National Academies Press: OpenBook

Marketing Transit Services to Business (1998)

Chapter: Executive Summary

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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Suggested Citation:"Executive Summary." Transportation Research Board. 1998. Marketing Transit Services to Business. Washington, DC: The National Academies Press. doi: 10.17226/9437.
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Executive Summary Gel Traditionally, public transportation agencies have marketed their services directly to riders and potential riders. In response to changing market conditions, however, a number of transit agencies leave begun to direct snore of their marketing efforts toward businesses. Many transit agencies slave worked closely with employers, in particular, to promote a range of services, including ridesI~aring, prepaid pass and voucher programs, guaranteed rifles home, and customized services. Some agencies have encouraged developers to incorporate transit-friendly elements into site design, while others have worked with local retailers and institutions on joint marketing efforts. Nonetheless, the transit industry, in general, has less experience in business-to- business marketing than do for-profit industries whose entire livelihood often depends on successfully targeting business customers. In an effort to learn the most effective strategies and techniques from the for-profit sector, the early research for this TCRP project focused on large, private companies in exceptionally competitive industries. At the same time, the team documented transit agency examples of product and service development, design, and marketing. After these broader efforts were completed, the team moved on to conduct more detailed analyses of particularly innovative transit properties, one multinational bank and one large non-profit HMO. The findings from both phases of these projects are summarized in this report. [~ This report begins with marketing theory, including both general marketing theory as well as techniques relevant for business-to-business marketing. In addition to planning a strategy, the whole marketing process includes a cyclical effort of testing, refining, implementing, and evaluating a marketing program. Marketing needs to be linked with the development of a service or product, rather than an afterthought once development is finished. Furthermore, a focus on customer needs is important in product and service development; marketing research can be a very important tool in understanding customer needs. More formally, the marketing process incorporates most of the activities in an organization. The process includes: ~ Goal setting and understanding the business strategy . . Pam

~ffive Summ" · Understanding the customer · Product or service development · Market analysis · Development of a marketing plan · Service or product delivery · Evaluation and refinement These components may not always be present when an agency develops a marketing program, and they may occur in different sequences. For example, there may not always be time to do thorough market research and market analysis. For some projects, it may be quicker and more effective just to implement a marketing program and see what happens. However, for larger undertakings, there is no substitute for careful research and planning. When planning a marketing strategy, an organization must determine who the product or service is for; what the product or service will be; what it will cost; flow it will be distributed to the customer; and how it will be communicated to the customer. Market research is important in understanding the customer needs and also in determining tile particular market segments who are the most likely customers for a product. Market segmentation is a very important part of most business-to-business marketing programs. There are very few business products or services that are marketed to all businesses at once. Rather, the size of the business and the type of business targeted help to determine the particular product or service design, whether a sales staff is required and when they are required, the need for general advertising and/or direct marketing approaches, the participation in trade shows and conferences, and so forth. Market research and market segmentation are greatly helped by computers and databases, which help to identify potential customers. Databases like those sold by Dunn and Bradstreet help characterize companies by size and type of business, and provide addresses and phone numbers as well. Of course, existing customers are often businesses' best prospects for new products or services. Accurate updated internal databases, which can now tie together all relevant information on customers, are used to help businesses establish the purchasing habits of customers arid pinpoint which eustolrlers would be the inost likely candidates for new purchases. Communication strategy includes advertising, personal selling, sales promotions, publicity, and public relations. In business-to-business marketing, the role of personal selling is far more important than mass media advertising or even advertising in the trade press, whereas the opposite is true with consumer marketing. Advertising can be useful in business-to-business marketing, however, to support a sales force, or to indirectly influence business purchasing decisions through employees. Page2

Have so Personal selling includes the use of sales forces and/or various direct marketing techniques, such as direct mad! or the use of the telephone to reacts potential customers. The relative balance between a sales force and direct marketing techniques will depend upon the complexity of tile product or service being marketed and the size of the target business. While a sales force may be necessary for selling to large corporations, it may not be economical when selling to small businesses. Oftentimes a combination of direct marketing techniques and a sales force can be effective. For example, a direct mail or telemarketing campaign may be used to develop interest and potential prospects. A sales force may then follow up with those businesses that respond to a particular offer, such as a request for more information or acceptance of an offer for a gift. While financial and time constraints can deter companies and agencies from developing comprehensive marketing plans, there is a great deal of value in taking the time to define the product, pinpoint the target market, and develop a promotional campaign to reach the customer. In many situations, the "customer" can be either an individual or a company, and the campaign can still be similar for both. There are, however, distinct differences between targeting businesses and targeting individuals; these differences should be addressed to ensure that a business-to-business marketing effort is successful. Some of these differences include the need to tailor the message and product or service, tile increased importance of a sales force, and the need to foster personal relationships through networking and/or peer-to-peer contact. These differences have important implications for transit-to-business marketing, including the following: Transit-to-business marketing cannot be based upon a "one size fits all" approach. There must be a tailored set of solutions to solve particular business needs. The services provided and the communication approach may differ by type of business. · The use of a sales force will be more important when selling to business than it is in consumer marketing. The sales force must have the skills to explain to business "what's in it for me." The need for networking and the development of personal relationships to appeal to the various levels of decision-making within a business. The need for a coherent transit marketing campaign using written material, promotions, presentations, sales, and networking in order to convey what may be a complex message. The need for close integration between transit marketing and the transit service development and delivery process. The marketer needs to insure that the product or service promised can be delivered and that the business customer is, in fact, satisfied. Pale

