So you want to reward riders as a way to enhance your customers' experiences and build ridership? What's the best way to do that? There are many options to choose from and pitfalls to avoid. Let's start with three general tips:
First of all, as with all new products or services, get clarity on objectives before you begin. Do you want to acquire new customers, strengthen relationships with existing customers, build off-peak ridership, improve brand perception? What's the top priority, and at what cost?
Make sure you can deliver a program that is user friendly by avoiding complexity that might confuse customers. For example, avoid excessive fine print, blackout periods, or anything that could cause customers to question whether you have their best interests at heart. The best way to do this is through a robust User Experience (UX) process. Early in the project, conduct focus groups and surveys with your riders to get input on ways to meet your objectives and solicit feedback on different rewards program concepts. Later in the process, beta test rewards programs with small groups of randomly selected riders. These UX processes will help you hedge the risk of wasting resources on a program that falls flat with your customers.
Partnering with another entity to deliver a rewards program is advantageous so that you don't have to reinvent the wheel and design and build a rewards system on your own. But be sure to think about the long term. Will the partner remain interested in continuing the partnership beyond an initial period? What criteria will they use when assessing whether to continue? And what is the financial stability of the partner? Keep in mind that riders will hold your brand accountable for their experiences with the partner, so make sure the partner is willing and able to support the program in the long term, has a strong focus on providing a user-friendly rewards product and provides excellent customer support, both to you and to the end-user.
Many transit agencies have experimented with rewards programs over the years, including the State of Minnesota, San Francisco BART, Connecticut DOT, Nashville, and SEPTA in Philadelphia, just to name a few, and of course rewards programs are common in the airline and rideshare sectors. A 2022 McKinsey study found that customers who are members of a loyalty program are 59% more likely to choose a brand over a competitor and 43% more likely to buy weekly. Here are some rewards program options, ordered from the most sophisticated to the most simple (Tip: consider starting with the simpler options at the bottom of the list!):
A. Traditional airline-style loyalty program: Under this option, transit riders receive points when they ride, and these points can be redeemed for additional free rides or other rewards. A unique ID tied to the rider's fare card or account would be used to track each customer's rides. If you opt for this option, be sure to consider the resources required for fare system integration, purchase of rewards, and customer service (e.g. for customers who have questions about their points balance). The infrastructure required to build and maintain an airline-style loyalty program is significant, so be cautious about this option unless you expect your program to be large enough to make these investments worthwhile.
B. Intermodal rewards program: Over the years, a number of companies have popped up with rewards programs that award points based on the mode of travel a person uses - often with higher earnings for eco-friendly forms of travel like walking, biking, or taking transit. While this is very attractive in concept, make sure you exercise due diligence. Can the program successfully distinguish the mode of travel used? Typically, the systems utilize GPS and travel speed to try to ascertain the mode of travel, but this is easier said than done. Be sure to test their system to see if it works reliably. Another consideration is whether the company has, or can credibly develop, an adequate base of users for the program. And finally, find out if prospective partners are profitable, and if not find out how long they can continue as a company based on the funding they have. The last thing you want to do is expend great effort on a partnership, only to have the company go under just after you launch!
C. Rewards credit card - Another option is to offer an "affinity" credit card that provides cash back on purchases, with the highest cash back rates for expenditures on transit tickets and passes, as well as expenditures at the transit company store if you have one. These types of rewards programs are often created in partnership with sports teams, professional associations, universities, and alumni associations. Affinity programs are typically administered by a bank, which in turn works with a credit card company to deliver the product. Often, a small portion of revenue is shared with the transit agency or other partner based on the number of signups and total spend on the cards.
If you decide to explore affinity cards, ask banks what they offer and read all the terms and conditions carefully. For example, banks may require a minimum number of cards issued after the first year in order to continue the program. Or they may require you to expend a certain amount on marketing to promote the card to your riders. You should also ask them to estimate what portion of your riders will not qualify for the card. Unless you are able to deliver a large quantity of qualified credit account signups to the bank, they may not have a strong interest in working with you. Tip: Consider approaching banks that manage existing accounts for your agency, as they may be more receptive and flexible in working with you to accommodate your needs.
