We’ve all heard it before, “First rate customer service;” “Customer-driven organizations;” “The customer is part of the team;” etc. We all talk the talk and know that the customer is paying something for the work we perform. And most of us are well aware that the customer ultimately buys our groceries and pays our bills. However, it is easy to underestimate the real value that a customer represents to the company we work for in the aviation maintenance business. This article will focus on the owners and operators that place their trust in us day after day and the actual value, from a dollars and cents point of view, that the customer and his or her aircraft brings to the company we work for. We participate in a regulated industry and provide services that ultimately result in our customers’ compliance with the regulations and as a result enjoy the comfort of knowing that much of the work that we do on an aircraft must get done for the customer to be in compliance. How many industries can plan on selling their labor because the work is scheduled and must be accomplished by regulation? The only real challenge to the manager of our maintenance business is to create and maintain the draw that will bring the customer back rather than choose Joe down the road to do his next inspection. Importance of relationships
An interesting thing about the aircraft maintenance business is that the community is very small and relationships are critically important. It is the owners’ relationship with a maintenance provider, or more likely their relationship with a specific employee within that maintenance organization, that will cause them to bring their aircraft back. Certainly, part of the initial decision to take an aircraft to a particular maintenance provider is the safety consideration and that maintenance provider’s ability to perform the work correctly and safely. There must be a high level of trust with the maintenance provider in order to feel comfortable when the maintenance is completed and the aircraft is approved for return to service. But, once the capability question is answered, it is the relationship that makes the customer keep coming back. Likewise, when an operator has a bad experience with you as a maintenance provider you must understand that the confidence of that customer has been jolted and must be regained. A rule of thumb to remember is the 10 to one rule. For every negative experience that your customer has with your company it will take 10 positive experiences to balance it. Be safe, put quality control processes in place that ensure that the work accomplished is safe, without exception. Be honest, customers can see right through a line of stink that equates to nothing more than an excuse. We have to accept the responsibility for the mistakes and learn from them. Everyone makes mistakes and customers understand that. What they are most interested in is how we handle and learn from them. Maintaining a relationship with our customers and delivering a quality product is important, but the value of keeping that customer coming back again and again is many times not realized or is greatly underestimated. Let’s take a look at how the dollars can add up over time.Scheduled maintenance costs
The aircraft that we maintain, particularly the turbine aircraft, are all subject to scheduled inspections and maintenance requirements. Along with these scheduled inspections and maintenance requirements comes other maintenance (unscheduled maintenance). Some aircraft cost more to maintain than others but a common rule of thumb ratio of inspection time to resulting maintenance is 1:1.5. In other words, if we spend an hour inspecting an aircraft we will spend an additional hour and a half working on the aircraft to make corrections to the discrepancies that are found. So, if the flat rate for a look-phase inspection is $4,000 the final bill for that maintenance should be around $10,000. Larger aircraft have a higher ratio and smaller aircraft a lower ratio, but whenever an aircraft is inspected there is additional maintenance and we need to consider the potential revenue from the additional maintenance as well when we look at the value of that aircraft coming back. Inspection schedule
Now let’s take this information and begin to plan for what we can be expecting over the next year. First, take some time to look over some work orders from some past inspections that were accomplished in your shop. You should be able to verify the ratio you can expect with a few sample work orders from each model. Next, we know that each aircraft type has an average utilization per year. According to NBAA Fact Book (online at www.nbaa.org) a survey conducted in 1998 showed that jet aircraft averaged 432 hours per year and turboprop aircraft averaged 406 hours per year. The next factor to note is the basic inspection cycle for the aircraft as well as the list of scheduled maintenance to be accomplished. If an aircraft flies 400 hours per year and the maintenance cycle requires the aircraft to be inspected every 200 hours, someone will look at that aircraft at least twice a year. Using the previous example’s numbers, if the basic scheduled inspection flat rates at $4,000 and we can expect to see an additional 1.5 times that in revenue as well for unscheduled maintenance, the value of that customer in revenue dollars for the year is $20,000. Apply your ratios and come up with an estimate of how much revenue your repeat customers might bring in to your shop if you can convince them to return. I think you will be surprised. Now, to get a little more detailed, there are also many other maintenance and inspection requirements that are due to be accomplished at different intervals than the basic inspection cycle (200 hours in this example). In other words, many other maintenance items may come due in the coming year or the year after that. If you properly researched that aircraft’s maintenance logbooks when it was in last, you should know or have access to what other items will be coming due and when. Knowledge of what scheduled maintenance will need to be done over the next year or two is as valuable to aircraft owners as it is to the maintenance provider. In other words the owner wants to know what dollar amount to plan on spending and the maintenance provider should want to know what dollar amount to plan on for revenue for the year. Knowing the inspection cycle, utilization, and any other major maintenance that will be due in the projected year will allow you as a maintenance provider to estimate the potential value of that maintenance customer and his or her business. The exact number is different for each aircraft and significantly higher for large turbine aircraft but you shouldn’t be surprised to find out that your customer may bring in as much as $75,000 to $150,000 per year in maintenance revenue to your company. If your company also can perform avionics upgrades and/or refurbish interior and paint, there is also a figure to apply for those things. Granted, modification and refurbishment are not a required function but statistics tell us that an aircraft will get new interior and be repainted once every five to seven years. And more and more avionics upgrades are being mandated by regulations every year. The customer is always right
We are all in business to profit and grow the business to some extent. Understanding the value of your customer should be in the front of your mind and should be discussed in some detail within your company. The old “the customer is always right” statement came from someone who understood the importance of a customer. Don’t make it complicated though. If you do you risk losing sight of what is really important. Stick to the basics of treating your customers right. Be honest — the customer always knows the truth and lying will destroy any trust that the customer has in you. Be fair — if your guys took longer than they should have, take the hit yourself and make your team better. Be good — provide the service that you would expect, and keep your standards high. A mentor of mine once told me “It’s never the wrong time to do the right thing.”
Joe Hertzler is the president of AVTRAK Inc., an Aurora, Colorado-based company. He is an A&P mechanic with Inspection Authorization and also a private pilot. Among its services AVTRAK provides data on maintenance and inspection requirements to aircraft owners.