Market Churn in the British Rail Passenger Commuter and Leisure Markets
B Condry, ATOC, UK; A Mason, J Segal, MVA Consultancy, UK
Most forecasting considers the net change in demand - the increase minus the reduction. The objective of this study was to consider the two elements separately: what is the rate of and the reasons for churn in the rail commuter market?
Research was undertaken to provide an improved understanding of the impact of rail market churn on the demand for rail commuting. Current GB rail demand forecasting methodologies, such as the Passenger Demand Forecasting Handbook (PDFH), only consider demand growth based on the net change in the total market. However, in reality, customers are continuously leaving the market and being replaced by different individuals, while others change the frequency with which they travel by train. It is important to develop a better understanding of the extent of market churn and its implications for rail demand forecasting.
To provide a thorough understanding of the impact of market churn it was crucial to identify the underlying reasons for market churn, and the respective roles of external and rail-related factors in driving churn rates.
A narrow definition of churn would be turnover in the customer base: lapsed rail users being replaced by new customers. Research on churn defined in this way would investigate rates of churn (what proportion of original customers is replaced over a given period) and differences in lapsed and new users' rail use patterns and preferences (journey distances, weekly trip frequency, etc), which drive some of the ongoing change in overall demand.
However over time the third group of customers - people who continue to use rail for travel to work - may also make significant changes to (for example) their weekly trip frequency, days of week when journeys are made, timing of journeys. And if they move home or change jobs (as part of another process of churn, in the job and housing markets) they are likely to make changes of journey origin, destination, distance and fare paid. Changes in the behaviour of loyal customers thus represent another aspect of churn, and are drivers of ongoing change in overall demand.
Rather than taking a narrow perspective we investigated the entire process of change in demand (for identified rail markets, over identified periods), and all of the underlying drivers of change in demand.
An internet based profile survey was undertaken to estimate the churn by different geographic area, and how it was related to factors such as:
- employment status - full, part-time, self employed
- occupational group
- household size
- presence and age of children
- car ownership
- home owned or rented.
Respondents were asked whether they commuted by train now and also two years ago.
The profile survey also provided contact details for use in a more extensive survey whose objective was to understand the reasons for the different levels of churn. This survey sought to explore the key reasons:
- distinguishing between attributes of the rail service (including perception)- eg changes in fares, journey times, crowding, etc - and external factors such as change of job or home;
- even when churn may have been triggered by an external factor, whether rail factors had an influence - eg did people select a job or home that enabled them to commute by rail?
- in addition to gaining a qualitative understanding of the relevant issues, seek to quantify some of these, both internal to rail and external.
The two surveys provide both quantification of churn in the rail commuting market, and insight into its causes.
The implications for rail demand forecasting will be included within the industry's guidance - PDFH.
While the main focus of the study was on commuting by rail, initial findings were also obtained from the profile survey of the rate of churn in other markets such as business travel, visiting friends and family, and other leisure travel.
Association for European Transport