Welcome to The Dive Locker podcast, the podcast for dive professionals where we bring you the latest in diving industry resources that make you excellent at teaching techniques, risk management and dive business.

I’m your host Tec Clark and thank you everybody for being here on another episode of The Dive Locker. Hey, you might remember in episode two I mentioned that, we’ve got hurricane Dorian bearing down on The Bahamas. Well at the time of this episode, it is still there. It is still bearing down on them. And I also mentioned in the last episode that we are going to hear about the relief efforts that are going to be needed for our friends in The Bahamas and, as this is starting to unfold and the news of the devastation that’s coming out is, is just catastrophic. So you’re going to hear about different relief efforts and we’ll see and keep our ears posted for what ones are coming out that are industry specific.

But there is one I mentioned last time and that is going to be the GoFundMe campaign that was launched for Cristina’s Zenato. Now, many of you know Cristina. She was on the League of Extraordinary Divers, but she has been really all over the place. She’s had so many documentaries, about her and her just beautiful relationship with the sharks that she has embraced over her many years at UNEXSO. She’s such a good caring soul. And now, Cathryn Castle Garcia and Gui Garcia have created this GoFundMe account to support and help them out. And so I think this is just fantastic. I’m looking at it right now. It is Cristina Zenato Grand Bahama 9119. And Cristina by the way, is spelled without an “h”. It’s C R I S T I N A Folks, there’s already been over $7,000 raised at the time of this recording.

So that is awesome that you all stepped up and, and came to the challenge for this. This is so cool. Great to see that. And so our thoughts and prayers are with Cristina and everyone else down there.  I can’t wait to hear from Stuart Cove and see how he fared down there as well, and all of the operators. So look for more news on that coming up here in the future.

Well today we’ve got a really cool episode. We are going to get into a little bit of the business side of diving and that is going to be an area that I’m quite passionate about. We’re going to talk about value selling, value selling, what it is and how we can sell on value rather than price. This is going to be a two part series because of the complexity and the content that we deal with. So we’ve got that and we’re also going to do an icebreaker that I think you will really enjoy, that you can put into your classroom environments. And it’s really a great one for communications as well as being an icebreaker. So there you go. Let’s get into it. Let’s have a great episode of The Dive Locker. Ready? Dive, dive, dive!

Value Selling Part 1

For our first dive business segment, we’re going to be talking about value selling. Now this is an area near and dear to my heart. I have spoken on this at the DEMA Show. I’ve spoken on this at ICUE, which is the International Conference on Underwater Education with NAUI. And I’ve done an article on this at Dive Center Business magazine. So this is something I’m very passionate about and what we’re going do is we’re going break this into two parts. Value selling part one will be in this episode of The Dive Locker and value selling part two will be in episode four of The Dive Locker, the next episode. So be on the lookout for that. We’re going to break it down into the two areas of competing with “price” and then competing with “value”. So this episode we’re going to talk about the competing with price part of selling.

Okay. Don’t you love a good deal? I do. I mean who doesn’t? Right? Has this ever happened to you? You go to the grocery store and you’re going to get some food or something like that, and all of a sudden you pass by coffee and you see that there is a buy one get one free offer going on with the coffee. Now, this might not be a brand that you normally use and you might not even need coffee, but you’re saying to yourself, “wow, this is a really good deal, and I know I will need coffee in the future if I get one free, what can I do with that extra seven bucks? Hey, maybe I can get that cool ice cream. I’ve been wanting to try.” Well, does that sound familiar? And then you wind up getting that and you wind up kind of having that tension of the fear of missing out on.

If you don’t get that, you know, what have you lost? You know, this is such great value, right? And so you wind up walking away getting coffee, which wasn’t on your list, and you get ice cream, which wasn’t on your list, right? So all of a sudden we have seen consumerism played out in a wonderful and magical way. And that is done by the company. So the coffee company wants to launch their product, they want to get out the new brand or the new flavor or whatever it is of the coffee. So they throw what’s called a loss leader in there. They throw a free one. So now they’re not making the same margins on those per unit sales. But what they are getting is a greater share of market. So now more people get to try the product and as they try it, then they tell their friends, they like it, and they get more later on.

And so the buy one get one uses the one product as the loss leader. And in return they gain customers. So loss leader strategies work well with goods because it’s easy to calculate those per unit costs and you can kind of accommodate for this and so forth. But the deal is this, can you do loss leaders strategies to services, especially our services in the diving industry – scuba certification courses. This is an issue, and our industry really needs to take attention to this because what we’re doing is in using some strategies that are out there like this, we are taking professional training and we’re reducing it down to bargain basement discount prices that doesn’t work. And here’s the reason why. If we want to attract customers and we use strategies of discounting and we based those strategies on price, what is the cost? Now the cost in this case is that you actually deplete the quality experience for the student getting training and you produce a poor student!

