Diamond customer relations (split from Garmin G-1000 ADS-B solution)

[Keith M]

The disappointing thing is that Diamond don't understand the value of such work to maintaining good customer relations. Contrast this with Cirrus, who work hard to keep their customers happy and have just reported sales up 30% for the first 6 months of this year. Giving your customers the option of purchasing a new aircraft as the only way to get a software upgrade is not going to generate goodwill. DA40D customers haven't had a G1000 upgrade since 2006, and Diamond UK went out of business this year. Connected?

[rwtucker]

The disappointing thing is that Diamond don't understand the value of such work to maintaining good customer relations. Contrast this with Cirrus, who work hard to keep their customers happy and have just reported sales up 30% for the first 6 months of this year. Giving your customers the option of purchasing a new aircraft as the only way to get a software upgrade is not going to generate goodwill. DA40D customers haven't had a G1000 upgrade since 2006, and Diamond UK went out of business this year. Connected?

Well said Keith. This reminds me of a major player in another sector of the economy which, for years, viewed growth solely in terms of new sales while ignoring metrics such as retention, referral sales, and customer satisfaction and loyalty. Yes, they paid lip service to these other values and their metrics but if you looked at their budgets, it was easy to see that the real value they placed on them was zero! Even though this company provided an objectively better service, they eventually fell to competition that spent money building and maintaining genuine long term relations with existing customers (you can't fake these things as well is in the past). Sometimes, this meant simply being helpful to existing customers not because they saw an immediate return but because they recognized that existing customers were the reason they were successful. They also believed that a new customer should never get a better deal than an existing customer. Imagine that!

[rwtucker]

An afterthought on Cirrus.

Several years ago, I flew an SR-22 on a demo flight. To this day, Cirrus maintains a closer relationship with me than Diamond. They know that I decided to buy a DA40 but they keep me apprised of developments in the hope that my next aircraft will be a Cirrus.

[CFIDave]

It's worth remembering that Cirrus sells direct with their own dedicated sales force in the US, whereas Diamond sells mostly through independent distributors in the US. So Diamond Canada is not staffed to deal directly with the customer like Cirrus is.

There are some real customer advantages to buying from distributors: As an independent aircraft dealer, a distributor is better able to analyze the customer's goals/aspirations/requirements/flying history/budget/tax situation to recommend the right aircraft, which more often than not is a good used Diamond (or may not even be a Diamond at all). This is in contrast to Cirrus salespeople who can only sell new Cirrus aircraft; the company "dumps" its used Cirrus trade-ins on third parties to sell.

A disadvantage for Diamond in using distributors is that the aircraft manufacturer deals with customers indirectly, thus getting less customer feedback about their products and pricing. Individual distributors can't market or advertise as efficiently as a manufacturer. And because distributors sell so many used Diamonds, Diamond Aircraft may sell fewer new aircraft than they would if selling (and marketing) directly.

Having said all that, Diamond this quarter sold more piston aircraft than Cessna, Piper, Beechcraft, Mooney, or anyone else except Cirrus (see GAMA report http://www.gama.aero/files/documents/20 ... ort-Q2.pdf)

[rwtucker]

Dave,

I appreciate the detail you have added. While this is probably not the forum for an extended discussion on this topic, I see the issue of Diamond's after-the-sale customer relations from a different perspective. It was Diamond's decision to structure US sales as they did. They chose a model that maximizes their potential margins while forgoing a platform for extended customer relations. Second, the sales platform is not the only mechanism by which Diamond can create and advance long term relationships with customers, old and new. Given that the only time I ever hear from Diamond is when they want to sell me a new aircraft (even then, their approach leaves much to be desired), it seems clear that they know how to contact costumers but generally choose not to. The same goes for securing customer feedback. Quality feedback, including ideas for fixes, revisions, products, etc., grows out of genuine relationships with customers. It is not secured by a poorly designed impersonal questionnaire. Based on my observations and the observations of a small number of one-off Diamond owners I know, Diamond has zero interest in them as owners. Third, I disagree with the position that multi-brand dealerships add value in guiding purchase decisions. Over the years, I have become friends with the CFI/sales person from whom I purchased my Diamond. He made it clear that commissions, company profit, and manufacturers' incentives guide which aircraft they promote within the scope of pilot interest. He also made clear that pilots generally show up knowing which aircraft they are going to purchase. The used aircraft issue is interesting to contemplate. Were Diamond to evolve to leadership that valued long term customer relations, they might consider adding value with a "pre-owned" network. The GAMA report is a different discussion. Even thought Cirrus outsold Diamond 2:1 globally (which might mean that sales skills and relationships matter), I don't see the US figures that might add detail to this discussion. Whatever personal judgments we might hold about Cirrus aircraft, they are unquestionably best in class for building an educated, loyal, and vocal community of owners. Cirrus also crushs Diamond and other brands in managing the press. Even though our Diamond's are provably safer aircraft, reporters across the globe sing the praises of the Cirrus BRS and show pictures of the Coastguard sea rescue

