FBO Tip of the Week: How to Measure Your Customer Service Performance

By John L. Enticknap and Ron R. Jackson
Aviation Business Strategies Group

There are many line items you can measure in an FBO operation in order to assess how your business is trending. By setting simple benchmarks for tangibles such as fuel sales, fuel margins and maintenance productivity, you can set up an electronic dashboard for daily monitoring. (See our previous post: FBO Tip of the Week: Keep Your FBO Operations Simple.)

However, how do you measure an intangible like your customer service performance?

The obvious answer is to initiate a customer service survey. But not all surveys will help you benchmark your performance and, perhaps more importantly, ask the right questions.

As part of our Don’t Forget the Cheese customer service training program, we recommend FBOs initiate a measurable customer service survey using the following criteria.

• Keep the survey short. Ask the customer to rate no more than five service areas or attributes. It’s our experience that pilots will more likely respond to surveys that appear short and easy to complete.
• Rate each service area or attribute from one to 10 with 10 being the highest.
• We suggest customers evaluate the following:
  • Line Service
  • Customer Service
  • Passenger Amenities
  • Pilot Amenities
  • Cleanliness of Facility
• Also ask just one really tough question: Would you recommend us? Yes or no?

We advocate you place a value of 50 points on this question alone. Why, you ask? Simply, a customer recommendation should not be taken lightly, and for most customers, this means they are putting their reputation on the line. Also, if a customer says, “No,” to this question, you should find out why. This will help correct a potentially negative situation and assist in repairing a valued customer relationship.

Now, when you receive a completed survey, add up your points. The perfect score is 100.

For convenience, we recommend placing this survey on your Web site. We also suggest you include a printed survey with your fuel invoice and place a completed survey box/receptacle next to the facility door leading to the ramp.

If you want to benchmark your progress, do a monthly tabulation. Also, you may want to establish an historic benchmark by inviting past customers to take the survey.

Besides the obvious benefit of finding out what customers think, a customer service survey also sends a positive message to your employees that customer service is important. Therefore, make sure your employees take part in this program, and always provide them with survey results.

About the bloggers:

John Enticknap has more than 35 years of aviation fueling and FBO services industry experience. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.

Decreasing FBO Costs in 2012

Cash Flow and Controlling Expenses—Managing Your Business
(Part 2 of a 3-Part Series: Planning a Successful 2012 FBO Business Strategy)

By John L. Enticknap, Aviation Business Strategies Group

 The buck stops with the guy who signs the checks.
                                                                —Rupert Murdoch 

In the first installment of this series, we discussed our FBO Business Outlook for 2012. At the recent NBAA Schedulers & Dispatchers Conference held in San Diego, we had a chance to discuss this outlook and the current business climate with a number of FBOs in attendance.

Many we talked to agreed with our forecast of a slow uptick of around 2.5 percent average industry growth in 2012, with some individual FBOs experiencing up to 5 percent growth or even possibly more.  We met a number of FBO owners and managers who indicated they were ahead of the 2.5 percent growth rate for 2011 and expect to do better than the 5 percent growth projection for 2012.  And of course, some indicated 2011 was a flat year and they didn’t expect to do much better for 2012.

For this installment, part two of our three-part series, we want to discuss ways FBOs can better manage and even decrease their costs in 2012.

At our National Air Transportation Association (NATA) sponsored FBO Success Seminars, we talk in-depth on ways to generate more bottom line revenue. From growing fuel margins to lowering credit card interest rates, we analyze every operating element in order to maximize the efficiency of each transaction.

The basis for these seminars is our Aviation Business Strategies Group proprietary 10 Steps to FBO Success. You can review these steps on or website www.ABSGGroup.com.

For the purpose of this blog post, we will concentrate on the subject of Cash Flow.

Cash is King

Most business managers or consultants will tell you , “in my opinion, your business can increase cash flow by 5 to 10 percent by reducing operating costs.” Or maybe the “big boss" simply tells you to reduce costs—then walks away!!

The obvious way to do this is to cut overhead and the easiest way to cut overhead is to cut back on the number of employees. However, if you read one of our earlier blogs on this subject, you would understand why this is not such a good idea. 

Instead, let’s look at your cash flow situation as one way to better manage your costs. Not to overstate the obvious, but cash is king. Without cash you can’t pay your employees or pay your bills! And depending on your credit situation with your fuel supplier, you may have to pay cash for your fuel deliveries.

Interestingly, a survey completed in 2009 by Intuit (the software company that makes QuickBooks) indicates that 22 million small businesses have overdue accounts for at least $1,500. That equates to 33 billion dollars in overdue cash!!

