Public transit has been losing its appeal for decades. While we can blame policies that incentivized personal car ownership instead of public transit usage all we want, we will not solve the problem at hand. Working to reverse this decades-long decline on a state and federal level is a tough task but there are ways in which every transit agency can try to attract new riders, beginning with improvements in service. Part of the puzzle might revolve around public transit loyalty programs, too. Few people are unfamiliar with the perks of a frequent flyer program, so why not transfer this to a frequent rider program?
What Is A Loyalty Program?
Frequent flyer programs were created four decades ago and have since become synonymous with gamification. Loyalty programs differ vastly but one thing is for sure – the more a customer uses the service, the better. Some offer brand-specific discounts and perks (buy 4 cappuccinos, get 1 free), while others offer a wide range of incentives via a network of partners (earn X number of points to get this perk from our partners). It depends on the business to figure out which type will work best for them.
These programs exist to reward customers for their loyalty and incentivize desired customer behaviors, and it is no surprise that almost every established business out there has some form of a loyalty program. It is not surprising that customers are willing to go the extra mile to use a specific business if they are using their program. And, as frequent flyer miles have shown us, sometimes the rewards are quite substantial.
How Can Loyalty Programs Help Public Transit?
As proven by numerous examples in almost every industry imaginable, loyalty programs serve two very important purposes: attracting new customers and reducing churn via incentivizing certain behaviors.
Businesses are finding it more and more difficult to find ways to stand out – and if they cannot stand out from the crowd, the crowd will pass them by. It may be down to a good ol’ loyalty program to provide the much-needed boost in sales but let’s not forget that it is the products or services that should always play the central role. In terms of public transit, this means first and foremost investing in service improvements. Riders have said it clearly and loudly for years – they want reliable, frequent, fast, and affordable service. So, if your city’s transit system cannot provide that, no amount of loyalty perks will lure people on board.
Churn is a whole different story. Retaining a customer is notoriously difficult, and companies that manage to do so have deserved a pat on the back. When it comes to customers and loyalty, businesses are increasingly complaining about the lack thereof. Not a surprise, really – with such heavy competition in products and services, loyalty must be earned the hard way. When moving around town, riders often do not have a lot of options which brings their choice down to a battle of the titans – public transit against personal cars. One of the titans is tired, and you know which one. Loyalty programs may prove to be a powerful move in this battle, but it certainly will not be the winning one as already explained.
What Public Transit Loyalty Programs Are There?
Loyalty programs are not an innovation in the transit industry – the first pilots in the US began more than a decade ago. What have we learned from them?
Minnesota’s Ride to Rewards program was the first frequent rider program in the US. Under the program, riders received points for using their cards. In exchange for points, they could get a gift card to be used wherever they like – extending the value of the program to local businesses. Unfortunately, it was shut down due to a lack of funding after three years.
Another example of a loyalty program is the BART Perks loyalty program in the Bay Area. It provided riders with small cash rewards if they opted to travel at off-peak hours. This program also had a social element to it, with participants prompted to share on social media. 10% of the targeted riders made the switch, as reported by BART, and there was even a second run of the pilot backed up by federal funding.
In Pennsylvania, SEPTA Rewards offered riders who own daily, weekly or monthly passes the opportunity to save when visiting local museums, restaurants, and shops. What’s more, contests to win cool prizes were also part of the program.
In each of these examples, there is an element of behavioral shift expected: from using a pre-paid pass to shifting one’s commute time. The bigger picture, though – whether these programs attracted new riders to their systems, is rather difficult to measure, especially in the long run and with so many factors playing a role in a mode shift.
What Are Successful Public Transit Loyalty Programs Made Of?
Most successful loyalty programs share a few very important characteristics.
- They are simple. If a program requires ten different steps for participation, most users will get distracted along the way. Keeping it simple in the form of ‘if this then that’ ensures that most people will understand the incentive and will be willing to participate.
- They are valuable. Choosing the right perks is not an easy task – what one rider will find attractive will be totally unnecessary to another. Having a variety of prizes guarantees that everyone will be able to find one they like. The added value of a loyalty program may also extend beyond prizes by creating an emotional connection with the rider (for example, when the perk is connected to their favorite restaurant or shop).
- They are challenging, but not overly challenging. When creating a loyalty program based on gamification, the goals must always be achievable. On the other hand, making the challenges too easy will not keep the curiosity on for long.
- They are social. We’ve all heard that the best type of marketing is the ‘word of mouth’ type. No matter how big the agency’s marketing efforts are, the best way to reach potential new riders is to help current riders share their experiences. With a loyalty program, especially a fun and challenging one, riders will be more inclined to share on their social media channels thus adding valuable social proof.
- They are digital. Digital loyalty programs offer so many opportunities – from in-app marketing to embedded social sharing options. It is far easier to create a loyalty program with an account-based fare collection system with mobile ticketing as this means riders do not need to download a special app or do the extra step of signing up outside the app. This also makes the whole endeavor more affordable for the agency.
Mobile Ticketing And Loyalty Programs
Today, mobile ticketing apps provide an easy-to-set-up, monitor, and optimize the environment for loyalty programs. Riders are becoming increasingly familiar with digital fare products and provided the loyalty program follows the characteristics outlined above, there is no reason not to participate in an in-app loyalty program.
Account-based ticketing allows agencies to quickly find out who their most loyal riders are and to reward them accordingly. It is also much easier to claim a prize in-app if it is a public transit product itself (a free daily or weekly pass, for example). If it is a prize given by a partner, the application can display a personal QR code with which the partner business can easily identify the winner and give them their prize.
Mobile applications also provide a fun way to gamify public transportation usage and literally make it a game in which you earn points for each ride. It is up to the transit agency and their willingness to work with the mobile ticketing provider to design a fun and engaging experience.