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Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
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OCR for page 191
Chapter 9
Bonelusion
G
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 lack of research into the transit experience in this area was a significant
problen, fueling the misconception that transit was something "lagging behind"
the for-profit industries. 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.
In that vein, 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
Some marketing techniques are particularly effective in the business
environment
Fostering links outside of the agency is critical
Each of these lessons is discussed in greater detail below.
Page a-]
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Condu"
Page&2
lul~lllelll~lllllld~iil~lllUlinI~lll
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 with
transit-to-business marketing.
Folusino on the Customer Takes Time
Changing to a customer-focused orientation takes time. Pace started in ~ 988
with a Strategic Plarl and created the Marketing and Development Group in
1989, also the year Pace began to work with Sears. The Vanpoo] Incentive
Program started in 1991, and the first marketing plan was developed in 1996.
Still, there is concern that the organization as a whole has resisted institutional
change.
Tracks customers
With the AlphaIPrima 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 to
determine which markets segments are most promising for increasing ridership.
Kaiser conducts extensive and ongoing customer satisfaction research. Similar
research in transit would help to identify routes or areas that need improvement,
and also would intlicate 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.
OCR for page 193
lone Con
Hi
rig_
In the course of this research, the project team had little trouble finding singular
examples of innovative marketing strategies and techniques now being
employed in the transit sector. What was unusual, however, was finding a transit
agency where marketing was not only a key part of the agency, but was also
integrated throughout all parts of the organization. This is one area where the
for-profit sector and transit seem to diverge.
Integratino the Marketing Function with Operations
As was shown in Chapter 4, 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, "Etransit]
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." 74
Future program development in the transit sector should better integrate the
needs and concerns of customers with the design and implementation of
transportation services.
Marketing Must Be Supportell From the Top
There is much about Pace's marketing strategies that are 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 than many authorities. Not every agency
will be able to provide service to a relocating employer as large as Sears.
Nonetheless the key lesson from Pace is that a change in agency orientation to
being market focused must be supported from the top. Pace had this type of
support, which it was demonstrated in the creation of both the strategic vision
and the Marketing Development Group.
Becoming Market~riented Takes Resourees
Pace is currently spending around ~ percent of its operating budget on its
marketing and communication program. Kaiser spends an industry low of
between 5 and ~ O percent of its budget on marketing functions. In comparison,
Saturn spends close to 40 percent of its budget on marketing; the same is true for
Ford. Obviously, transit agencies do not have the resources (or need) to spend
40 percent oftheir budget on marketing, but the lesson is still in the numbers: a
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Tyson
P818~4
firm financial commitment to the marketing function increases the likelil~ood
that a marketing campaign will be innovative and thorough enough to capture
target employers and customers.
Dommienent to Internal Marketing and Training
For Bank of America, the Alpha/Prima product development had a significant
impact, even requiring the company to change the internal computer and
accounting systems, and to provide training to employees on a large 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-
time schedule adherence and, in fact, can improve schedule adherence, if
systems anti training within the agency are adequate. 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.
Even in this age of technology and innovation, 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 have garnered media program
sponsorship, which has been equally 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, where many fimns are vying for market share.
Likewise, transit needs to focus on those target markets most likely to increase
their transit use.
Developing a Vision
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
OCR for page 195
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not exclusively a "business-to-business" marketing approach for Kaiser, it is still
key to attracting tile employee members, which make up 80 percent of Kaiser's
customers.
Press Releases and the Use of the Media
Press conferences can be an effective technique for generating broad-based
interest in a new program. For example, greater impacts (measured by inquiry
responses and resulting enrollments) for a transit voucher program came from a
well-orchestrated introductory press conference staged in a New York City
subway station. The press conference generated excellent coverage by the local
press, and sparked many inquiries from employees seeking to involve their
respective companies. BofA often made use of press releases as part of its
approach to getting out the word on small business products as well as the
Alpha/Prima launch. Press releases can provide free advertising if the release is
well-written, clear, interesting, and well timed enough to entice the press.
Yard
'It if_
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. Perhaps the package delivery in`dust~y is
the most clear-cut example of how diversity is the most effective method for
guaranteeing success. DHL, Airborne, and FedEx use advertising to support a
sales team for larger companies, direct mail to reach smaller companies cost-
effectively, informative newsletters to both educate and market, awards for
customer support, and new technologies like the Internet and telephone
technologies to provide product information and enhancements.
