Michael Raasch, CEO of Omnevo, shares an introductory view on the potential for train operators to adopt digitalization to drive new levels of performance and profitability.
Digital transformation is all around us. The COVID crisis fired up a global acceleration in digital adoption across all demographics. It’s now the norm to go online for almost any need – from food deliveries, working from home, dating, education, and medical consultations to buying anything from groceries to a new car, or simply to order ahead of your usual Starbucks and skip the queue. Digital interaction is deeply embedded in daily life.
“Over the past decade, digital technology has transformed rail systems and rail safety. In everything from autonomous trains and automatic train control systems to track monitoring and moving block systems, digital innovation has driven higher performance, making the rail sector a global leader in safety and reliability. However, the industry has been notably slower in the adoption of digital technology to drive onboard revenue performance, productivity, and profitability.
Of course, there are several reasons for that broader hesitancy in investing in digitalization, not least the length of operating contracts that can constrain investment and development decisions. Despite that, Train Operating Companies (TOCs) now have a major opportunity to exploit digitalization to enhance the passenger experience while raising crew efficiency and growing ancillary revenue and profitability. Here, I’d like to explain how.
As consumers, we’re experiencing much greater digital interaction with brands, retailers, and service providers – and over the past three years these have become stronger, more immersive experiences designed to provide more choice, quality, and service, seamlessly available with 24/7 convenience. As consumers, we take our best digital experiences with us to the next brand we interact with, and we constantly assess and compare these experiences. Our most recent ‘best experience’ often becomes the benchmark we set for other brands we interact with - and we bring these expectations to our rail journeys.
Whenever they take a train journey, passengers bring with them their experiences with brands such as Amazon, Apple, JustEat, Farfetch, and Nike - influencing their expectations of the rail experience. Airlines too face these same expectations. At Omnevo, we also create platforms for major airports and airlines (such as Singapore Airlines and Virgin Atlantic) enabling them to respond to the pressure of comparison with the passenger’s experiences with consumer brands – rail operators can do the same.
Digitalization enables rail operators to create a stronger response to their customer’s needs – addressing both the things they love and the things they hate about their rail journey.
Although digitalization has certainly transformed timetables and ticketing into far better experiences for rail customers, there are many more unexploited opportunities for TOCs to interact with them along the whole journey and address the issues that passengers love - or hate – about their rail experiences. Through a blend of new levels of crew efficiency and a stronger passenger experience, performance and profitability will rise alongside customer satisfaction scores.
Omnevo has already partnered with pioneering TOCs such as Eurostar, TGV Lyria Trains, Thalys Trains and their catering operators in their digital revenue strategies, enabling them to gain competitive advantages by developing platforms that drive operational efficiency and achieve greater control of staff performance - while simultaneously maximizing revenue and profitability.
These digital solutions are built around the three core business performance goals of any TOC: the optimization of Efficiency, Control, and Profitability.
Digitalization enables TOCs to create a much sharper focus on performance across the whole passenger journey through a proven, uniquely effective, and versatile end-to-end solution. The platform enables operators to precisely target their core business aims across almost any aspect of Crew performance, sales growth, and the passenger experience.
The beauty of the platform’s versatility is that TOCs can target their priority issues by first adopting the most relevant digital modules. This cost-effective, risk-free strategy enables them to launch and evolve their digital capabilities - starting small, growing at will – while retaining full control throughout. The progression is actually not dissimilar to the way we use our mobile phones; we select the apps that are most useful to us and then gradually expand the ways that we use those apps.
Operators can select the most appropriate modules from the platform’s menu to target their priority operational issues that will best support the three key business aims I mentioned earlier. From greater Crew efficiency and a stronger customer experience to dramatic improvements in markdown and sustainability, the operator always retains full control of the platform's focus, scope, and growth.
Before I outline the launch focus of the platform, I would also like to point out that passenger behavior changed significantly through the pandemic as intermodal train and urban mobility possibilities expanded. The dramatic shift from commuter to leisure traffic – driven especially by ticket initiatives such as the discounted rail passes recently launched across many European markets – meant that customer profiles and demands have become even more difficult to predict. Digital solutions enable operators to manage such dynamic changes much more effectively.
Faced with that ‘menu’ of module options in the visual (above), where should you begin your digital strategy?
Well, from partnering with several TOCs over the past few years, I’ve found that POS capability is often the priority starting point chosen by most operators – quickly enabling stronger monitoring of staff performance and smarter management of transport plans. For example, the system gives a detailed ‘live’ operational overview of all trains running in the network. In-depth pictures are created in Crew Scheduling and Management, including an instant view of crew rostering and full identification and analysis of performance.
The single biggest demand from passengers is that many of them don’t want to leave their seats to queue for bars or restaurants, so self-ordering from their devices for seat delivery is hugely appealing. Of course, this raises challenges in handling the priorities order numbers and capacities (as well as the length of the train to optimize serving and waiting times), but the digital platform can optimize performance across all these parameters.
Across the platform, the performance gains achieved are remarkable, including sales growth of 60% and truly startling drops in markdown – such as a reduction from a high of 22% to below 2%.
Passenger feedback is also strongly positive and drives a powerful increase in recorded satisfaction scores. TOCs are especially delighted to see their key priorities being addressed and this gives them further confidence to continue the development of their platform.
Unlike ‘one size fits all’ packages, the modular platform can integrate with any existing system and has in-built adaptability to be tailored to the operator’s needs. This flexibility means that if the operator needs to re-configure a process or adapt the system to existing protocols to create a more effective outcome, this can be done.
With the initial modules established, the TOC retains full control and, with that solid long-term foundation established, the platform can be further developed and expanded at will.
Although every TOC knows that digitalization is the future driver for almost every aspect of operational performance, the challenge has been to judge the right time to seize the digital initiative to drive onboard performance. That time is now.
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