~ffiV~ Sat In either business-to-business or business-to-consumer marketing, tI,ough, it is crucial that the marketing process reflects the goals and values of the company selling the product or service. its ~1~ A number of transit agencies have utilized the basics of marketing theory to generate effective marketing plans for services like ridesharing, employee passes, and transit vouchers. Transit organizations have employed many business-to-business marketing techniques to promote various services for businesses; there are a number of these organizations using almost all of tile various techniques that are contained in the business-to-business marketing literature, and that are employed by marketers in non-transit industries. Ridesharing organizations, Transportation Management Associations (TMA's), and transit agencies undertaking ridesharing, for example, have used direct mail and telemarketing, particularly to help with smaller employers. Different organizations have combined direct marketing techniques with sales force marketing in order to use their sales forces most effectively. They also have used affinity groups, like the Chamber of Commerce and peer-to-peer marketing approaches, to reach the targeted employers. Once employers have become customers, these organizations use newsletters, transportation fairs, and other promotions to attract employee usage, and to retain their existing employers/clients. Transit voucher programs provide several useful examples of techniques for marketing to business. While a sales force was useful in marketing to larger corporations in the New York City market, there was surprising interest from small businesses in this program. Direct mad! and telemarketing techniques were better suited to marketing to small businesses, and have been successfully employed in New York and elsewhere. In larger cities, transit voucher programs have been sold successfully by marketing to transit riders, who then can request such a program with their employer. Other approaches include partnering with TMAs and ridesharing organizations to market the voucher program. Also, voucher programs have obtained discounted television advertising in exchange for crediting a television station with program sponsorship. Limitations in marketing budgets, holdover, constrain transit organizations in their approach to marketing to business. As these organizations are seldom profit making, there is no bottom line to help guide expenditure on marketing. Rather, transit organizations spend what budget they may have available. Likewise, because the services provided by transit organizations are expected to provide a public good and to be in the public interest, there has not been much effort experienced to measure the benefits of this good with respect to the cost. There are a scattering of studies that attempt to deEne the results of various programs marketed by transit to business, but these are mostly qualitative in nature. P; - 4

~ffve SAY = In an effort to compete with the private automobile, transit increasingly has focused on marketing to communicate the value of transit to both the consumer and the employer, and to advertise the variety of new transit services now available. A review of transit's ridesharing, transit voucher, employee pass, and reverse commute programs are a testament to transit's recent marketing success. Yet, as an industry, transit is less marketing oriented than the private sector, and could certainly learn from other sectors that have adopted effective (and transferable) marketing strategies to better compete in the marketplace. This report details the experience of six of these industries, as well as tile possible lessons to be learned and applied by transit agencies. In order to examine other industries' marketing methods for marketing to business, a limited number of industries was selected for study. Based on the advice of the expert pane] for the project and on comments received from the Transit Research Board Committee on Public Transportation Marketing and Fare Policy, six different industries were selected for examination. The objective was to review the literature on general business-to-business marketing techniques and specific approaches that were either innovative or might have applicability to transit. The review was not exhaustive for each industry, but in most cases revealed one or a number of companies with marketing techniques or approaches that could be instructive. These six industries provided examples of most all of the marketing methodologies, including the use of sales forces, direct marketing, partnering, market research, market segmentation, and customer focus. The corporate examples are intended to show the diversity and scope of business-to-business marketing, and to provide some insight into techniques that might be applicable to transit-to-business marketing. The common thread throughout each of the industries (and the lesson for the transit industry) is the clear focus on the customer, even in the face of extreme competitive pressures. The following is a list of the six industries selected for study, as well as the transit lessons learned from each subject area. · Package Delivery or Courier Sew - Examples of excellent and highly competitive companies in a field with similarities to transit. One conclusion to draw from these examples is that in the package delivery industry (as in many other industries), no one marketing technique is best. The best companies have taken a comprehensive marketing approach to the design of products and services, have determined their unique value, and have developed marketing methods to promote this unique value. DHL, Airborne, and FedEx's success is also attributable to the rigorous market segmentation, which clearly defines target markets, businesses, and customers. Other marketing methods that transit agencies can borrow (and which several transit agencies already have implemented) include (~) the use of advertising to support a sales team for larger companies, (2) the use of Page 5