[carym]

let me add one other perspective to this discussion. I purchased my DA42 from a Diamond dealership who also dealt with other airplane manufacturers. Within a few years they were no longer in business. I no longer had reliable customer support. I could (and have) called Diamond Canada for support but that is far from ideal and often not helpful. I am not a business person, so I can't say which is better. I can say that when I mentioned to my wife that we should think about getting another plane (as my DA42 is back with Diamond), she tells me to not even think about getting a Diamond.

[CFIDave]

Robert:
I agree with most of what you said, except for the part about distributors not adding much value because "pilots generally show up knowing which aircraft they promote within the scope of pilot interest." In my experience, many pilots are unsure about the pros and cons of various aircraft and need considerable help in deciding which types/years/options to consider. Equally (if not more) important, as a distributor we spend a lot of time discussing different types of ownership, including partnerships vs. putting aircraft on leaseback with flight schools, vs. DiamondShare, helping people understand the tax and insurance consequences, training, delivery/ferry options, and financing. Many of our conversations are "after the sale" where we help people with maintenance/insurance/training issues.

With regard to long-term relationships, we as Diamond distributors have many customers who have come back to us multiple times to buy and sell aircraft, or for upgrades. Every pilot's life situation changes over time, and it's the development of these long-term personal relationships that really drives the business.

[CFIDave]

Cary:
I'm sorry to hear of your past "dealership experience" but during the past year things IMHO have gotten better for customers. In particular, Diamond Canada did away with exclusive regional sales territories, thus allowing all distributors to sell new Diamond aircraft anywhere in North America. Diamond Canada also introduced fixed US dollar pricing for new aircraft, which did away with the uncertainty associated with varying US dollar/euro exchange rates for DA40NG/DA42-VI/DA62 aircraft produced in Austria (US dollar prices were actually lowered).

This forces distributors to compete with each other for new Diamond aircraft sales (they've always competed nationally and internationally for used aircraft). A buyer can work with any distributor knowing they will get the same price for a new Diamond aircraft. So now the real differentiator is distributor service and support, based on that distributor's years of experience and knowledge. If you're not happy with one distributor you're free to work with another.

[Keith M]

Interesting to see the perspective from you guys in North America. Here in Europe, Diamond only allow one dealer per country, with none in the UK now. My impression is that when sales drop, they move on to a new country (eg. Russia), or a new model, rather than undertake any marketing to generate new sales. As Robert so eloquently explained above, they can't rely on their existing customers to generate new sales either, because they make no effort to nurture them. This way of doing business obviously springs from the top of the company, so I can't see them changing course after all this time. I wish they would though, because it will be unfortunate for all of us if they go under.

[rwtucker]

This is definitely a complicated issue with much to be said on all sides. I think it is clear to anyone who has been on this forum for awhile that CFIDave is an exception in the positive direction. His helpfulness and knowledge have been relied on by most of us and I have no doubt that he builds good and lasting customer relations. This said, where is Diamond in the process? Do they compensate Dave and his team for going the extra mile? Do they even care? Corporate caring is manifested by expenditures and not words. Every thing I see in their structure and practices suggests that Diamond's view is on the next customer and they do not care if that person happens to be a previous customer. In our business, for example, we have an iron-clad policy that existing clients pay a minimum of 10% less for a given service than a new client pays for it. The only way to get our best prices is to have a relationship with us and the longer you are a client, the lower your fee. Expecting 10% for customer loyalty is perhaps too much for aircraft sales, but a genuine financial appreciation (not one that they would quietly give to anyone who walks in the door) would make a real statement.