Persond Contact
Traditional thinking is that in business-to-business marketing, much more so
than with consumer marketing, personal contact with the customer is extremely
important. Private companies typically use dedicates! sales forces for this
purpose, particularly when large employers are targeted; this is certainly true in
the case of FedEx, Bank of America, and Kaiser. Due in large part to the
complexity and variation in products, personal contact has been the most
effective method of business-to-business marketing in the insurance industry as
well. It seems that some products need to be carefi~ly 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. While transit may not share the level of complexity found in these
Pate 0 5
OCR for page 196
Cor~uson
other industries, the importance of both a personal contact making the sale
and/or the use of direct mad! through affinity groups to reach employers may be
useful lessons for transit organizations.
1
A variation on the personal contact theme is "relationship marketing," which is
aimed at building close relationships with larger businesses. 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 to
choose.
Pace does not use Relationship Teams, but they do use a variety of personal
contact techniques for dealing with larger employers. For example, Pace's
Marketing and Development Group has five members who form a sales force.
Each member of that sales force has a geographic area, and each is responsible
for working with the employers in his or her area. The idea is to build a
relationship between the Pace representative and the employers in his or her
area. The Team has a variety of services that they can offer to an employer, in
order to best meet the employers need for transportation alternatives to the
automobile. Pace's services include employee surveys, vanpools, shuttles to
rail, subscription buses, modified route services, and advice on site layouts to
encourage transit use. If the employer is interested in vanpools, for example, the
Pace sales representative will involve a representative from the vanpoo! group.
050 of Technologies to Support Direct Sales
New technologies have revolutionized the way businesses market their products
and services. Now, with the availability of inexpensive databases, sophisticated
telephone technologies, and the Internet, businesses and transit agencies can
market to smaller businesses without huge financial expenditures.
BofA is making full use of the Internet both as a marketing and as a technology
too! to gather information on customers and to allow customers to sign
themselves up for banking services. To the extent that infonnation helpful to
small business can draw custc~ners to the BofA sites, the Internet can be an
inexpensive way to market. While few transit agencies are actually using the
Internet to sell passes, many agencies are providing schedule information via
Web locations. Innovations in transit-related Web sites are no doubt right
around the corner.
Kaiser, meanwhile, has taken full advantage of database and telephone
technologies. The organization has a staff of "high tech" phone centers and their
own trained personnel to provide information on insurance products to potential
customers, to set up appointments for sales people to visit, and to send written
P - BEG
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Cdl,8Illl
information about Kaiser insurance plans. As reviewed in Chapter 8, Kaiser
uses Dun ~ Bradstreet databases for small and medium employers, but also
makes use of the Westar Media company lists and Gallop lists from surveys of
Kaiser's own employer-customers. MCT also has been especially skillful in
using telemarketing to sign up small employers for phone service. MC} worked
hard to develop targeted products and messages for particular kinds of
employers, and also to develop a highly skilled telecommunications staff to
contact prospects.
Transit agencies are also using technology. For example, the MBTA in Boston is
using a CD ROM with business addresses as provided by Dun & Bradstreet.
They have found that usury direct mail with this database has made selling
passes to small businesses practical. A recent post card mailing to businesses
resulted in an ~ percent response rate. The New York staff selling TransitChek
has reviewed the sales records and participation levels and standard industrial
classification (SIC) codes for enrollees. The staff determined that 46 percent of
all TransitChek participants active as of May ~ 996 were in three major SIC
categories: legal services, business management services, and
finance/insurance/real estate. This analysis will allow the staff to better target
future campaigns.
Peer-to~eer Marketing
Sometimes, however, a single effective individual can make a large difference in
signing up the business community. Peer-to-peer sales encourage business
customers to share experiences and to offer advice to their peers; these
groupings are effective because they place experienced users in the position of
selling products or services to other businesses. Many companies are reluctant
to participate until they know that others are involved in a program; peer-to-peer
sales eliminate this anxiety at the outset. Pace has used the technique of peer-to-
peer sales by providing group seminars and encouraging participating businesses
to share experiences and to offer advice. These groupings are effective because
they place experienced users in the position of selling ride-sharing to other
business.
In another example of the innovative personal selling, the founder of the
company Work Family Directions (which markets employee assistance services
to business) conducted research showing how much more productive employees
are when supported by employee-benefit services. This research was written up
in a front page WaN Stree! Journal article. Work Family Directions leveraged
this publicity with the assistance of existing clients. Current clients of Work
Family Directions would sponsor a seminar for other employers at which Work
Family Directions staff could explain their services as well as the potential
positive outcomes from offering these benefits to employees. The endorsement
of the current client did much to help win new clients who attended these
informational seminars.
