Author: Ana Stanca
Demand Generation Leader, Enghouse Transportation
In many ways, riding transit should be its own reward. After all, transit riders get where they’re going safely and efficiently without having to watch the road or worry about traffic — all while knowing they’re doing their part to make their city a better place.
But to recruit more customers who love and appreciate their daily transit trips, you have to get them onboard in the first place and then convert them into regular riders. That’s no easy task in a car-centric society, and transit agencies need all the help they can get to meaningfully grow ridership and revenue to sustainable levels.
The good news is that account-based ticketing and open-loop fare collection enable some exciting options for programs that can incentivize new riders, reward frequent ones, and tap into third-party partnerships for new revenue streams.
It turns out that loyalty and rewards programs really do create loyalty. For a transit system, they can do this in several ways:
For example, Portland, Oregon’s public transit agency, TriMet, strengthens and promotes its Riders Club rewards program with local business partnerships that offer member-only discounts, product giveaways, and other perks.
There are a few recent technologies that enable all these innovations.
First is open-loop transit payments. In other words, it allows customers to pay using their personal credit cards, debit cards, and mobile devices as they pay for other goods and services. (Open loop is not a recent development, but chip payments fast enough to be used in transit area.)
Next, behind the scenes, every customer has a unique account maintained on a back-office server. Account-based ticketing enables the transit system to keep track of customers’ data, including:
Once the agency has the payment system in place, customers can sign up for the loyalty program on an app and link to a payment method. The transit agency can decide what loyalty schemes to try, collecting data from each to evaluate its success. The app technology makes it easy to plug in new ideas and new partners. And unplug anything that isn’t working.
Cross-loyalty programs make for appealing rewards because participating businesses can leverage the collective strength of the coalition to create a desirable value proposition for customers. Collaboration in a cross-loyalty program often involves sharing customer data and insights among the participating businesses, allowing for a more comprehensive understanding of customer behavior and preferences.
Cross-loyalty programs also enable joint marketing efforts, promotions, and ad campaigns that leverage the combined reach and customer bases of all partners.
There’s even more revenue to unlock from a transit rewards system.
Traditional transit ads, such as those inside train cars and stations or on the sides of buses, are broadcast to a broad, general audience. However, many advertisers find it far more valuable to use narrowcasting, targeting a particular and niche audience with ad content. Narrowcasting delivers tailored messages to a highly targeted group of individuals with common interests, characteristics, or behaviors.
These narrowcasted ads can be location-specific. For example, when a customer taps out of a transit station, they may see an advertisement for a restaurant within walking distance of their location, perhaps with a percent-off coupon attached.
Or the ads might be based on the information previously volunteered by the customer. For example, a customer with an interest in seeing movies might receive rewards, ads, and offers from a theater near their home.
The rules for targeted ads and rewards programs can be iteratively changed as the transit agency and its partners collect more information about the customer’s transactions and the reward redemptions that result from the ad campaigns.
Such targeted ads are a win-win-win. They’re far more palatable to consumers than generic ads, particularly when they come with discounts and other offers to use. They’re also far more effective for advertisers, allowing them to speak directly to the people most likely to buy from them. And, of course, this high value means they bring in more revenue for transit agencies.
A reliable and sustainable source of revenue is crucial for transit agencies to provide efficient, accessible, and safe public transportation services that meet the needs of the communities they serve. Effectively designed rewards programs can make a real difference, providing a stable source of revenue and more satisfied customers.
Enghouse Transportation has nearly 25 years of experience providing technologically advanced solutions and innovations to the transit market. To see how Enghouse can help your agency grow revenue with automated fare collection and rewards programs, request a demo today.
