Insights 07 June 2019 By: Madeleine Funes

Tackling Customer Acquisition and Cost Cutting: Can Ground Operators Do Both Without Compromising Either?

Across the US, mass transit operators are struggling with the rising costs of attracting new riders, cumbersome legacy ticketing and payment processes – key issues identified in a transport survey we carried out in late 2018. The good news is these issues can be solved through with right digital and mobile solutions, provided transit agencies can agree on making investment in these technologies a priority initiative for their organizations – and to better serve their riders.

Of the 103 mass transit operators we surveyed, rising costs and increasing ridership were their top two concerns.

While a quarter (26%) of US transportation operators overall cite rising costs as their biggest challenge, this struggle is more pronounced among mass transit and metro operators specifically (40% report this as their chief challenge). Twenty-eight percent of private transportation providers, 25% of regional agencies and 23% of national agencies say rising costs are their biggest concern.

Having an omni-channel solution that addresses both digital and mobile needs can address core these business and revenue challenges by lowering the cost of every payment transaction. And operators can have a significant impact on passenger experience and rider volumes too, simply by modernizing their ticketing and payment systems.

Mobile app implementation must be a priority

For transport operators, a well-designed mobile app can streamline the ticketing and payment process, provide a better rider experience while also reducing operational costs. However, differing views within transit agencies on implementing digital and mobile solutions are preventing many organizations from realizing those benefits.

Overall, 13% of transit operators say that implementing mobile technology is their biggest operational challenge. Only 17% of those responsible for payment/ticketing cited increasing costs as their biggest organizational challenge, versus 31% of those in IT and 29% in project management. On the other hand, 33% of those responsible for payment/ticketing cite acquiring new customers as their biggest challenge, versus 13% in IT and 21% in project management.

Our survey findings reinforce that on the payment and ticketing side, transportation professionals are less worried about costs, partly because new mobile payment and ticketing solutions are easier to implement and are cost-effective. Conversely, decision-makers responsible for broader IT and project management issues are dealing with more complex solutions that aren’t as simple or economical to roll-out as mobile.

At the same time, professionals responsible for payments and ticketing are worried about customer acquisition because the success of their solutions depends largely on adoption by riders. This is reflected in downloading transit apps, for example, or pre-storing payment information in the app. A well-designed app can help increase ridership by making planning, booking and ticketing incredibly easy and convenient, driving increased conversions and more satisfaction among riders.

The takeaway: Transport operators can easily reduce payment and ticketing costs while making their service more attractive to new riders by implementing the right mobile apps and seamless payment solutions.

What other operational and investment challenges are US mass transit agencies facing? Learn more in our in our recent report here.