Supply and Demand – the Needless Suffering of the Supercar Driving Experience Industry

The Supercar Driving Experience industry is in pain and quite possibly dying in the UK. It’s an industry I worked in as an instructor for more that a decade and so it saddens me deeply to be writing this post. I have a great affection for the industry, the great people within it and the many, many high quality, professional race instructors who worked within it and earned a living speaking very quickly indeed from the passenger seat of a supercar.

Today, the industry is suffering and possibly, slowly dying through pressure on pricing and in many cases, self inflicted wounds.

It’s a very simple, old fashioned rule of Supply and Demand. Let me explain what I mean.

Any industry or product has a Golden Era. That period when something is new and exciting and everyone wants one. Think of whatever iPhone is due as you read this. Buzz Lightyear figures, any limited production Porsche 911. It’s a Must Have Product that people queue to own and will sometimes pay over list price to be amongst the first to have.

After that comes a period of steady demand, where supply races to catch up and there is still a healthy demand, though perhaps not the hysteria of launch. Still good times and profitable.

Eventually, down the line, the product becomes what can be called ‘Mature’.

Inevitably, competitors come along, the demand is fulfilled, then price pressure takes over and the downward spiral begins. More and more competitors join the industry and of course, like any business, it is always survival of the fittest. Some products mature and survive with a long life, others are come and gone in a flash.

Think Jedward vs Bruce Springsteen.

I have no problem with that. Throughout most of my working life, I have worked in industries where results count and you’re only as good as yesterday’s work. It keeps businesses from becoming complacent and is a Darwinian life cycle that is, in my view, perfectly natural. Businesses come and go. Sometimes demand for a product simply goes away and it’s no longer appealing. Everyone who wanted it has bought one and the world moves on.

Sorry Buzz Lightyear Doll.

Other times, the world changes and the established businesses are killed by changes in the marketplace that they either did not anticipate, or chose to ignore.
Sorry Blockbuster Video.

Sometimes though, something comes along that disrupts the norm even further and actually accelerates the process. And sometimes, something comes along that disrupts a market so much that it begins to kill a perfectly healthy industry, even when the demand is still there.

This is the current state of the Supercar Driving Experience industry. If you enjoy studying business characteristics and figuring out what’s happening to a business, then this is a perfect example of an industry potentially heading to the bottom, even though there’s no need.

The Supercar Driving Experience industry is actually doing an even better job than most mature markets. It’s actually consuming itself in a classic Race To The Bottom.

It is of course a traditional business cycle but it is one which I had a vested interest in. As I mentioned, I was until recently a supercar driving experience instructor.

I am no longer to any large degree. I still instruct on track, but I’m fortunate to be able to choose who I work with.

And sadly I have witnessed a great industry continue to consume itself in a race to the bottom.

So what happened?

Shock Number One.

Along came Wowcher and Groupon. They are nothing new, bucket shops have been around for decades. But traditionally, they buy up end of line products and sell them at, well bucket shop prices. Which is fine for old DVDs in the supermarket and last year’s fashion clothing on a market stall.

You really wouldn’t want a bucket shop to be selling your prime, current products from under you, would you? Really?

So, imagine this.

You have a perfectly good product that sells for 200 pounds, business was competitive but it is good and stable, happy days. Competitors are out there, the checks and balances are that everyone has operating costs which are similar, the cost of buying and maintaining supercars, the staff overheads, the marketing, so prices can only go so low.

Imagine when someone comes along and says “We want to take your 200 product and sell it for 100 but don’t worry you will make it back….”

How?

“Because everyone will love it so much that they will buy some more on the day and they will book to come back again and pay the regular 200 price. Really, they will.”

Yeah right. Can you see where this is going?

“Oh and by the way we need 50 per cent so you get 50 of your 200 product. And instead of you getting the money from the voucher sale at the point of purchase, we keep that and only pay you out if and when the voucher is ever redeemed.”

