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Wednesday, June 1, 2016

How Social Media Can Aid in Seeking the Next Buyer

By James T. McKenna

When Denver, Colorado, lawyer and inventor David Brody decided in the last few years to launch an effort to develop an innovative business aircraft, he did what aviation entrepreneurs do. He assembled a team of the best engineering and marketing talent he could find.

The company he and those rotorcraft and aviation veterans formed, XTI Aircraft, aimed to develop a high-speed, five-passenger, vertical takeoff and landing business transport. They added an unconventional twist to that approach. XTI decided to use social media to generate publicity for the TriFan600 project as well as funding for its development.

That approach put XTI at the intersection of traditional aviation business development and marketing and the rapidly evolving world of social media. The effort illustrates the promise of social media for this industry as well as some of its challenges.

It was just a decade ago that Brody took the more traditional approach, when he founded AVX Aircraft to come up with innovative solutions to the U.S. Army’s scout and utility helicopter needs. He tapped as the company’s president Troy Gaffey, a former Bell Helicopter chief engineer and SVP of research and engineering who is among the most experienced executives and aeronautical engineers in rotorcraft.

On the business development side, AVX’s team included Frank King, a former Bell senior executive director with 35 years experience in program management and marketing, and Don Taylor, a 28-year veteran of finance, business management and contracts who had served as EVP and CFO at Bell.

The team Brody assembled at AVX pursued government contracts. The company vied for the U.S. Army’s Joint Multi-Role Technology Demonstrator initiative. It was not picked as a final contender; teams of Sikorsky and Boeing and Bell and Lockheed Martin were. But AVX has contracts to support that initiative and perform other work for the Army.

In standing up XTI Aircraft to develop a vertical takeoff and landing (VTOL) business transport, Brody enlisted Jeff Pino, former Sikorsky president, to serve as the new company’s vice chairman. Dennis Olcott came onboard as chief engineer, a post he’d previously filled for Adam Aircraft and the PiperJet program. Former Cessna Aircraft president, Charlie Johnson, joined XTI as a member of the board of directors.

But XTI added that unconventional twist. It elected to mine social media fields for participants like active Twitter users and science and technology bloggers to identify people who might generate “buzz” about the company and its TriFan 600 high-speed, five-passenger VTOL development project.

XTI hired an outfit called StartEngine and another called CrowdfundX to use results of that data mining effort to develop a program to generate interest in itself and the TriFan 600 among small investors.

The company didn’t plan to rely on such “crowdfunding” (an option created by relaxation of U.S. investment regulations) to finance the VTOL’s development. It also is pursuing financing from traditional banks, private equity and venture capital firms, high net-worth individuals and aviation OEMs. But the crowdfunding effort promised to generate publicity about the company and its work, which could facilitate other financing as well as generating funds itself.

That work paid off. In mid-April, XTI said the crowdfunding effort had resulted in $1 million investments from more than 700 individuals who pitched in $350 to $50,000 each and that it was aiming to raise $2 million more that way.

What was not clear was whether the crowdfunding effort might also identify or develop potential purchasers of the new aircraft. Late last year, Pino (who was killed Feb. 5 in an airplane crash) told R&WI he didn’t think the crowdfunding would have that kind of benefit. That effort was focused on small investors, who probably would not be in a position to afford the TriFan 600.

XTI Aircraft used crowdfunding to garner $1 million in investments. Photo courtesy of XTI
XTI’s crowdfunding then created a curious juxtaposition of building a base of people who were helping to financing an aircraft that they might never be able to own.

Social media has many benefits for those in the helicopter industry. Police departments and air ambulance operators throughout the world use Twitter, Facebook, YouTube, Snapchat, Instagram and other channels to update their communities on why that helicopter is hovering over their homes or why road traffic is tied up. (At the same time, such social media activity can promote public support for those operations.)

Social media also is clearly valuable in building brand awareness and engagement.

What is less clear is how such activities can be converted to increased sales.

That is a crucial question, not only because of the sales and operations slumps facing the industry, but also because of our graying nature.

A recent survey of 2,500 business and general aviation industry members by the aerospace and defense marketing firm BDN Aerospace found that fewer than 20% of respondents in business aviation were younger than 50 years of age and numbered less than 10% for general aviation respondents.

“That doesn’t mean we can ignore the under-50s,” Mesa, Arizona-based BDN said in summarizing the survey it did with AvWeb. “These younger people do play a role as influencers and decision-makers, and we need to understand and market to them now, preparing for the time when they represent the majority.”

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