Cash Flow Case Scenario

Consider a hangar tenant with an overdue payment of $2,500 for a one-month rental. However, the tenant has not paid their hangar bill for 60 days and you’re now owed $5,000.  (To make things worse, in good faith, you originally gave the customer a discount on the hangar in exchange for fuel sales this new customer would generate.)

Your accounting procedure calls for 30-day terms but you really didn’t worry about the bill until it hit the 60-day period! So after 60 days you are really owed $7,500 because you’re tenant is now behind two months, plus the current month you just billed. By the time you collect the original $2,500, the overdue amount can easily be five to six months past the original due date, which means the amount due should really be $15,000. Overdue accounts mount up fast!!

No one wants to offend a customer, or so goes the conventional wisdom. But we need to get over that notion. It is outdated and not part of today’s competitive business environment. You may fear hurting the feelings of those who owe you money, but you don’t need them for new business. That’s because they haven’t even paid for the old business! A business transaction is not completed until you get paid and the money is in the bank.

So what do we do about our overdue hangar tenant? As the owner of a multimillion dollar aircraft, one would think our hangar tenant is a business savvy corporate owner and is familiar with large financial transactions, borrowing money, and paying on time. So find out who pays the bills. Most likely it is not the pilot, although he may approve them.  Talk to the CEO or the CFO, the person who signs the checks. It does no good to just talk to the pilot, who has no authority to sign the check. Just like our quote from Rupert Murdoch—the buck stops with the guy who signs the check!

Don’t be concerned with threats like “I’ll take my airplane to your competitor,” or ”I won’t buy any Jet A,” or “I’m leaving,” etc. This so-called customer is not really a customer because they don’t pay their bills.  By the way, they’re most likely not purchasing any fuel either.  If you have to, park the aircraft in the back of the hangar and demand full payment with a certified check or wire transfer. You can then move on to the better customers who value quality service at a fair price. 

Want an idea to get attention for overdue bills? Rather than send these delinquent customers a regular overdue invoice notice, send them a vacation-style postcard. Put on it, “Wish we were here, but we can’t afford it since you haven’t paid your bill.” The card is public while it goes through the mail system of the company—it will get attention.

Collect your money—stay in business for the real customers.

Expense Management

How about expenses? It’s easy to say, let’s cut 10 percent!  I’ve had bosses tell me that, or call me and say, “cut 5 percent of your employees.” This is no way to run a business.

When it comes to expenses, look at Zero-Based Budgeting. Zero-based budgeting requires that your budget requests be re-evaluated thoroughly, starting from the zero-base. This process is independent of whether the total budget or specific line items are increasing or decreasing.

Another tool is to competitively bid all your expenses. For example, simple office supplies purchases. Put a list together of what you need and send an e-mail or fax to all your local suppliers, like Office Depot, Office Max, Staples or better yet, your local small business office supply firm. They all want your business.

Note: Take the lead from your own customer base. Aren’t they seeking the best deal on fuel prices every day? You need to do the same thing with your vendors.

Here are a few actions you can take to cut expenses and maximize yours profits:

• Put your own expenses up for competitive bids and use your best judgment
• Create a monthly expense budget and stick to it
• Never let expenses become routine
• Benchmark your expenses to see trends from various vendors
• Put systems in place to control expenses
  • Set approval levels by expense category and employee
  • Set the authority to approve all expenditures
• Watch expenses by adding and tracking three key financial metrics weekly in your flash report
  • Cash Balances
  • Payables Balances
  • Receivables Aging 

Management Flash Reports

Now let’s talk about your Flash Report, Dashboard or Daily report, whatever you call it. First and foremost, you should have a Dashboard Report you can refer to in order to get real-time information on the metrics of your business. We discuss this in detail in our FBO Success Seminar.

Your report should include fuel pumped on the previous day, MTD and Budget MTD. It should also include the productivity of your maintenance shop, charter department and flight school. In addition to the financial metrics we mentioned above, you can include other easy to print reports from your accounting system. Let your bookkeeper be your “virtual CFO” who can regularly produce these reports—on-demand and without visiting your office.

Are your eyes on the money? If not, how can you be sure that you’re making any?
                                                                                                                —Sam Frowine

Next in the Series:
Part 3: Increasing FBO Productivity in 2012

Read Part 1: Our FBO Business Outlook for 2012

Let us know what you think!  Please e mail us at jenticknap@bellsouth.net 

Ron Jackson
Ron 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. 

John Enticknap
John 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. 