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Rider~ased Marketing
Some transit-to-business programs can be marketed by transit riders who can
convey the need for a particular service or program to their employers.
Employees can deliver program materials to their employers more effectively
than any salesperson might, and they can use internal means of advocacy that are
not available to the outsider. This method is especially helpful for reaching
small employers, and is helpful when it is hard to justify other sales efforts.
Ill~r~ll!l~l~;~lll'~n~l,.'ll~tl~l[~Il
Non-profits have led the recent charge toward fostering links, partnerships, and
entrepreneurial relationships with for-profit companies, other agencies, or 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.
Partnerships
For years, the United Way has been well known for its association with the
National Football League (NFL) and the ads that appear during each NFL'
broadcast. United Way's marketing director for the New England region (home
of the New England Patriots NFL team) noted that his chapter receives at least
$4 million in free advertising each season thanks to the NFL/United Way link.
In earlier years, the NFL took an active role in training the United Way in more
sophisticated marketing techniques, and provided NFL marketing personnel to
conduct training and to develop marketing plans for local United Way chapters.
Now all employees in affiliated chapters are trained in marketing, and the
national office even coordinates yearly marketing and advertising conferences.
The NFE's relationship with the United Way is part of a new trend in corporate
philanthropy, in which companies now tie corporate giving directly to business
strategy. 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 regulatow obstacles, and foster synergy among
business units. Like the NFL, most companies are giving far more than cash
assistance. Many are providing non-profits with managerial advice,
technological and communications support, and teams of employee volunteers.
They are funding these initiatives not only from philanthropy budgets, but also
from business units such as marketing and human resources.
In the transit industry, San Francisco Airport (SFO) has enlisted others to help
convince employers of the value of ride-sharing to the airport. SFO targets
convention planners, travel agents, hotel managers, and large businesses with
information about ride-sharing to the airport. These businesses are given rolodex
Pagers
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Cd - D
cards, notepads, and baggage tags promoting the service, as well as a pre-written
articles for company newsletters or email. These, in turn, share the information
about available ride-sharing options with their clients or employees. By targeting
these efforts at bulk purchasers of transportation services, it is possible for SFO
to reach its markets more cost-effectively. Super Shuttle, an airport
transportation service, offers a premium plan to hotels in its service area. Under
this Priority Program, the hotel is assigned a personal account executive who
will assist the hose' in making reservations for its guest and will deal with any
difficulties or last minute changes. In addition, a Super Shuttle direct dial
telephone is installed in the hose! lobby for the exclusive use of hotel guests and
employees.
Co-Marketing
Co-marketing is another popular linkage technique, which is actually oft-used by
private companies. The travel industry makes much use of co-marketing,
through which multiple companies benefit from a marketing partnership. A
frequent-flyer program, for example, offers lower rates (and subsequent bonus
miles) for overnight stays in particular hotel chains or car rentals from a specific
company. The consumer benefits from lower prices; the companies benefit
through expanded advertising on another company'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 more to establish promotional links with other businesses.
Transit and ridesharing agencies also have had some success with co-marketing
and partnerships. In southwestern Connecticut, The RidEe Stuffprogram gives
retail discounts to employees who use transit or ridesharing for commuting. The
program provides incentives donated by businesses in exchange for the
promotion they receive, and also provides a compelling product for employer-
based marketing. The Bay Area Commuter Check program places its television
station sponsor's logo on its marketing materials; in exchange, the station
provides television coverage for the program. The mass marketing and product
validation has considerable value to the local media outlets (who have their call
letters on program brochures, flyers, and posters).
Nationd and toed [inks
While it may be unrealistic to expect that transit providers will suddenly find
corporate sponsors to subsidize marketing efforts or program costs, there may be
some advantage for transit agencies to foster stronger finks with local or 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
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tone ud0
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.
Kaiser focuses a lot 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. The organization
also does not focus exclusively on national links, but instead blends national-
leve! partnerships with links to local organizations in the communities where
Kaiser does business. 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, the 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.
3EC
Transit-to-business marketing offers transit agencies opportunities to add riders
and revenue, gain political support, and continue to address mobility,
environ~nental, and social issues. It provides a framework for transit to better
face its competition and 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 multidimensional or
multimarket 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
from interested third parties (the business community) to make it easier to gain
new riders and to 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, and they have different levels
of re'-e~,ance 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.
Pagers
Representative terms from entire chapter:
personal contact