D. Fare promotions
Another way to reward riders is with variable fare promotions. Examples could include:
awarding a free ride credit to anyone who rides at least 10 times in a particular month.
providing a 30% discount to anyone who rides on Valentines Day after 6 pm.
half price on all rides to a particular station when there is a festival underway.
One of the advantages of a fare promotion program is that you can measure consumer response to various offers and refine promotions over time. The possibilities are endless!
If this option is of interest to your organization, check with your fare collection system provider to see if they offer promotional fare capabilities in other markets. Ask them to delineate the costs to customize the infrastructure to meet your needs. Also, find out what authorization you need from your agency to offer fare promotions. At BART, as part of the annual budget resolution we had our Board of Directors authorize the General Manager to offer fare promotions, and the General Manager in turn delegated this authority to the Chief Marketing Officer.
E. No points, no fuss programs - Another option is to establish a program like BARTable that promotes off-peak destinations that are easily accessibly by transit, and offers contests and discounts to fun venues. BARTable has used this attractive value proposition to generate over 150,000 subscribers and social media followers across web and social channels. This is a great way to thank customers, incentivize ridership, and strengthen the brand!
One thing to keep in mind with this type of program is the resources required to develop it and maintain it. This includes initial website development (and occasional website refreshes), content development to keep offerings fresh and interesting, ongoing effort to solicit offers from partners, and contest administration. BARTable attracted about 200 partner organizations to provide occasional discounts and contest prizes in exchange for BARTable promotion of their events and venues. It takes two to three staff to run this type of operation, but it does provide a great platform for marketing year-round! And it lets you avoid the overhead and complexity of point-based rewards system.
F. Surprise giveaways - the simplest option to reward transit customers is to just thank them by way of surprise giveaways on the system. For example, at BART we worked with Ghirardelli Chocolate to give away approximately 100,000 free chocolates to BART commuters. Other "BART Rider Thank You" partners have included Peet's Coffee, Tulley's Coffee, Jamba Juice, the Broadway musical Wicked, and locally owned bookstores. With this rewards option, the partner typically donates the giveaways, and the transit agency works with the partner to staff street teams to hand out the freebies. In exchange, the partner receives enormous publicity on news media, social media, and other platforms. For this option, keep in mind that it takes time to form partnerships and partnership building is not always successful. It requires finding partners that want exposure to your riders and who feel it is beneficial to co-brand with you. This is easiest when your customers are happy and your brand is strong....
If you work with a partner on a giveaway program, disclose to the public that the partner is fully underwriting the cost of the giveaways. Otherwise, some riders or taxpayers may feel the transit agency is misspending funds that should be used to improve service instead. In fact, a 2019 Wired article about transit reward programs quoted the former executive director of public transportation research organization TransitCenter, as saying:
"the hullaballoo around loyalty programs risks distracting agencies from more urgent priorities. The best loyalty program is to provide good service... Fundamentals of good service are frequency, speed, and reliability. If you don’t have that, giving someone a free cup of coffee doesn’t make any difference.”
This should serve as a caution to transit staff as you navigate rewards programs, although this sentiment is an issue that can be overcome with clear communication about who is underwriting the rewards.
Finally, here are two last pieces of guidance to keep in mind when you plan a rewards program:
Confer with legal counsel to ensure you are compliant with all local, state, and federal regulations covering privacy, sweepstakes, and other aspects of the program. Also, confer with accounting and budget staff to ensure compliance with audit standards.
Before you launch a program, establish metrics to gauge whether the program is delivering against your objectives. For example, you might want to track things like quantity of engagement or impact on brand perception.
Whatever you decide to do, hopefully this blog post helps you make sensible choices and avoid surprises. Rewards programs can be fun, but make sure you know what you are getting into!
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