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Business, Expertise, Technical Cameron Tipton Business, Expertise, Technical Cameron Tipton

Consumers are More Informed - What does that Mean for 'Experts'?

Consumers have huge amounts of research and data available to them when shopping for products and services; what does that mean for experts? I examined the changing tides in consumer research and the steps that experts can take to stay relevant.

Times Have Changed, Should We?

Everything about how consumers interact with products and services has dramatically shifted over the last few decades. Consumers have more resources at their fingertips than ever before. Just consider the idea of the global community that the internet provides for shoppers - in a few keystrokes, you can be searching thousands of reviews, articles, and videos related to your product. So it seems reasonable to wonder - where does that leave people like me? Those of us that have staked our careers in providing expert information to an educated populous - are we out of jobs?

Be Relevant or Fail

If houses, boats, cars, or airplanes have something in common it’s that they’re expensive. The advent of consumer-facing technologies like Zillow for homes or Car Gurus for vehicles has given everyone access to amounts of aggregated data that would have been incomprehensible 15 years ago - FOR FREE.

The real estate industry has great market research and data, so I will pick on them for a moment.

A study published by the University of Alabama in 2003 revealed that the creation of an online multiple listing service (MLS) had drastically increased the number of properties a consumer was able to “visit” online. Despite this increase, the overall shopping period a prospective buyer took to reach a decision did not change, nor did the reliance on a real estate agent. This is important. It shows that while access to advanced resources may improve the overall quality of the shopping experience it does not undermine the value that an expert provides when purchasing high-worth items.

The increase in public data has changed the dynamic between the consumer and the expert. It increases the pressure on the expert to truly…. be an expert. It has become much more difficult to underperform in these types of industries. The consumer will quickly recognize if your knowledge-base begins and ends with the same information they can find on google in 5 minutes.

Provide Hard Value

An educated client is a great client. There is no question in my mind that a person that comes empowered with knowledge will ask the right questions, challenge my thoughts in a productive way, and have a better outcome with whatever service I am providing because they are more invested. With that said, expert's must bring drastically more value to a client than what was required 15-20 years ago. Experts can no longer operate solely on information that was once difficult for clients to obtain, we must adapt our practices and provide a greater analysis of data that our clients can rely upon.

In my sphere within aviation (particularly in the brokerage space), I occasionally hear a prospect ask, “why do I even need you? I can find all of what I need online?”. We shouldn’t take these questions offensively (as I often tell myself), this is simply a reflection of the times we live in and the type of high-net worth and above average intelligence clients that many of us work with daily. My response is always the same; I tell my prospect that I encourage them to research along with me if that is something that interests them, but it is my trained eye, experience, and understanding of what to look for that differentiates my practice from the lay-person. These types of questions should serve as a stark reminder that our service ought to be worth the price of entry. I think this adds needed and beneficial pressure to experts to continue to employ and leverage new technologies and make an even more effective and impactful experience for the clients.

We must recognize that the consumers of today are generally coming to us armed with a higher level of knowledge than ever before. We can choose to take advantage of this with innovative approaches that leverage our client’s greater understanding of the market - or we can blame the access to resources as the source of our failings. I challenge not only my firm but all of my colleagues to continue to push towards excellence and understand that changing tides should not evoke fear, but a drive towards innovation. In the end, these types of evolutionary shifts force us to assess our strengths and shortcomings and to adapt. We’re better for it and so are our clients.

Cameron+Tipton,+ASA.jpg

Author:

Cameron Tipton, ASA, ARM-MTS

accredited senior appraiser

appraisal review & management - mts

Flight Level Partners


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Aircraft Market, Aircraft Appraisal Cameron Tipton Aircraft Market, Aircraft Appraisal Cameron Tipton

Future Values in Business Aviation - What's Certain?

Aircraft values are hotly contested at the beginning of each year by everyone - OEM’s, brokers, appraisers, but what’s the truth? How do you cut through all the noise? What’s absolutely certain anymore?

headlines move articles not always facts

Depending on who you ask - the 2020 biz av market is either booming or on the verge of total collapse. That’s a bit of the world we live in today - hardline positions make for more entertaining arguments and surely help boost search results, but they make it difficult for the rest of us who just want real facts. Misinformation can leave the business aviation industry exposed to an undue optics problem that can ultimately lead to market instability. I’m not breaking out the crystal ball today (I’ll save that for future posts), but here are the facts you need to know.

The Truth…

Extremes are statistically rare. Without delving into the raw mechanics, it’s important to understand that the market always seeks balance and stability. That means that if someone is forecasting record-breaking growth or the world’s largest bust - your spidey-senses should be tingling.

The reality is, it’s tricky to forecast a single segment’s movement and even more so an entire industry. Does movement in the single-engine turboprop market have a huge bearing on the stability of large cabin biz jet sales? No, not necessarily. Business aviation serves as a support role for so many industries, and aircraft classes can serve distinct market segments that may help bolster (or bust) their values.

Here’s the “inside” scoop - the lower the intrinsic utility of the aircraft the more volatile the values will be. It may seem simple and it is really, but this concept has caught the market off guard more than once. During the financial crisis of 2008, the business aviation market faced major market instability with values plummeting across all aircraft types and classes. However, those that suffered the most were those with a lower intrinsic utility to their respective owners. In some cases, large-cabin business jet values fell by over 50% between 2008-2009. Certainly, these aircraft had more to lose in terms of monetary value but a close look at market conditions would reveal that while a high-utility turboprop like the King Air 350 did have an accelerated value loss after 2008, the market overall remained liquid; while an aircraft like the Gulfstream GIV-SP suffered a nearly 40% loss in core value due to downward market pressure from a flooded market (among other factors) which was not an uncommon sight among heavier business jets. I’m not picking on the GIV-SP as a “low-utility” aircraft, it’s a good airplane, but the reality is, the market certainly believed it had lower utility than a King Air - it’s much harder to pivot a GIV-SP from carrying executives from industries that simply no longer possess the capital for continued operation to say, carrying cargo. The great news is manufacturers are more aware of this dynamic now more than ever - low utility aircraft simply don’t sell well.

OEM’s Want a Stable Future

Manufacturers across all types and classes are focused on delivering aircraft that deliver exceptional value to the widest variety of customers. That doesn’t mean that OEM’s are less concerned with delivering a great on-board experience - but they need the “bling” to be backed by discernible value for the customer - like being able to fly faster, further, and higher than ever before while staying connected to what’s happening at the office in real-time. This pressure to innovate or become obsolete has never been more apparent. Over the past decades, we have witnessed a continual consolidation of OEM’s that were not able to keep pace with an industry set on moving forward and overall, that’s good for the consumer. OEM’s that are dedicated to creating true value for their customers not only build better airplanes but are helping assure a more sustainable future for business aviation.

Here’s the Takeaway:

  • Market forecasts are not always reliable and that’s a problem for consumers and the business aviation industry.

  • Forecasting values of all of business aviation is disingenuous. Biz av supports a huge variety of industries, many of which, have very little effect on one another.

  • The intrinsic value an aircraft serves to its consumers is a huge driver of market stability - low utility aircraft will suffer the most during market downturns.

  • Aircraft manufacturers care about the future. No group has more at stake to guarantee that their planes have a long-lasting value-add for their customers. Especially in a world where consumers are more sensitive to purchasing assets that offer quantifiable ‘real-world’ value.


Cameron Tipton, ASA, ARM-MTS

Cameron Tipton, ASA, ARM-MTS

Author:

Cameron Tipton, ASA, ARM-MTS

accredited senior appraiser

appraisal review & management - mts

Flight Level Partners





Read More