The fundamental thing is to make sure the trains run on time.” No, it’s not that well-known marketing man Benito Mussolini, allegedly responsible for getting Italy’s trains to adhere to their timetables in the Twenties, but Alex Turner, sales and marketing director of Chiltern Railway, talking about how train operating companies can win customer loyalty.
Turner believes true loyalty begins with getting the basic product right: for a railway, that means providing “a reliable, civilised, comfortable service that gets good word of mouth from users. The best way we can market ourselves is by customer recommendations”.
Turner, like many of his counterparts at the UK’s other passenger train operating companies, is a classically trained fmcg marketer who was drafted into Chiltern two years ago when the Government set up its controversial shadow franchises, splitting British Rail into more than two dozen independent units supposed to function as if they were already in the private sector.
Turner sees Chiltern as very much a retailer and the marketing department’s job as making sure passengers get the information they need to make an informed choice.
At the moment, Chiltern uses press advertising and posters at stations, with direct marketing in the catchment areas immediately around its stations offering saver deals and incentives to stimulate travel. It has recently started mailing its database of season ticket and Railcard holders with a quarterly brochure highlighting what’s on in the various cities and towns it serves.
As a result, Chiltern has seen passenger use increase by 60 per cent in the past two years, he says. He is quick to admit, however, that the marketing function cannot claim all the credit and that the line is lucky in having new rolling stock – the result of major investment four years ago.
Despite his retail background, Turner has no plans to launch any of the sophisticated loyalty schemes that have been the hallmark of the retail industry recently, nor anything akin to the airlines’ frequent flyer programmes.
His idea of relationship marketing is rather more direct and involves talking to people who use the line. Loyalty card schemes such as Shell Smart or Tesco’s Clubcard are not for the Chiltern line, he thinks: “It’s important to avoid fancy gimmicks and to talk to your customers.” He admits it is likely a significant proportion of Chiltern’s above-the-line spend will be shifted below the line.
John Beauchamp, advertising and promotions manager for Thameslink Rail, which operates services from Bedford through London to Brighton, used to run the UK frequent flyer programme for United Airlines. However, he also believes rail companies do not need over-sophisticated systems. He says: “Our loyalty scheme is very bespoke. It’s not a points-wins-prizes system – it’s much smaller, much more targeted.”
It is also not about increasing the number of passengers the line carries: instead, it is about retaining season ticket holders and encouraging off-peak travel. Thameslink surveyed its regular users at the beginning of 1995 to find out what they wanted: more than 80 per cent of commuters said they wanted timetables sent to them, infor-mation about changes to the service and special discounts and third-party offers. As a result, monthly season ticket holders get a pack roughly every three months.
Gold Card holders – annual season ticket buyers – get reminders to renew their season ticket a few weeks before expiry and a thank-you note once they have done so, outlining the benefits, including discounted rail travel all over the South-east and membership of a restaurant discount scheme valid at more than 2,000 restaur ants worldwide. Beauchamp admits it was easier to link with the existing Transmedia discount scheme than for Thameslink to launch its own.
ScotRail – which operates about 95 per cent of the consumer rail services in Scotland, as well as sleeper services between London and Scotland – has had significant success with direct marketing and database marketing.
Mike Ashton, marketing manager of ScotRail, used to work for Procter & Gamble and Johnson & Johnson. He is a great believer in building long-term customer relations and an enthusiast for the idea of lifetime value.
Ashton says roughly half Scot-Rail’s marketing budget has been switched from above the line to below the line in the past two years, with considerable success.
In particular, ScotRail has been using loyalty marketing to drive up the number of passengers using the West Highland Line, which many Scots were recently concerned was earmarked for closure.
It relaunched the line about a year ago and was particularly interested in increasing the number of West Highland Line Railcards. These encourage consumers to make more journeys by offering them a 34 per cent discount on tickets. Before the relaunch, it was 1,200 tickets a year: nine months after the relaunch and a concerted direct marketing campaign in the areas the line serves, 30,000 cards were in issue. Business increased 36 per cent.
Also last year, ScotRail launched a package of short-break holidays throughout Scotland, in London (via sleeper) and in Northern Ireland. Advertised through direct mail and the classified newspaper and magazine ads, these are used to generate names, addresses and other information for ScotRail’s database, which now has more than 100,000 consumers on it with 3 million records. “Nearly every promotion we do has a data-capture element,” Ashton says.
ScotRail also has a programme running called ScotRail Select, which offers season ticket holders a variety of special offers, not just on cut-price train tickets but also on items such as luggage or mobile phones. Members also get a special plastic card with an exclusive ScotRail Select hotline number for travel information. Since its launch in January 1995, it has cut the attrition rate for monthly season ticket holders by 30 per cent. Next on the agenda are loyalty programmes for first class and sleeper passengers.
ScotRail’s magazine, Horizons, has been expanded from 16 to 32 pages with a print-run of 60,000 and an estimated readership of around 350,000 – which makes it Scotland’s leading lifestyle magazine, according to Ashton. “No propaganda, no messages from the director: just two pages of offers. It’s a general lifestyle magazine with major national advertisers.”
But ScotRail is doing more than just applying classic loyalty techniques to rail travel, he adds. In conjunction with Strathclyde Uni- versity, it is conducting research into what he calls “total journey systems” – a way of modelling the process a traveller goes through, from deciding to go somewhere through to looking back on the journey.
This study has identified 180 “moments of truth” that determine whether the consumer will go by rail or not: Ashton believes that by addressing these in the right way, ScotRail can win more business.
The first passenger train operating company to enter the private sector – around a month ago – was Great Western Trains, based in Swindon. John McCallion, its director of marketing, says the company’s first venture into loyalty marketing was the launch of its Business First scheme, aimed at encouraging business travellers to return to first class. McCallion says: “During the recession, a lot of companies were downtrading, saying staff had to travel standard class rather than first class.”
Business First offered complimentary tea and coffee, newspapers, magazines and a book of the month. Its success spurred the company to launch its Merlin club, which offers a variety of discounts and two-for-one deals with hotels and retailers, as well as the use of a special first class lounge at Paddington. Great Western is also trying to encourage business users to travel at weekends and is exploring integrated packages with taxi or car hire companies.
Unfortunately, McCallion says he is unable to discuss hard results for the company’s loyalty and database-driven marketing efforts because it is making a share offer to staff and is restricted in what information it is allowed to disclose.
A number of other passenger train operating companies were unwilling to discuss their loyalty schemes. In some cases, apparently because they felt it was confidential; in others because their franchises are currently being bid for. Others seemed just scared of talking and, given the appalling press that railway companies have been getting recently, this is hardly surprising.
After all, whatever one thinks of the rights and wrongs of the privatisation of British Rail, it is difficult to forget recent débÃÂ¢cles that have led to at least one franchise being revoked and another being investigated on grounds of alleged fraud; the refusal of drivers to operate certain types of trains that apparently have a habit of splitting apart; a spate of crashes and near crashes that appear to support suggestions that privatisation has de-emphasised safety; and allegations that privatisation has brought layers of bureaucracy and extra paper-work that the public will have to pay for.
However, British Rail desperately needed to put its marketing in order. For years, the complaint was that BR was incapable of listening to its users. At least now most of the operating companies seem to have recognised the need to build relationships with the public if they are to get them to travel by rail.