Now what do I mean by this and how can discounting affect training that much? So here’s how this works. We often hear about competing with the dive center down the street and so if they offer a $199 open water diver course, well the other person’s going to offer a $99 course. Or they’re offering a $99 course, so we’re going to offer a two for one GroupOn. Now, the problem with this is that the dive centers in this case are competing on price rather than on value. Price comparison is not sustainable. There will always be someone, some company somewhere who will underprice you, especially from individuals who want to break into the business and they are willing to undercut the competition in order to gain customers. Sound familiar like the coffee example, right? But the deal is that if you react to those competitors by discounting your products and services, you’re likely to run yourself out of the business and be out of business in two to four years.

That’s just the painful truth about trying to compete on price. Now, why do we see this happening so much in our industry? You know, many people point to that, well, dive center owners and managers don’t have business backgrounds, which is true in a lot of cases, but that’s not necessarily what’s going on. What’s going on is it’s the opposite side. We are all consumers and we deal with consumerism and so we have to understand that there are consumer driven strategies that erode business models. Now they might work for big box retailers, but do they work for dive centers? Not really. Here’s some things to take into consideration on consumerism. So first of all, we love things cheap and quick, right? So what we do now is we go shopping on Amazon and Alibaba and other Internet retailers and we’re looking for the cheapest and quickest way to get things right?

And so that’s part of us, but yet we want to have businesses that are sustainable and we don’t want these customers to go to the Internet and, and you know, get their goods elsewhere. We want them to come into our dive centers. Well, wait a minute, it’s the same thing. You are a consumer too. And we have to understand that this is part of consumerism to get things cheap and quick. Then we’re also seeing that c-cards, the certification card is being turned into a commodity. So a commodity is any economic good that can be bought and sold. But you’re probably thinking, isn’t scuba certification a service? Well, you might be thinking that, but think about this. The consumer looks at the c-card as the means to the end to go diving. So they know if they want to be a diver, they need the c-card.

You see? So it’s about being a diver. It’s about getting to dive, which means I need to hold this seat guard to do it. That turns the c-card into a commodity, a product, just like anything else. So what the consumer’s going to do is look at that c-card as, “how can I get it as cheap and quick as possible?” This is natural. It’s not the consumers’ fault to think this way. We’re just inclined to do so. So when we have prospective students that are looking for cheap and quick, don’t dismiss them as being flighty or aloof or noncommittal. They’re just being consumers. And then we’re also seeing loss lead discounting. The loss leader, like I talked about in the coffee example, right? But here’s the deal. What we’re seeing with loss leading is that dive centers are using training to be the loss leader to get people in so that then greater purchases can be made down the line for continuing education, for equipment sales, and for dive travel.

All of these things to get the consumer in the door is the loss leader of offering a discounted course. So now if that loss lead discounting comes in and that course is sold for $99 or a two for one type of a GroupOn thing, what’s being lost? Well, this is where the slippery slope happens. It’s not as simple as a product is sold and now I have a per unit sale is down a little bit like in the coffee example. Now to be able to keep afloat for a service that has such fixed costs and variable costs like a scuba certification course does, that becomes an issue. What we’re seeing is the training is suffering from these consumer driven strategies. They erode the dive center business model, and they erode the quality of training that can be offered. Here’s how that is happening.

Okay, so let’s say that you’re competing by price to the dive center down the street and you start to do your pricing strategies. You start to do the discounting and get that bargain basement price just to get people in the door. Now what’s going to happen is that in a loss leader, which has the sacrifice kinda to it, if you just sacrificed everything at the high quality level, then the expenses of that loss lead would crush your business. So what happens is to balance out the loss leader, dive centers are pulling back on the services offered just so they can kind of survive that initial loss leader experience, that initial discounted training experience. Here’s how that happens.

First of all, we start to look at those, like I said before, fixed costs and variable costs, right? And those things are going to include, first, let’s look at pool time. So pool time renting pools. Now this can be done by the hour or by the student, but it’s costly. And so what we’re seeing is that some people are shaving the pool time by a day or two or hours just to save money. So now the student experience underwater isn’t there anymore. So what happens is they are now discounting that pool experience. They’re pulling back on it. So by pulling back on the amount of hours spent in the pool, there’s the savings of the pool rental, but there’s also the savings on the instructor’s hourly rate as well. If an instructor is paid by the hour, and then think about this, if the dive center pays their instructor per student, well then what’s the motivation for the instructor to offer longer pool time? You see, so these two things really hurt the student experience when you start to pull back the pool time. Now what about classroom time? Well, usually there’s not rentals that are going along with the classroom.

