4th Quarter Journal 2013 - (Page 45)

Marketing Strategies for Driving Share of Wallet and Profitability BY PETER DUCHESSI M arket share is a measure of a company's performance - and even status - in the business aviation industry. Most companies believe that the more market share they have, the more profitable they are. However, in slow growing markets (e.g., United States), to increase their market share, most business aviation companies resort to competing on price (i.e., buying market share) or building the most persuasive sales team in the industry. There are alternatives to increasing profitability and one, which has not received enough attention in the business aviation industry, is "share of wallet." Share of wallet is popular in a number of industries and many companies have discovered that share of wallet is strongly related to client retention and profitability. Case and empirical studies have demonstrated this relationship in many industries. The same should be true in the business aviation industry. Yet, there is little or no mention Aviation Business Journal | 4th Quarter 2013 of it in popular business aviation magazines. Let's discuss it now. Size of Wallet versus Share of Wallet "Size of wallet" and share of wallet are two different concepts. For a business aviation company with multiple service lines including completion, maintenance, and fixed base operator (FBO) services, size of wallet represents its clients' total spending for all of the services. The aircraft life cycle and aviation regulations guarantee considerable size of wallet. For a company that has a single service line, size of wallet represents its clients' total spending for the lone service. Total spending for some services, say charter service, depends on a client's personal flying habits, financial resources, and other factors. Share of wallet is the amount of its clients' total spending that a business aviation company captures, or retains. For a business aviation company that has multiple service lines, share of wallet is the amount of its clients' total spending for all services the company captures. For a company that has a single service line, share of wallet is the amount of the clients' total spending for the lone service the company captures. Share of wallet is an important measure of client retention, relationship strength, and profitability. Increasing share of wallet suggests that clients are deciding to use a business aviation company's services, client relationships are strong, and profitability is secure. Conversely, decreasing share of wallet suggests that clients are deciding to use competitors' services, client relationships are decaying, and profitability is in jeopardy. Consequently, business aviation companies should make share of wallet a high priority and marketing needs to devise strategies for increasing share of wallet. If a business aviation company is interested in share of wallet, how should the company re-segment its market and what are the strategic marketing implications, or strategies, for the new segments? Continued on page 46 45

Table of Contents for the Digital Edition of 4th Quarter Journal 2013

President's Message
From the Ground Up
Navigating Through healthcare Reform
2013 International Update
Veterans Airlift command: they've got heart; they need wings
FAA Chief Counsel Interpretations
Free is a Very Good Price
Marketing Strategies for Driving Share of Wallet
State Tax Changes for 2013
A Beginner's Guide to Rulemaking
Advertiser's Index

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