Planning a Successful 2012 FBO Business Strategy: A Three Part Series

Part 1: Our FBO Business Outlook for 2012

By John L. Enticknap and Ron R. Jackson, Aviation Business Strategies Group

 Get your facts first, then you can distort them as you please.                                                                                                                                          —Mark Twain 

Recently we received a call from one of the major business aviation publications asking for our outlook for the FBO business in 2012. As writers, practitioners and consultants to the business aviation community, we are often contacted by the aviation trade press for our views on various industry subjects.

We have our ears and eyes glued to the FBO market, and recently completed one of our FBO Success Seminars for the National Air Transportation Association (NATA), so we have a pretty good pulse on the health of the industry.

Looking into the FBO Crystal Ball for 2012

First of all, in today’s political environment—especially with an election year upon us—it’s hard to get a good read on what’s going to happen in 2012 on a national level that will affect our FBO industry either positively or negatively. If you’ve watched any of the debates, you probably think ‘ol Mark Twain hit the nail on the head. You might as well wet your finger and hold it up in the air to see which way the economic wind is going to blow.

We can start by turning our attention to the cost of fuel because it’s one of the most watched components to running an FBO. 

For 2011, the Platt’s (what fuel suppliers use to price Jet A) pricing index at the beginning of the year saw the Gulf Coast Pipeline Mean (GCPM) at $2.4738. By the time December rolled around, the GCPM posting was $2.4866 with the highest price occurring in May, when the GCPM topped out at $3.3239 per gallon. It is interesting to note that in the first week of 2012, the Platt’s index is up a little over 7 cents per gallon. 

For 2012 we think it’s fair to say fuel prices are going to remain somewhat volatile and a range of $2.50 to $3.00 per gallon is going to be the norm. With nothing new to report on that front, expect more of the same general course for 2012. (Of course, a caveat is that the world economic situation needs to remain reasonably stable.)

Outlook for FBO Operations

As to actual operations, the best information comes from the FBOs themselves without all the filters from so-called experts.  As mentioned, we recently completed another effective FBO Success Seminar in November. We gained a wealth of data from a diverse group of more than 25 attendees representing 20 various sized FBOs.

So what did they have to say?

They all experienced a reasonably stable business environment in 2011 with incremental growth in fuel sales as well as solid aircraft maintenance bookings. If you were to benchmark their growth with the National Gross Domestic Product (GDP) index for 2011, you would see similar numbers to what the attending FBOs experienced, which is a 1.9% increase on average.

Historically, the FBO business suffered significant lows in the 2008/2009 timeframe and since that period has seen small but steady growth. Of course, we’re still seeing some industry fallout from those lean and tough years, so keep in mind FBOs will not be getting back to the 2007/2008 business levels in the near term. This, again, tracks national business trends.

The Market for New Aircraft

Another leading indicator for aviation business recovery is industry forecasts for new business aircraft sales. Traditionally the demand for new aircraft picks up when companies operating business aircraft start to fly more hours and thus feel the need to either replace or expand their current fleet.  Obviously, more flying hours equals more airplanes on the ramp equals more fuel sales. So tracking new aircraft bookings is a good idea.

Both Forecast International and Honeywell do not predict business aircraft sales to return to 2008 levels (1,313 units sold) until 2018! However, just for reference, the business aircraft production forecast for 2011 was 683 units with a rise to 728 units for 2012. Again, only a slight uptick, but an incremental increase is better news than a recessionary market.

The companies attending our FBO Success Seminar had similar concerns for the coming new year. They are not expecting anything new or earth-shattering that would help increase business growth.

Other Areas of Concern

Besides a less than robust business environment, the FBO community also has concerns about other areas which might adversely affect their profitability. These concerns include national business trends such as increasing regulations from the EPA and FAA; increasing labor costs including healthcare; and a national election year leading to sustained political gridlock.

In addition, FBOs are concerned about a potential trend of airport boards and authorities getting into the aviation service business and competing against existing firms, or not extending leases with reasonable terms.

So what’s our 2012 FBO business prediction? If your FBO sales increase 5 percent, you are a star! Based upon what the general business trends seem to be, a 2 to 2.5 percent increase would appear to be normal business growth. At the same time, most FBOs will not be adding new employees but instead replacing those lost to attrition. In addition, cost control will remain a high priority as will be increasing productivity. (Stay tuned for Parts 2 and 3 of this series for more on that.)

What about the big FBO networks? In 2011, every chain made some major expansion moves and worked to increase efficiency. (Signature just announced another FBO acquisition as we go to press.) It is reasonable to assume the chains will continue to consolidate the FBO industry. Remember, our national FBO industry includes fewer than 3,000 FBOs while the FBO chains combined represent a group of about 250 locations. Consequently, plenty of acquisition targets remain.

