerful and has a compelling sales message. If you don't grab a prospect's attention quickly, the rest is moot. Harrison, NY Page 4 of 7

5 FBO Directories There are numerous directories serving the aviation industry, like AC-U-KWIK, AOPA or AirNav. Take advantage of these listings to broaden awareness. Check your profiles from time to time to ensure they're accurate and up-to-date. Co-Op Marketing Programs Most fuel vendors offer co-op marketing programs that can increase exposure while stretching your budget. With co-op marketing, fuel vendors split the cost of advertising and other marketing activities when your FBO accrues enough credits from fuel purchases. Ask your vendor what programs they provide to supplement your marketing program. Marketing marketing is an affordable and measurable way to keep your name in front of prospects and customers. With marketing, the key is to build your own list of opt-in subscribers people who have chosen to receive your alerts. Third-party services like icontact or MailChimp make it easy to set up, create and distribute professional campaigns, as well as track results. Internet Marketing At a minimum, your FBO should have a website that describes who you are, what services you provide and why you're a better choice than the other FBO across the field. Few prospects will take a business seriously without one. Your website should incorporate search engine optimization (SEO) so potential customers can easily find you on the major search engines. Pay-per-click advertising can provide additional leads that are easily tracked, if you have the budget and know-how to manage it. Lead Generation Software Programs offered from TRAQPak and Passur provide FBOs with data to monitor customers' activities and help improve customer service. Besides providing flight status information, these programs also include tools to track and analyze aircraft visits both at your FBO and your competition. Many can help you develop a targeted database for direct marketing, either through the mail or . Trade Shows Trade shows are a cornerstone of marketing in the aviation industry. You can interact with industry professionals face-to-face and, if you've prepared well enough beforehand, close sales right there at the venue. It takes a sizable upfront investment in time and Harrison, NY Page 5 of 7

6 money, so make sure you have a plan to get the most from each event. Booth design, signage, sales materials and giveaways not to mention follow-up all have a tremendous impact on your success. Social Media Look at social media as another communications tool. Free and easy to set up, social media channels like LinkedIn, Facebook, Twitter and YouTube provide additional ways to promote your FBO, and allow you to interact with customers. Social media can build your FBO's brand, showcase promotions, provide a news outlet, and even act as a customer service channel. Sales Promotions Sweepstakes and giveaways can be an excellent way to generate sales and build a prospect list. FBOs have used ipads, motorcycles and even steaks to bring in business. Consider handing out freebies to flight crews the next time they visit a bottle of wine or handy gadget might mean a 500-gallon fuel purchase on their next flight. Below is how a typical FBO Marketing Program might breakdown in terms of budgeting and weight Harrison, NY Page 6 of 7

7 Case Study: Saker Aviation Saker Aviation, a small FBO chain with four locations, held a successful promotion to boost traffic to its FBOs: Any pilot who purchased 350 gallons of fuel would receive a free ipad Keyboard/Case. The promotion combined several of the marketing tools listed here, including lead generation software, marketing and a giveaway. The FBO began by using TRAQPak to track flights and identify customers who might be interested in the promotion. Saker then created an campaign targeting those pilots and directing them to a landing page online. Interested pilots could pre-register on the landing page or register in-person when they made a purchase but they would have to register before receiving their free ipad Keyboard/Case. This enabled Saker to collect valuable marketing information including pilots' names, the tail number of their aircraft, the type of aircraft they flew, the amount of fuel purchased, and when the purchase was made. In addition to an increase in fuel sales, Saker was able to build a database of customers it can use to target future promotions. Conclusion As competition grows and profit margins come under increasing pressure, independent FBOs need to improve customer retention and increase new business to stay viable. An effective marketing plan gives FBOs an edge by positively shaping perceptions about the value they provide. This is critical to avoid competing solely on price a race to the bottom for independent FBOs with limited resources. Instead, FBOs can and should leverage a range of marketing tools to promote a unique brand message in ways that generate the greatest possible return on investment. About Aviation Marketing Consulting Aviation Marketing Consulting combines sound strategic planning with award-winning creative solutions to achieve its clients' marketing objectives and long-term business goals. We provide a full range of marketing services to the aviation and aerospace industries. These include: advertising, public relations, brand development, internet marketing, social media, marketing communications and trade shows. To reach us for a free consultation regarding your FBO marketing needs, please call: ; or visit our website: Harrison, NY Page 7 of 7