Those are usually done in the dive center, so you don’t have to pay for the rental, but what do you have to pay for? It’s the instructor. So the more time that an instructor is spending in front of the students, the more expense there is to pay that instructor.

So what we’re seeing is many dive centers moving more towards the e-learning. Now don’t get me wrong, e-learning is awesome. It’s a great tool for diver training. It really is. But here’s what we’re seeing. Some dive centers are keeping their instructors completely out of the classroom. They’re just having them do e-learning. And then they’re saying, “all right, well let’s meet and do our paperwork and review our knowledge reviews on the pool deck.” So they don’t even come to the store. They’re just going to the pool deck. Now think about this, how many distractions are there on a pool deck?  So that’s not a good time to bond. It’s not a good time to get to know people and it’s not a good time to start going over paperwork and the first knowledge reviews and such. It just isn’t. So by missing out on that classroom time to save money and go more on that e-learning, it actually winds up hurting that instructor student relationship. That’s an important piece of developing divers.

And then we also look at the expertise area that changes. Now what do I mean by that? Well, think about this. Who is teaching the majority of courses and what are the majority of courses that are being taught? So in most dive centers, open water diver is kind of the prime catchall. It gets most people in the door. Well who are the people that are going to be teaching that? Is this going to be the tenured veteran instructor that’s moved into technical diving and things like that? No, it’s usually going to be the brand new instructors cutting their teeth. These are also the people that have the lowest pay rates. They’re being paid the least. Why? Because they’re the least experienced. So there’s a lot of dive centers that say, “yeah, we’re going to go ahead and use our least paid instructors to teach our loss leaders scuba class, open water diver.” So you don’t want to really go down that road too much because saving the buck and you know, even not giving divemasters to assist that new instructor just to save a buck. That can deteriorate that training experience too.

And then finally, location. What we’re seeing a lot is instead of places going out and renting a really nice pool at an aquatics complex that has a really nice dive, well you know, something 12 feet, 16 feet, 18 feet deep, that type of thing. We’re seeing dive centers say, “Hey, we got to save money on this loss leader. We’re going to go to other locations so we don’t have to pay for a pool at all.” And we’re seeing that dive centers will go to hotels or apartment complexes in an effort to cut costs. Now hear me out. If you’re in a resort and you are at a dive resort and the only pool is the pool at the resort, I get that. Don’t worry about that. That’s not what we’re talking about. I’m talking about the person that could literally do deep water training, but they are purposefully saying, “no, we’re going to go into a free shallow pool to save money on the course to get people into the course because we’re going to loss lead price it, discount price it.” Wait a minute. So that is really a tricky situation because now if you’re in that six foot deep apartment complex pool, where is the training for equalization really happening? Where is the training for neutral buoyancy really happening? Where are we feeling the wetsuit compress because of depth? You know, it’s different things like that that we kind of miss out on when we go down that road.

And another area that we’re seeing here in South Florida, we have dozens of charter dive boats all around us, and boat diving is typical for these parts. But we will have dive centers that save on the training and not take their students out on a dive boat and they’ll do all of their training off the beach. Now the beach is free and just pay for some parking, right? But the deal is, is that now you’re only going to probably a max depth of about 20 feet. So now you’re open water diver never gets to experience much deeper than 20 feet and they never get to go on a dive boat!

Now again, I’m talking about South Florida. There’s many of you that are landlocked and that’s okay. You and the lake are your only options. But I’m talking about purposefully saying, “you know you live here in South Florida but we’re not going to actually take you out on a dive boat because of keeping the course costs down.” So are we then, by doing that deep discounting in scuba training, are we actually hurting the diver and their experience to be a good well-trained diver? I think so. And I’m not the only one folks, maybe you agree. There’s many of you listening to this that are in the same mindset and opinion. I hear it from charter boat dive captains everywhere, crew everywhere, other dive professionals that go out and look and observe. This is a buzz. We are all sitting here saying the same things. There are students that do not know how to set up their gear and I mean new newly certified divers that do not know how to equalize that do not have good buoyancy.