Decrease in Number of FBOs

Another industry trend we should all be concerned about is the continued loss of FBOs within the US. The most recent NATA Fact Book indicated in the year 2009 there were 3,138 FBOs in the US. In November 2010, that number decreased to 2,987. Now, at the end of 2011, there are reports of three more FBOs going out of business and no doubt there will be more to come. Will this be a continuing trend?

As mentioned earlier, there is still fallout from the massive 2008-2009 downturn coupled with the continued unsettled economy. In addition, bank loans have been called, credit has been tightened, leases have not been renewed under reasonable terms, and, to a minor extent, FBO consolidation continues.

Unfortunately, the business pressures FBOs have been under will continue in the coming years and managing a profitable FBO won’t get any easier. However, there are things we can do to affect the bottom line by decreasing costs and increasing productivity. Parts 2 and 3 of this series will discuss these opportunities.

Next in the Series:
Part 2: Decreasing FBO Costs in 2012
Part 3: Increasing FBO Productivity in 2012

Let us know what you think!  Please e mail us at jenticknap@bellsouth.net 

Ron Jackson
Ron 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. 

John Enticknap
John 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. 

Not All Customers are Created Equal

Or, Sometimes You’ve Got to Tell Them How the Cow Ate the Cabbage!

 By Ron Jackson

 Recently we completed our fall NATA FBO Success Seminar in Atlanta and we had a great turnout of FBO attendees representing locations from as close as the Atlanta area to as far away as Grand Rapids, Michigan, and points in between. We were fortunate to have as one of our sponsors AC-U-KWIK, and Jodi Espinoza made a very informative presentation.

One of our discussion topics at the FBO Success Seminar is how to work with customers who want everything but are not willing to pay for anything. Sound familiar?

The old adage “The Customer is Always Right” is usually true. However, every once in a while you run across customers who break this general customer service axiom. They seem to know everything, want everything, and want it now. Unfortunately, these customers usually don’t purchase a lot fuel, if any. Yet we manage to spend an exorbitant amount of time, resources and energy trying to make them happy.

My business partner in Aviation Business Strategies Group (ABSG), John Enticknap, knows all too well that a customer is not always right, and that sometimes you just have to take matters into your own hands. In one case, the customer was an Army Lieutenant Colonel (LTC) and John was the pilot of a Huey Helicopter doing Command & Control (C&C) reconnaissance during the Vietnam War.

“We were out flying, doing some C&C work, and I kept checking the fuel gauges when the yellow caution light went off indicating 20 minutes of fuel remaining,” John recalled. “I told the LTC we needed to get to the fuel dump to refuel. He said we’ll go in just a minute.” 

Warrant Officer John Enticknap, center, with his Huey Crew in Vietnam, 1969John said five minutes went past and they’re still on the C&C point, and so he reminded the LTC of the fuel situation. “Just give me another minute or two and we’ll go,” the LTC told John.  After five more minutes, John told the LTC “We need to go now,” pulling the ship’s nose around for a dead-head run to the fuel dump, while the LTC was yelling expletives from the rear of the aircraft. 

“As we approached the fuel dump, I radioed for a direct approach instead of the customary routing,” John said.

 “Good thing. We were flaring to a landing point, and we’re about 10 feet off the ground when poof, the engine quit and we went straight down doing a hovering autorotation.”

“What the heck happened?,” the LTC exclaimed, picking his jaw up off the floor of the Huey. “We ran out of fuel, sir,” John exclaimed.

After refueling and going back on C&C again for another two hour sortie, John told the LTC it’s time to get fuel. To which he replied, “Let’s go now…I can’t handle another one of them landings.”

Of course, this is an extreme situation, but as my dad always said, “sometimes you just have to tell someone how the cow ate the cabbage.” (Read the origin here.)

I wasn’t sure about the origins of this saying, but the way Dad used to say it, I knew exactly what he was talking about. Sometimes, you just can’t afford to put up with all the nonsense. 

When John was President of Mercury Air Center’s chain of FBOs, he would tell his General Mangers not to put up with the non-paying habitual complainers. “It’s not worth it,” John explained. “I told my GMs to invite these types of customers to take a walk across the field. These folks are not really customers. I’d rather have my competition deal with these types of individuals so I can concentrate on wowing my really faithful, as well as profitable, customers.”

Giving up a customer sounds contrary to good business sense. But sometimes it is the best business decision. Your goal should always be to seek out and nurture long-term profitable customer relationships. They key word here is “profitable.“ 

I'd like to hear from you regarding how you handle these types of customers. Please email me at Ron@thejacksongroup.biz

Ron Jackson
Ron 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.