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Can Public Transit Reduce Churn with Rewards Programs?

Public Transit Loyalty Programs Prevent Churn

With many options available for transit today, ranging from Uber and Lyft to an increase in car ownership to the use of bikes and scooters, fewer and fewer people are dependent on public transportation. Looking at the choices people make instead demonstrates that their priorities are efficiency, economy, and effectiveness. Mass transit ridership is down. The churn rate for public transportation companies is on the rise.

Why Reducing Churn Matters 

There are a number of reasons why customer churn is important. Some churn is always to be expected, and a small percentage drop may not seem like much. The problem is that it is more difficult and expensive to attract new customers than to retain existing ones. As an example, just a 5 percent retention rate can mean an increase in profit of 25 percent or more because returning customers spend more. 

Transit companies have traditionally focused on getting more new users, but there are many advantages to retaining riders. Existing customers are also more likely to be loyal, and loyal customers bring in others and use services even more. Churn prevention is a critical element of a successful transit company. 

How to Calculate Customer Churn
Churn is the amount of customers you lost divided by the total amount of customers. This allows you to see “churned customers” as a percentage of your total customer base.

Innovative Transit Loyalty Programs 

Increasingly, public transportation companies are finding that loyalty programs retain and increase ridership. Loyalty programs that most effectively reduce churn use data gathered about customers to allow them to predict when the customers might stop riding and what initiatives would motivate them to continue doing so. Transit companies should also gather data on how they get new customers, whether they become regular customers and what kind of engagement they prefer. 

Related Post: What are the Different Types of Loyalty Programs?

A good customer loyalty program has two important elements, valued hard benefits (discounts, perks or tangible rewards) and soft benefits that create an emotional connection. Opportunities to share with friends on social media about the loyalty program and any associated perks and to engage with the transit company online can increase a sense of loyalty. Here are a few examples of transit companies’ successful loyalty programs. 

Metro Transit ExpressLanes Rewards

Transit Rewards

Los Angeles Transit Rewards program focuses not just on public transit but on the broader issue of transportation throughout the county. Furthermore, in addition to making transit stations safer and more attractive, it added more frequent service in some places. Its reward program was the first in the country to allow transit riders to accumulate credit toward tolls. Using their registered TAP card, transit riders can earn a $5 toll credit by taking 16 one-way trips during peak hours along the I-10 El Monte Busway or I-110 Harbor Transit way. More than 6,800 people enrolled at a rate of more than 200 per month, and transit use increased significantly.

Carpool Loyalty

Los Angeles also has a Carpool Loyalty program. Participants using he I-110 with two or more occupants per vehichle are able to use the Metro ExpressLanes toll-free at all hours. Vehicles with two occupants pay a toll during peak hours (5am-9am; 4pm-7pm), but will have toll-free use during off-peak hours. The Carpool Loyalty Program automatically enters the Metro ExpressLanes FasTrak accountholders into a monthly drawing for a chance to win toll credits when they use the ExpressLanes as a carpooler.

Metro Transit RidetoRewards 

Ride to Rewards Transit Loyalty Program

The aim of the Minnesota Ride to Rewards program was to increase rideing frequency, keep current riders while attracting new ones, reward riders and to enhance Metro Transit’s relationship with its merchant partners. Local and online merchants participated as well, and riders could get rewards from them and earn extra points for making purchases with them. This was the first transit reward program in the country.

How Ride to Rewards Loyalty Program Works

The program was very successful, with thousands of participants, and more than 80 percent said they were more likely to use public transit because of it. Over half of participants said they liked gift cards as rewards while nearly three-fourths liked stored value. 

Bart Perks 

Bart Perks Loyalty Program

The goal of Bart Perks was to reward transit users for traveling outside of peak travel times. A six-month program, it offered incentives for riders who shifted their commute time from 7:30 a.m. It was estimated that the program would have about 10,000 participants, but nearly 18,000 signed up. They had the chance to win cash rewards and to post about those transit reawrds on social media, which many did. This helped others learn about the program. In all, about 10 percent of people changed their commute time to an hour earlier or later. 

Related Article: How to Justify a Loyalty Program.

Best Loyalty Programs

There are 8 best practices to follow in creating a loyalty program. 

  1. Garner support. It is necessary to have buy-in for all involved, and everyone should agree about the necessity of improving customer retention while building loyalty and customer relationships. 
  2. Know your customer. With customer insight, the customers most likely to respond to your programs and offers can be identified along with effective ways to communicate with them. 
  3. Digital Harmony. Ease of use is also important. How the program works should be easy to understand, and if there is an app, the user experience needs to be a positive one.
  4. Omni-channel. Provide a seamless experience across all mediums possible, engaging consumers with the right message at the right time on the right channel.
  5. Brand Experience. Inspire a meaningful and memorable connection with customers by having your loyalty program be an extension of the brand experience.
  6. Financial Rigor. There must be concrete financial objectives and a way to measure whether the loyalty program is helping the company meet those objectives. These measurements should take a long-term perspective.
  7. Innovate. Stagnation should be avoided. Rewards programs should always be under evaluation to ensure they are functioning as intended, and ongoing innovation should be part of meeting those aims.
  8. Make it personal. The program needs to be personalized for every customer at every step of the way. Personalization improves the experience by making the entire journey, from the first tap through post-purchase. It’s friction reduction at a customer level.

Ridership may be down nationwide, but this does not mean that transit companies have no choice but to accept a gradual decline. The incentives and engagements that public transportation loyalty programs can create lead to proven results. By using data wisely and creating a loyalty program that offers customers rewards that will motivate them, transit companies can keep existing riders while bringing in new ones and keep churn rats minimal. 

Sallie Burnett
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