Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
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-]
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.
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 P - ~3
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
Coon 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
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
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. P8!Pl~7
Coon 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
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 Pales
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