~ffve S~" direct mad! to reach smaller companies cost-effectively, (3) tile use of informative newsletters to both educate and market, (4) the use of awards for customer support, and (5) the use of new technologies like the Internet or telephone technologies to provide product information and enhancements. Bankbo and Finanes - A competitive industry, which is undergoing a great deal of consolidation. Traditional banks are also facing much competition from mutual fund companies, brokerage houses, etc. This is a field in which market research into existing customer needs is important in the design of services, and in which different services are designed for different target markets. As is clear from the research, the banking industry has been an important innovator in marketing products to consumers and small businesses. One key to the success of a number of banking industry leaders has been the integration of the marketing function with banking operations. Product design, quality, and customer satisfaction are, for the most part, linked to the development of a comprehensive marketing strategy. This can be a valuable lesson for transit providers. Alan Hoffman writes in Building New Transit Markets, "[transit] marketing has tended to focus on revenue and ridership, while operations has tended to focus on costs and efficiency, leading to a built-in conflict between marketing's insistence on change and operations' concern with caution."' Perhaps future program development in the transit sector can better integrate the needs and concerns of customers with the design and implementation oftransportation services. Tdecommunbabons - Another highly competitive industry, which is getting more competitive as deregulation continues. This industry uses technology extensively to develop unique products. Marketing to small business is now an area of interest to this industry. Two particular lessons may be taken from the telecommunications industry example. One is that highly visible marketing is extremely important in a competitive industry, in which many firms are vying for market share. Second is that targeted marketing is an important ingredient to success. At the heart of a segmentation strategy is the identification of groups most likely to respond positively to the service (or product) being offered. This positive response can translate into a block of consumers that values the service enough to make the provision of service financially feasible. Likewise, transit needs to focus on those target markets most likely to increase their transit use. TMV~ - The travel industry includes airlines, hotels, rental car agencies, travel agents, ground transportation operators, and so forth. This industry markets heavily to businesses, because business travelers have less discretion when they travel and will generally pay more. This industry has found much value in promoting customer loyalty though frequent traveler programs, and in co-marketing with other modes or companies. For example, a hose] chain may form a relationship with an airline such that the airline will provide airline miles when a customer stays at the chain's hotel. A key lesson from the travel industry is the importance and effectiveness of Pal86

~ - 0v0Summ&~ co-marketing. A frequent-flyer program, for example, offers lower rates (and subsequent bonus miles) for overnight stays in particular hose] chains or car rentals from a specific company. The consumer benefits frown lower prices; the companies benefit through expanded advertising on another co~npany's bill. Transit has used co-marketing approaches by offering discounts on certain merchants goods or by merchants providing a discounted transit fare for customers. Advanced fare technologies such as smart cards (which allow transit passes to double as bank debit cards) are a promising innovation in co-marketing for transit. Nonetheless, the transit industry could possibly extend marketing (and operating) dollars by doing snore to establish promotional links with other businesses. · Insurance and HeaKheare - In marketing to business, this industry has some similarities to transit. Due in large part to the complexity and variation in insurance products, personal contact has been the most effective method of business-to-business marketing. It seems that some products need to be carefully explained and options thoroughly explored before businesses are likely to accept products as benefits for their employees. These one-to-one sales also are facilitated by "messages" that distill complex products or services into more manageable, more persuasive concepts. Another effective alternative to personal contact is to work through affinity groups, where there is a high level oftrust. While transit may not share the level of complexity found in the insurance industry, the importance of personal contact when snaking the sale and/or the use of direct snail through affinity groups to reach employers may be useful lessons for transit organizations. NOII`l'OmS - Non-profits have something in common with transit, since they are, by definition, not profit making organizations. They often have limited budgets and need to find highly cost-effective ways of marketing their services. One approach has been to find corporate partners whose interests match with the philanthropic objectives of the non-prof~t organization. While it may be unrealistic to expect that transit providers suddenly will find corporate sponsors to subsidize marketing efforts or program costs, there may be some advantage for transit agencies to foster stronger links with local or even national corporations. These links may even be developed from pools of employers already connected to transit programs. The key for transportation providers, however, would be to continue to market transit as a public good with specific social, environmental, and financial benefits. This strategy leas certainly proved effective in the non-profit sector, and may encourage employers to make even larger commitments to local or regional transit providers. In order to adapt to extreme competitive pressures, the package delivery, banking and finance, telecommunications, travel, insurance and health care, and non-profit industries all developed a number of innovative marketing strategies and techniques to reach consumers. While this broader industry perspective can be critical in identifying popular trends and practices, such a broad view can obscure the experiences of individual companies, firms, and organizations. To Page 7

