DZO’s: It’s Time to Wake Up!

adventure-1835025_1920

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.

Here’s why:  

  • 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.
This blog is proudly sponsored by Sun Path Products.

This blog is proudly sponsored by Sun Path Products.

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? 

Burble Software is a skydiving reservations and manifest solution.

DropZone Marketing proudly endorses Burble Software as the #1 manifest and reservations software in the world.

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. 


UPCOMING EVENTS
  • 2018 DZ Marketing Conference - February 6-7, 2018

Eventbrite - 2018 DZ Marketing Conference

About James La Barrie

James La Barrie is passionate about marketing and changing a company's service culture. Originally from the Caribbean island of Antigua, James melds his approach of marketing and delivering elite service together as one. James has injected his 'service marketing' approach throughout his career to transform companies from good to great.

5 thoughts on “DZO’s: It’s Time to Wake Up!”

  1. Thanks for the article James. We’re certainly feeling it here in Chicago. Too many dropzones and most of them are willing to offer tandems for less than cost. We’ve gone in the other direction. Our median tandem price has gone from $187 in 2016 to $217.75 in 2017. We’ve seen a 12% decline in volume, but our bottom line is actually better. It hasn’t been easy to watch the reservation numbers decline, but it’s about making money and surviving. Less fuel, less gear and aircraft maintenance, less payroll, etc. We are going to continue to push CSC in this direction as it’s the only way we can exist against the low budget operators in our market. I agree, we are going to see the number of dropzones decrease over the next year or two. The path this industry is on is unsustainable.

  2. Doug,
    I did the same thing. Going up against groupon and skyride, I raised our prices immediately. Justifying the product with high altitude, bigger planes, and quality staff. We are in fact up from last year. My advice has always been dont talk negatively about competitors but rather promote the positives of your facility and justify the difference in price.

  3. I’m lucky to operate in “an island of light” (dark sky map shows Wichita as an island of light, literally), and without competition so have never felt the push to lower prices or to get in bed with third party dogs. Kansas is a relatively low volume, low population state, so no DZ, outside the Kansas City Area, has ever operated as a full time, or single source of income business. One KC area DZ does play the “low price, high volume game”, with constant “specials” for $170 tandem, seems to be working for them so far. Of course, I’m not privy to their books.

  4. In the UK it is the same, a large number of non involved (non skydiving operators) driving prices and revenue down. We operate an agency at no charge for charity organisations supplying both our own and other DZ’s and try to be realistic and not argue too much the rate the DZO offers – and yes I do hear the chuckles from around the UK. We have had an awful weather year as a weekend only operation especially as our A/C supply had to change mid year and we encountered a 22% rise per hour, we have scraped through financially and have now found an alternate supplier with realistic rates for a 3 year deal, but I could not have done this without the depth and quality of my team whom have all dug in, no reduction in payment but the little ‘extras’ they bring to the operation means I really wish I could pay double but as i have taken zip this year? – so onward and upwards.

  5. Excellent article James. Those DZ’s that want to be around long term cannot survive if they fall into this strategy. I realize it is a catch 22 with raising prices with the risk of less volume but somehow they need to emphasize quality over quantity.

Leave a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Receive Our Newsletter!

If you would like to receive our industry newsletter offering free insights on industry marketing techniques to help you make more money, fill the form below! We publish a newsletter designed for skydive industry professionals. We are vehemently against spam and refuse to do it (even if offered lots of money).

What we're trying to say is we value our audience and only wish to send you quality content and have no intention of clogging you inbox with a bunch of rubbish. If you hate what we send, opting out is very easy!

Share