And so where is this coming from? When me and my colleagues take a look at where this is coming from. There is one common denominator that we’re always seeing. It is the suppressed training courses, the courses that are reduced down to as cheap and quick as they can possibly be. And that is where we are seeing that competing on price is actually hurting our industry. It’s hurting our students. And if our student comes out, ill prepared, ill equipped, they’re not comfortable, they’re not confident, they’re banging into the reef and then they’re being yelled at for banging into the reef. They can’t get underwater and they’re holding up their buddies because they’re not good at equalization. How long you think they’re going to persist in this activity? They’re not. They quit. And in a place like here in South Florida, when you get on Craig’s List or OfferUp or anything that’s offering equipment, you’d be amazed to see the amount of titles that say “gear used one time”,  “gear use two times” and now it’s for sale.

Wait a minute, there’s something broken here folks! And I point to this area of discounted training of discounted services, and I think that it’s really a serious problem that we need to look at in the industry. So now I have just really illustrated why competing with price has some challenges. Next episode is going to be the answer to this. Why do we not want to compete on price but on value? What will it be that we can offer a value that makes a student come to your dive center and choose you over the competition, but you might even be higher priced. Wait a minute, how can that be? I’m going to explain that to you next week, so we’re going to get into that. Be on the lookout for that next episode.

“The Reporter” Icebreaker

Here’s a cool strategy for an icebreaker. If you don’t know what it is, is basically that type of activity that you do at the beginning of a group meeting or gathering or class or wherever it is that you want to break the ice, get people to know each other and learn who the other people are in the meeting or the classroom or whatever. So icebreakers are a really good thing to do for our scuba classes at all levels. They’re great to do for meetings, anything that you want to introduce people to each other and get that out of the way in a fun and dynamic way. It really adds to the fun of our scuba courses at adds to a stimulating environment and a way to get to know buddies quicker. Now this icebreaker is called The Reporter and this one is ideal for divemaster and instructor training.

This was introduced to me at Pro Dive by Kelly Levendorf, my good buddy and I love this one. So I’m giving him props for this. And it was fantastic, we did it all the time at Pro Dive. And so here’s what this is about. The Reporter is where you’re going to have your class sitting around. And what they have to do is buddy up into teams of two and with their teams of two, they are going to take turns interviewing the other person, just asking them questions about themselves, their history, what their diving was like whatever it is that you want to give them to kind of “report” on and give each person three to five minutes to learn about the other one, where they’re from, what they like, what they don’t like, what their diving background is.

All these different things they’re to report to the other person. Now, once both people have interviewed the other person, now it’s time to go around the room and instead of introducing yourself and telling people about yourself, the other buddy is the one introducing you. So have the “reporter” stand up and say, “hey everybody, I’d like you to meet So-and-so. This person is from Chicago originally and became a diver at the age of 15 back home and blah, blah blah,” and on and on and on. Right? And so you then see that there is more attention given to the person that is doing the reporting. Everyone’s listening and the person speaking is really into talking about the other candidate, right? So they’re not shy and embarrassed and they don’t want to talk about themselves and they’re looking down. They’re actually very engaged in telling what the other person told them.

Now, here’s another great piece about this, is that not only do you command the room, you have more attention and people will lean in and listen more, but here’s what’s great for you, the trainer. You get to see and measure the communications skills of every person in the room before the class has even started. You are now assessing who you need to work with more for their communication skills, what’s their body language, what’s their crutch words? All of these things all of a sudden come out and it’s early on and you get to see how good they are or how rusty they are. So this is, I think, one of the coolest icebreakers. That’s why I wanted to share it with you. Again, props to my buddy, Kelly Levendorf who’s now at Rainbow Reef and he just gets all the credit for this one and, all the days that we were doing it at Pro Dive as well. I’m sure he’s doing it down there too now. So, thanks Kelly and definitely look at using this in your next leadership courses. You’ll love it.

Hey, thanks for listening my friends. Remember to subscribe to this podcast on iTunes. That way you’ll be notified of new episodes as soon as they go live and please leave a rating. Also, you can leave me comments and feedback. Go to ScubaGuru.com find The Dive Locker podcast and you’ll see the microphones on that page. Just click the icon on the microphone and send us a message. Also, remember that every episode is going to have its own dedicated show notes page. So for this episode number three, you’ll have a dedicated page that will have links to everything we discussed in this episode, including the link to the article, The Value of Value Selling, which I wrote for Dive Center Business. I’ll provide the link for the Dive Center Business online so that you can read that article.

So there you go. Thanks again everybody. We will see you in the next episode. Safe diving and take good care, my friends.

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