- ~- satisfy tile need for more specific information, several case study sites were selected for more detailed analysis: (1) Pace, a transit service provider in suburban Chicago; (2) Voucher Programs throughout the country; (3) the financial institution Bank of America; and (4) the HMO Kaiser Permanente. = Pace is an example of a transit authority that is approaching marketing, particularly marketing to business, much as would be done in the private sector. Like most transit agencies in tile United States, Pace operates in a very difficu} and competitive environment, with the dispersal of travel tending to lower transit anode share. To combat these declines, Pace has undertaken a number of initiatives to target taxis prime transit market. First, Pace has refocused on tile customer. To accomplish this, Pace developed an overall vision and strategic plan, and developed a comprehensive operating plan and annual marketing plans that support the more customer-focused strategic vision. Before finalizing these new visions and plans, Pace conducted significant market research. Information from this research allowed Pace to understand better the different needs of the market segment it serves. This customer research also informed later efforts to develop more responsive transportation service. In order to address the needs of area commuters, Pace has chosen to focus many of its marketing efforts on employers. The Marketing and Development Group, which was set up specifically for this purpose, works closely with area employers in order to identify their transportation needs and to develop solutions. The group uses a range of strategies to reach this market, including extensive use of market research data, personal contact, direct ~nail, and promotional materials (including videos). The Vanpoo! Incentive Program, in particular, uses several approaches to build loyalty among vanpoo} members, including a newsletter, annual brunch and awards ceremony, and longevity bonuses. Just as important, Pace managers have worked to create a business culture within their organization. Marketin:, and Development staff members treat area businesses as clients and work to address their specific transportation needs. In doing so, Pace has introduced support services that are unusual at transit agencies, including the practice of billing vanpoo] clients directly. When marke research showed shifts in commuting patterns from Pace's traditional suburb-to- city market to city-to-suburb and suburb-to-suburb travel, Pace developed new types of services tailored to these growing markets, including vanpools and subscription buses. This approach has allowed Pace to work effectively with area employers and to meet the changing needs of the growing suburban commuting market. Pass ~

~Q-Mary A key test of Pacers approach to marketing was its effort to provide transportation services to Sears, which relocated from the Sears Tower in downtown Chicago to the Prairie Stone development in the suburban community of Hoffman Estates, an area without transit service. It provided a set of services to Sears, including employee surveys, vanpoo! services, and special shuttle services. The result after five years of effort is a transit service program that includes 3 Pace fixed-route bus lines, ~ subscription buses, 50 Pace vanpools, and a Guaranteed Ride Home program. Currently, nearly 40 percent of Sears employees at the Prairie Stone site use some form of ridesharing. There is much about Pace's marketing strategies that is transferable to other transit agencies. Certainly the market conditions faced by Pace are very typical. However, Pace's location as a suburban transit authority in the metropolitan area of a very large city makes it different frown many other transit authorities. Not every agency will be able to provide service to a relocating employer as large as Sears. Nonetheless, key transferable lessons are as follows: · A change in agency orientation to a market-focused orientation must be supported from the top. Pace had this type of support, which was demonstrated in the creation of both the strategic vision and the Marketing Development Group. · Becoming a marketing-oriented agency takes resources. Pace is spending approximately ~ percent of its operating budget on its marketing and communication program; over 2 percent if its Vanpoo} Incentive Program included in the computation. · Changing to a custo~ner-focused orientation takes time. Pace started in ~ 988 with a Strategic Plan and created the Marketing and Development Group in 1989, also the year Pace began to work with Sears. The Vanpoo] Incentive Program started in 199 I, and the first marketing plan was developed in 1996. Still, there is concern that the organization as a whole has resisted institutional change. =9,~= The transit voucher innovation first appeared in the late 1980's but has since been implemented in nearly 20 regions across the United States The program started in the New York metropolitan area, the largest transit market in the United States. Early market research used focus groups to help identify small employers as a key market; appeals to riders were added later. Both were effective marketing approaches in these early appeals, and have continued to be effective in more recent efforts. The New York voucher program helped to promote increased federal benefits for transit subsidies by employers, and new regulations and laws raised that benefit from $! 5 per month in 1984 to $65 per month in 1996. Voucher Pass