And what many people don’t realise is that a large percentage of gift vouchers in all industries are actually never taken up. So they get to keep all the cash.

You would tell them to close the door behind them, right?

Shock Number Two – Virtually Nobody Did.

Pretty much every driving experience company signed up for it. You see, it’s not the Wowcher and Groupon bucket shops that are to blame. They cunningly managed to convince almost an entire industry to consume itself with very little risk to themselves whatsoever. Well done.

They have virtually no risk, no investment in high end supercars that are inevitably going to be driven hard and need a lot on maintenance. They are simply an aggregator with tons of positive cashflow, needing only to pay out when someone actually redeems the voucher, if they ever do.

And what none of the companies I know seemed to realise was that the £50 offer was to become the new price point. The nature of the internet and social media today means that pricing in most retail industries is pretty transparent. It’s easy to check pricing across a range of competitors in just a few minutes. So while you may think that there’s no harm in Wowcher and Groupon selling off the remaining inventory of driving slots in the days leading up to an event, in fact you’re educating people that this is the new standard price.

In addition, that new price point attracted a totally different profile of customer. They weren’t really interested, they’d simply bought the deal. So they didn’t take the step-sells that can sometimes restore profitability, such as the video stick of the drive, the photo print as a memory of the day, additional drives. They would turn up, do the drive and then go. On to the next deal.

What should the experience companies have been doing instead?

They should have been insanely busy building up their own brands, their own products with real value to protect their pricing and rejecting offers from voucher code companies, working on delivering great value experiences to their customers so that the difference is so blindingly obvious that customers are happy to pay for a premium product.

They should have been building their own, exciting social media channels, building their own ‘tribe’ of loyal fans who loved them, their own email marketing lists.

Instead, they grew lazy, they let others do their marketing for them, let others dictate their terms of business. For sure, some would have always signed up. However, if your own brand was strong enough, you would still have been safe. In fact, even if EVERY OTHER driving experience company had signed up with Wowcher and Groupon, you would still have been OK, because you’d have been unique. Your own followers would remain loyal to you, because you’d made sure that you loved them by creating great content that constantly reminded them what cool people you were. Then when the time came to sell to them, they would buy loyally.

So why should you care? Well, you don’t have to really. That’s the market and as Gary Vee always says, the market doesn’t care.

From my own viewpoint, I watched as standards declined, both in terms of quality of venue, car and sadly also instructors. The industry turned into a sausage machine as the cars were worked harder to try and maintain the figures. Some once great businesses fell by the wayside, to no surprise of those within the industry.

Many of the very best instructors I know have, like me, left that part of the industry.

What does this mean to you if you are looking to buy a driving experience gift for someone? Quite simple, you literally get what you pay for and there really, really, really is no such thing as a free lunch.

So don’t expect to buy a drive in a Ferrari for 50 quid and expect to see a pristine 488GTB that’s a few months old when you arrive at a venue that is less than hospitable.

And don’t expect to be driving around Silverstone GP at that price point either. More likely, a scruffy disused lump of old airfield barely driveable and with no facilities other than a portable loo.

As one company owner was heard to comment recently about the voucher sites, “It costs more to bounce down the side of a hill inside a fucking plastic ball than it does to drive a Lamborghini!’

Go figure.

There are still some good Supercar Driving Experience companies out there and I wish them well. I’m happy to continue working for them on occasion. They work very hard to deliver a good experience to their guests and genuinely care about their customers. They place their faith in Trip Advisor, Google Reviews and the belief that people can genuinely understand that something that is sold for 50 quid somewhere cannot be the same experience that is sold for 150 quid elsewhere.

The supercar driving experience industry is now probably dividing itself into two sectors. The pile em high, sell em cheap sector where as many as seventy people per day will be driving each car. And the premium side of the industry where the product costs more but the quality is higher.

As with anything in life, you get what you pay for.

The surprising part for me is that customers seem to be having a harder and harder time figuring that out.