Not since the phenomenon of “Point Break” in 1991 has the U.S. Parachute Association seen a surge in membership like it has in the past few years. After years of hovering around 30,000 members, USPA membership has increased over the past six years to more than 36,000 members. This awesome growth spike is great news for manufacturers and anyone who sells anything related to skydiving. Ironically, this growth has been anything but good for the majority of drop zones.
The foundation for this increase has been built on an unsustainable platform: Groupon, LivingSocial and their various cousins. Groupon became a national phenomenon in 2010 and the industry bought in, drinking the Kool-Aid recklessly with little thought of what the after effects would be. Drop zones are now suffering the hangover and instead of getting better, the headache continues to worsen. Here’s why.
With the surge of tandems into the sport from these daily deals, we also saw an increase in the number of drop zones. At the end of 2009, there were 263 USPA Group Member DZs. By the end of 2014 there were 311. There are also several new DZs that are not USPA Group Members adding to this number. This surge in new DZs is unprecedented and we find ourselves in a precarious position; the demand for tandem skydives is normalizing as daily deals are dying a slow death, but we are left with an oversupply of DZs competing against each other in an overcrowded market.
After years of compromising price for volume, many DZOs are making the disastrous marketing mistake of continuing to offer artificially low prices. In order to win market share, DZs are reducing their prices to ridiculously low levels and forcing others to follow suit. This is an unsustainable model and is being made in desperation as the glory days of high volume dry up. The good news is this is the first step toward the industry normalizing itself; this price war will eventually force a number of DZs out of business and bring an end to the supply surplus. The next two to three years are critical for many DZOs as they fight to keep their heads above water during this period of price wars and market normalization.
I travel to DZs throughout the country and actively secret-shop many drop zones. The narrative at many of the DZs I visit is the same: turn and burn. While the operation quickly pushes students through, the very basics of customer service and concern for the customer experience are often ignored; instructors use profane language in the presence of students, the hangar is untidy, the bathrooms are filthy, wait times are long, etc. Why would anyone return or recommend this business to a friend? DZs operating like this are in a state of constant struggle and will likely not survive because they are undercharging and providing a mediocre experience. Just because a DZ can safely offer skydiving doesn’t make it a good business.
In order to survive, DZs will need to be creative with their marketing, prepare for lower volume, operate efficiently, and treat their guests with professionalism, creating repeat customers who will recruit their friends to come to the DZ.
I love skydiving and I love the industry, but there are many DZOs who must wake up and realize that what has worked for so long no longer works. As an industry we must take a step back, look at the big picture and examine where we are. Are we too stubborn and subjective to see things clearly? Are we scoffing at the millennial generation (our target market) for their lifestyle choices and failing to adapt to their expectations as consumers? Will we dig our heels in and say, “This is how it’s always been done,” and refuse to change? Will we continue to work twice as hard for half the price just to stick it to the DZ down the road?
Companies that grow offer two things: a great product and a great experience. The DZs of tomorrow will not be the ones who offer the lowest prices, but the ones that find the balance in price, efficiency and the customer experience.
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