e sway programs were instituted in many new cities, including Denver, Philadelphia, Chicago, San Francisco, Los Angeles, Sacramento, Milwaukee, Pittsburgh, Portland, Washington DC, Minneapolis, Seattle, Buffalo, Boston, Norfolk, Louisville, and elsewhere. The programs work best in places where there are multiple operators and a reasonable transit commute market, so that riders have some clout with their employers. Because the program has appealed to small employers, it has proven successful in some single operator communities. However, the program is less successful in smaller communities where transit has a low mode share and where transit users/employees have a more difficult time advocating for the service. The increased financial incentive of $65 tax-free transit benefit per month has been successful in attracting larger businesses' which can use the tax exempt benefit to employees partly in place of salary increases. The New York voucher program thus has shifted its marketing program from smaller businesses to larger employers. In San Francisco, the voucher program has increased sales over prior years with the use of a brochure that stresses the cost advantages to businesses of partly substituting vouchers for wage increases. As the history of transit voucher programs has shown, the program has wide applicability in the transit field. The findings from this review suggest the following for the transit industry: · Transit vouchers seem to work best in larger communities with multiple operators. New York City's TransiCheck program was the first key success in a large metropolitan area with a number of different service providers; San Francisco, Los Angeles, and Seattle followed soon after. · Although the program was originally designed to meet a need for a simple transit subsidy mechanism in a multi-operator environment, it also has been adopted in communities dominated by single operators. Its main appeal in such areas is with smaller employers, although larger employers will adopt a program when they have parking or employment issues. Rider-driven marketing techniques have also been effective in larger communities, where riders/employees are able to advocate for the voucher program. Direct marketing techniques, including direct mad! and telemarketing, have been successful in targeting small businesses. Business databases have proven useful for targeting business segments with the greatest potential to use voucher programs. · With increases to the tax subsidy benefit, some larger communities have found it worthwhile to conduct sales force marketing. The cost of this type of larger (and more expensive) marketing effort is offset by the ability to appeal to employers of various sizes, not just larger employers. Panels

~ffiveSunmary 1~ Bank of America (BofA) is a $250 billion dollar asset bank with headquarters in San Francisco, California. BofA was extremely generous in providing general information about its marketing approach to small businesses and its relationship marketing strategies for medium-sized businesses. In addition, the bank provided great detail on the marketing of the Alpha/Prima consumer product, which illustrates the way that BofA undertakes a product launch, whether for business or for consumers. Due to the proprietary nature of its marketing plans, BofA was naturally reluctant to provide detailed information about current banking products. However, the Alpl~a/Prima product roll-out, although it occurred in the 1 980s, gives a clear picture of the type of effort that BofA puts behind a major product launch. In the highly competitive environment of the financial services industry, BofA has made a name for itself as an important lender to small businesses. In an effort to reach a strategic goal of lending $10.6 billion to this sector, BofA has implemented a number of new products and services targeted specifically to tile senate business customer. BofA has promoted these products and services using print media, press releases, and in-branch literature. In a particularly aggressive move, BofA also has marketed heavily on the Internet and even offers a number of direct on-line banking services to these customers as well. BofA also has focused organizational resources to market services to medium- sized businesses, particularly in nearby Silicon Valley. A key innovation stemming from this medium-sized business practice has been the "Relationship Team." By using a team instead of an individual account manager for each business customer, BofA is able to offer a one-stop shopping experience for almost all financial services. New business needs also are identified; far more quickly through the Relationship Team structure than through the traditional market research avenues, since a needs-identification process is a part of the Relationship Team experience. Although BofA is currently one of the largest banks in the United States, it faced slightly declining market share during the ~ 980s. In an attempt to counter this decline, BofA undertook a major effort to develop and promote a new consolidated account, called the AlphalPrima account. First, BofA undertook market research to understand what its own trends were versus competitive trends in banking accounts. In order to better understand its weaknesses, BofA also surveyed the customers lost to competitors. After this initial research, BofA developed the Alpha/Prima account, and completed a marketing plan for this product. The marketing plan stated the goals of stemming the flow of customers to other financial institutions and to establish a competitive and aggressive position in interest bearing checking accounts. The plan specified the actual dollar goals in teens of total Alpha/Prima balances and incremental balances over a four-year period. The ra9etl

