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The value of customer-centric strategies for passenger railways

Every seat is a customer...and a relationship

The golden age of rail―when the journey itself was an experience―might seem a memory. But conditions are right for a renaissance. Newer high-speed trains are making long-distance rail a more viable alternative to air and road travel. Even with a slow economic recovery, rail is growing quickly.

By 2014, the global passenger rail sector is forecast to be nearly US$200 billion, up 31 percent since 2009.

By 2014, the global passenger rail sector is forecast to be nearly US$200 billion, up 31 percent since 20091.

But the industry still faces serious growth and economic challenges. Forecasts show that nearly 60 percent of European rail corridors may have severe capacity issues by 2015. In California, government subsidies have been reduced by 45 percent. And in Europe, some companies are facing a financial crisis because they can’t fill seats.

To thrive, railroads must raise the profitability of each seat by improving the long term value of each customer relationship. The key is to attract riders using relevant offers and good service, and by actively managing supply and demand. Research suggests that the right strategy can help railroads accomplish both.

Customer-centric competency outcome map for rail

Source: IBM Center for Applied Insights and IBM Transportation industry, 2012

Using a hypothetical organization, the IBM Center for Applied Insights demonstrates a model that quantifies the economic impact of a more customer-centric strategy. This report outlines the specific competencies required and the potential benefits for passenger railroads, including being able to:

  • Capture traveler history and deliver information and services using multiple channels.
  • Make a single view of the traveler available to the entire enterprise.
  • Personalize proactive marketing, promotions and services.
  • Provide real-time updates before, during and after the journey.
  • Deliver continuous information to travelers.

Although your journey to create a customer-centric passenger rail experience will be unique, the outcome is clear: increased revenue and profitability. And that’s a destination worth the journey.

 

Download the executive report, The value of customer-centric strategies for passenger railways (PDF,1.58MB), to see how these competencies can impact your organization.

 

1. Passenger Railways: Global Industry Guide. Datamonitor. October 2010. http://www.datamonitor.com

2. Study on Infrastructure Capacity Reserves for Combined Transport by 2015. Kessel + Partner Transport Consultants, and KombiConsult GmbH. May 2004. http://www.uic.org/IMG/pdf/uic_finalreport.pdf (PDF,3.85MB)

3. Capitol Corridor Joint Powers Authority. http://www.capitolcorridor.org/about_ccjpa/ccjpa_performance.php

4. “High-speed train operator in financial trouble.” DutchNews.nl. February 1, 2011.