DZO’s: It’s Time To Wake Up!
The skydiving industry is akin to global warming. We’re making bad choices that are leading to our demise and yet our behaviors still aren’t changing. It’s incremental self-sabotage and like an iceberg, it’s crumbling slowly and steadily.
I think there needs to be a greater awareness of what’s at stake. Hitching an entire marketing and revenue strategy to third-party operators or dramatically dropping prices is a bad decision. This strategy is a short term solution, not a long term play. It’s as if we’re trying to survive today and deal with tomorrow when it comes.
The Short Term Play
DZO’s around the country are feeling the squeeze with the decline in tandem numbers (the number one source of revenue for a DZ) due to more competition and laughably low pricing. In order to stay competitive, many DZ’s have banked on Groupon or dramatically dropped their prices. This is short sighted (though understandable) as it focuses on the now instead of the long term effects.
- Increasing Expenses. EVERYTHING in the sport is more expensive, yet the number one revenue generator for a DZ is the lowest we’ve seen in 15 years.
- Volume. The only way this low price model works is with high volume. DZO’s enjoy seeing high bank balances, but this brings a false sense of security. The volume chain can be too easily interrupted.
Skydiving is a very cash flow heavy business due to multiple variables like weather or expensive, unplanned maintenance of aircraft (which is inevitable). In other words, there’s a lot of robbing Peter to pay Paul… constantly.
Eventually, the low price, high volume model will catch up. This year, the Midwest has seen an inordinate amount of bad weather and every DZO has been feeling the squeeze. The DZ’s offering the low price model are feeling it more than anyone as low margin pricing doesn’t allow for much savings to manage both a down year and preparations for the winter.
This model is not sustainable.
Let’s look at the California market. There is a well established, multi-turbine DZ (that’s been around for nearly 60 years) that has dropped its prices in order to price match a DZ that is undercutting everyone at $149. If without military contracts or some other source of revenue, this is a recipe for a slow death. $149 tandems using turbine aircraft isn’t sustainable as the math doesn’t add up.
I’m not suggesting that managing through these challenging times is easy; it’s never been more difficult, but dropping prices in order to survive is only prolonging the inevitable. There must be a better choice.
The business of DZ ownership is riding a tidal wave that will crash. Sounds dramatic, but it’s true. The economies of scale mandate this. We will be seeing a decrease in DZ’s in the next few years at the rate we’re heading. Which ones will survive?
The Long Term Play
The long term play is straightforward.
- Be More Efficient Than You’ve Ever Been. Just as families must create a budget and forgo eating out or grabbing a seemingly inconsequential $4 latté from Starbucks, DZ’s will need to do this on a grander scale.
It’s survival mode until the market normalizes. Trim out every ounce of fat.
- Be Better Marketers.
As a general whole, the skydiving industry is behind the curve with the execution of solid marketing. This isn’t a criticism as many DZ’s don’t have full-time marketing managers on their staff. DZO’s shouldn’t be expected to know the most current upgrades with Google or how to better capture more site traffic from a qualified audience.
It’s little wonder that DZO’s feel the need to rely on third party operators as they are executing modern day marketing strategies so they can make more money on your efforts.
Perhaps we should be marketing the way they are?
It’s Time To Wake Up
If the price of a tandem skydive is barely covering the cost of your expenses, then you’re in trouble.
If you feel that the only way to survive is to offer bottom of the barrel prices to keep the doors open, then you’re in trouble. It’s time to wake up and change the game. Less volume is okay provided it’s at the correct price point.
We’re riding a dangerous wave with wobbly balance; the only way to regain stability is to look at the horizon while resisting the urge to look down. Resilience and an iron stomach will be required to get through this challenging period, but there are many who are doing this and doing it well.