Move so - plan also specified pricing policy for tile accounts, financial considerations cannibalization issues with existing accounts, and implementation issues. More market researcI, was conducted to assist in the design of product features and pricing considerations. This research indicated that customers especially appreciated the simplicity of the consolidated account. The actual implementation of the Alpha/Prima account was a large project. Bank support systems including computer, accounting, and telephone service capabilities had to be improved. Personnel had to be trained at all levels of the organization. Overall, the implementation costs of $] I.2 million dollars exceeded plans by $4 million dollars. Fortunately, the benefits of the plan were also greater than what was projected. Although BofA is much larger and has more resources than transit agencies, there are still lessons that can be learned by close observation of BofA's marketing approach. Also, not all methodologies used by BofA are expensive. Consider the following: BofA is making full use of tile Internet as a marketing too] and as a technology too] to gather information on customers and to allow customers to sign-up themselves for banking services. To the extent that information helpful to small business can draw customers to the BofA sites, the Tnternet can be an inexpensive way to market. While few transit agencies are actually using tile Internet to sell passes, many agencies are providing schedule information via Web locations. The APTA Web site, for example, now has links to hundreds of Web sites from transit agency members. BofA is appealing to small businesses by making its service convenient to use. It has eliminated red tape in applying for loans, and is also offering multiple services to small business customers. Analogous to this is that some transit programs are being marketed to businesses, including the transit voucher program. The objective of the voucher program is to make it simple and equitable for companies to provide transit service subsidies to employees. BofA is appealing to medium-sized businesses by providing a "Relationship Team," and a variety of different services and products designed to meet the particular needs of that business. While few transit agencies can afford to have a "Relationship Team," the concept of having one sales representative assigned to particular companies is more common. Likewise, enterprising transit agencies, such as Pace and King County Metro, are providing businesses with a menu of products from which they can choose. With the Alpha/Prima account, BofA spent some time analyzing what is happening with its market, and in particular, surveying those customers who closed accounts. Some transit agencies also undertake market research of their users and non-users to better understand their respective characteristics, and which markets segments are most promising for increasing ridership. . Page ~

~vesunmarr · BofA developed a detailed marketing plan for the Alpl~a/Prima account, which specified expected financial results as well as costs. A marketing plan is useful for making explicit the goals of a new service or product, as well as for providing detail for the marketing techniques to be employed. · The marketing techniques used for the Alpha/Prima account included internal marketing of the program. Tunis is a critical lesson for transit, since internal attitudes can support or kill new marketing and service initiatives. · BofA often made use of press releases to announce its small business product and the Alpha/Prima launch. Press releases can provide free advertising if clone well so that tile press picks them up. · Tile AlphalPrima product development was significant, in that it required BofA to change internal computer and accounting systems, and to provide training to employees on a wide scale. There are analogous situations in transit, particularly in situations in which the use of new technologies is envisioned to greatly improve service. For example, a transit system employing new technologies such as Advanced Vehicle Location (AVL) systems, can provide better information to passengers on real-ti~ne schedule adherence and, in fact, can improve schedule adherence, if systems and training within the agency are adequate. ~7 ~ This case study provides an overview of the HMO Kaiser Permanente's marketing operations. Kaiser is the largest Health Maintenance Organization (HMO) in the United States. Although much larger in scale than transit agencies, Kaiser faces a similar task in marketing to business customers and, sin~ultaneously, to employees as well. Kaiser must sell employers on using its HMO and other health insurance options; at the same time, Kaiser must sell to employees who may have other choices besides Kaiser for health insurance. There has been rapid change in the health care industry, and the last few years have seen tremendous growth in HMOs and in Point-of-Service (POS) options for health care. The filial is also quite competitive, which means that market research and marketing are crucial to Kaiser. In response to this new level of competition, Kaiser has had to be more aggressive about costs, and has had to focus on developing a clearer and stronger marketing message to retain existing customers and to lure new ones. Kaiser also has responded by increasing the stature and role of marketing within the organization. Even more striking has been Kaiser's decision to explicitly link the marketing Unction with operations at the national and local levels, a common practice in product-oriented industries such as auto production but an innovation in the service-oriented health care sector. Paged

wove summery Kaiser's general approach has been to handle most of its marketing and sales in- I,ouse. It has developed a state-of-the-art telemarketing operation, and it has used teams of Kaiser employees as its main marketing force. Recently, however, it has started to use brokers to help sell to smaller businesses. Kaiser has been collecting its own customer satisfaction information for many years. This program first focused on comparing different Kaiser Divisions and on measuring customer response to new Kaiser initiatives. Later on, the survey also looked at key questions such as whether a customer would choose to repurchase Kaiser or whether the customer would recommend Kaiser to a friend. The survey also began to incorporate a random selection of non-users to better understand the outside perceptions of the organizations. More recently, Kaiser has started to consider tile value of an independent firm to conduct customer satisfaction surveys, since findings from an independent source may have more credibility in the marketplace. Finally, Kaiser has been working to develop a brand image. The objective is to have a recognizable brand that people automatically associate with certain values, such as low-cost and high-quality healtI, care. Concepts frown the Kaiser Permanente case study that may be transferable to tile transit industry include the following: · Kaiser Permanente has focused on developing a "brand image'' for the organization. This requires the development of an image via advertising and promotion, and absolute adherence to that image in the delivery of products and services. Some transit agencies accomplish something similar to this when they reinforce a particular image of themselves with slogans, promotions, advertising, and graphic design. Key to the success of this approach for transit, however, is ensuring that the image cultivated fits the service and vice versa. While this is not exclusively a "business-to- business" marketing approach for Kaiser, it is still a key to attracting the employee members, which make up 80 percent of Kaiser's customers. Kaiser has reorganized to tightly integrate its marketing and sales with product development and operations at both the national and local levels. This type of organizational structure would be unusual in transit, but it is still important that these functions work closely together to ensure that transit service is responsive to the needs of businesses and employees. Kaiser conducts extensive and ongoing customer satisfaction research. Similar research in transit would bleep to identify routes or areas that need improvement, and would indicate the impact of marketing promotions or service changes. Kaiser also is asking hard questions, such as intent to continue to use the service. Such questions to transit passengers might help identify problems as well as areas needing more marketing attention. Kaiser found it necessary to market to small business, but impossible to do so with its own sales force. Its alternative approach was to use insurance Pale ~

~ffiv0 S granary brokers, who receive a commission for selling Kaiser's services. WI,ile transit agencies are not likely to be able to provide a sufficient commission to insurance brokers to interest them in transit-related programs, insurance brokers might be willing to provide literature on transit services as a service to their employer/clients. · Kaiser focuses a great deal of effort on service to the community, partly because it needs to do so as a private non-profit organization, and partly because it furthers Kaiser's image as an organization interested in the greater good of the community and in furthering health care through research. Although transit does not have the advantage of excess revenues to put into community service, transit agencies often get pressed into helping with community events. Like Kaiser, tile special community services that are provided by transit should be seen as part of marketing, and should be promoted so that transit gets appropriate credit. = There are many advantages to the transit industry of marketing to business. By marketing directly to business, transit agencies can reach a concentrated group of current and potential customers in an efficient and cost-effective manner. The message can be targeted at customers who have similar travel patterns, and collaboration with the business community can provide transit agencies with visibility and community support. The original expectation for this research was that private businesses have more experience in marketing to business than do transit agencies, and that studying methodologies from the private sector would be beneficial to the transit industry. However, while there are many innovative concepts being used in the private sector, the project team found examples of marketing-oriented transit agencies using similar approaches. Also, there are certainly people in the industry keeping up with the leading edge of marketing thought, even if traditional marketing methods may not have been as widely adopted by transit. The major difference, of course, is that the private sector has more resources to implement marketing programs. The lessons learned from this research are not exclusively from private industry, but are also from transit properties that have chosen to market their services to business. The following best summarizes the "lessons learned" from this research: A focus on the customer is the key ingredient to success The marketing function should be well integrated and supported within the agency · Marketing must be visible to be effective P -

~0 Sun - " - - - · Some marketing techniques are particularly effective in tile business environment ~ Fostering links outside of the agency is critical Each of these lessons is discussed in greater detail below. A Focus on the customer is the Key Ingredient to Sueeess Successful examples of business-to-business marketing have a number of characteristics in common. · They understand the customer They respond to customer needs · They aggressively sell! the product · They are reasonably flexible · They are in tune with and supported by corporate leadership These five characteristics can be summarized into one simple concept: customer focus. The ability to assess the customer's needs and to respond to them is an essential prerequisite to a successful business marketing program. Despite the apparent simplicity of this approach, it may represent a shift in perspective for some transit providers. And while this kind of change may not come easily to transit agencies, focusing on customers and their needs is the key to success in transit-to-business marketing. There are two additional caveats to the customer focus: (~) focusing on the customer takes time, and (2) tracking customers is crucial. For-profit industries are often more patient and even expect to take the longer view; the exigencies of politics and an annual budget often discourage transit agencies from showing the same level of patience. Tracking customers is also a widely accepted tactic used in for-profit and larger companies. BofA spent considerable time and energy tracking customers before, during, and after 2 product launch, awhile Kaiser has been conducting first annual and now almost quarterly customer research efforts. The Marketing Funetion Should Be Wel! Integrated and Supported Within the Agency In the course of this research, the project team had little trouble finding s examples of innovative marketing strategies and techniques now being employed in the transit sector. What was unusual, however, was finding a transit . ingular Paged . . .

Have so - agency for which marketing was not only a key part of tile agency, but also was integrated throughout al' parts of the organization. This is one area in which the for-profit sector and transit seem to diverge. In order to better integrate the marketing function and to provide the proper support for a more comprehensive campaign, transit agencies must be more willing to integrate the marketing function with operations, support marketing "from the top," provide the necessary resources, and make a commitment to internal marketing and to training all employees. Marketing Must Be Visible to Be Effective Even in this age of technology and innovation, some of the most common advertising techniques are still print ads and broadcast media spots. Some transit organizations have been quite creative in advertising their services, and have even designed their own unusual campaigns. The TMO Metropoo! in Stamford, Connecticut, designed a campaign modeled after the "Dewar's Profile" liquor ads, for example. A few agencies also leave garnered media program sponsorship, which has been very successful. Regardless of the level of innovation, though, marketing must be visible to be effective. The telecommunications industry is particularly reflective of this example. The telecom industry has shown that highly visible marketing is extremely important in a very competitive industry, in which many firms are vying for market share. While these larger "mass marketing" techniques are important, transit also needs to focus on those target markets that are most likely to increase their transit use. One successful technique for organizing the mass marketing function within the agency is to develop a "brand vision." This requires the development of an image via advertising and promotion, and absolute adherence to that image in the delivery of products and services. Some transit agencies accomplish something similar to this when they reinforce a particular image of themselves with slogans, promotions, advertising, and graphic design. Brand management is widely accepted ant! supported in for-profit industries, with great success; transit agencies should consider making the same commitment to update and solidify their image within a market. In a similar vein, transit agencies could improve their use of the media through the use of press conferences and media events. Some Marketing Techniques Are Particularly Effective in the Business Environment One conclusion to draw from both the industry and transit examples is that no one marketing technique is best. The most successful companies and agencies have taken a comprehensive marketing approach to the design of products and services, have determined their unique value, and have developed marketing methods to promote this unique value. Nonetheless, a number of techniques P8gB 17

love S - wary seem to be well suited for tile transit-to-business marketing environment. These successful techniques include personal contact, the use of technologies to support direct sales, peer-to-peer marketing, and rider-based marketing. Fostering [inks Outside of the Ageney is Critieal Non-profits have led the recent charge toward fostering links, partnerships, and entrepreneurial relationships with for-profit companies, other agencies and even government departments. While certain transit agencies in the United States certainly co-market with other service providers and, in some cases, even co- market, the practice unfortunately is not common. Within profit-oriented companies, philanthropic and business units have joined forces to develop giving strategies that increase their name recognition among consumers, boost employee productivity, reduce research and development costs, overcome regulatory obstacles and foster synergy among business units. While it may be unrealistic to expect that transit providers suddenly will find corporate sponsors to subsidize marketing efforts or program costs, there may be some advantage for transit agencies to foster stronger links with local or even national corporations. These links may even be developed from pools of employers already connected to transit programs. The key for transportation providers, though, would be to continue to market transit as a public good with specific social, environmental, and financial benefits. This strategy has certainly proved effective in the non-profit sector, and may encourage employers to make even larger commitments to local or regional transit providers. Transit-to-business marketing offers transit agencies opportunities to add riders and revenue, gain political support, and continue to address mobility, environmental, and social issues. It provides a framework for transit to better face its competition and to strengthen its market position in both the short- and long-term. The transit-to-business marketing strategy envisions new markets for transit and improved linkages to existing markets. It reflects a new multi dimensional or multi market strategy for transit, and it explicitly acknowledges that transit can influence the demand for its products and services by getting more involved with the actors and forces that create the demand for transit. Transit-to-business marketing is a service development and delivery process that integrates support Tom interested third parties (the business community) to make it easier to gain new riders and ensure their satisfaction with transit. Despite rapid growth in recent years, transit-to-business marketing remains an emerging area that is poised to evolve and expand further. Many different types of transit-to-business programs and services exist, with different levels of Pager

~v0SDnmary relevance in different transit settings. As transit-to-business linkages can yield relatively immediate pay-offs and potentially far greater long-term impacts, an expanded focus on this area is justified. The area can be addressed incrementally within the focus of existing transit marketing activities, or it might be an important element of new strategic initiatives for addressing some of the basic challenges that transit agencies now face. In either case, further attention to this area could have substantial returns for transit agencies. Page

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