25

número 6 - junio - 2018. Pág 455 - 461

Customer personalisation and service efficiency: the pillars of the new Renfe business policy

Cañamero Palacios, Francisco

Renfe Operadora1

Abstract Financially-wise, high-speed transportation has been currently consolidated as the most profitable of all the services which integrate the railway sector at a global level, specially in Spain where this type of service is experiencing relevant growth in accordance with the infrastructure investments that have taken place in the last decade. Back in 2011, Renfe’s high-speed commercial services (flagship company of the Spanish railway sector) transported little over twenty million passengers; nowadays -barely seven years later- that number surpasses the thirty-five million mark. In order to consolidate our actual position in the passenger transport market and as regards the imminent liberalization of this sector at an European level, Renfe has decided to direct its different commercial strategies to its clients and their necessities, making the passengers the focus of its business vision and the essential reference framework for all the activity areas of the company, developing its trade policy from a service segmentation strategy towards the customization and using new technologies and the profound knowledge of the client CRM provides as tools.

1 Cañamero Palacios, Francisco. Marketing director of Renfe Viajeros.

International Congress on High-speed Rail: Technologies and Long Term Impacts - Ciudad Real (Spain) - 25th anniversary Madrid-Sevilla corridor 455 Cañamero Palacios, Francisco

The deregulation of the railway industry on a continental scale, the regionalisation processes at a national level affecting the competitive framework and services funding, and the opening of the international passenger transport are some of the main challenges that the railway companies are set to face in the upcoming future. In the context of a very near scenario of strong competition, added to the existing intermodal competition, Renfe has understood it should strengthen its market position and align its structure and strategy to such a complex future scenario, where it will have to abandon its position as the sole player in the passenger rail transport business and compete with other future operators. In order to consolidate its current position in the passenger transport industry, Renfe, among many other measures, has decided to implement strategies focused towards the customers and their needs, placing the customer at the heart of the business vision and seeking the more and more necessary “Customer personalisation”, and as the essential reference framework in every business area of the company. Thus, for example, Renfe has strongly encouraged innovation and interaction with customers, leveraging all the potential offered by new technologies at the service of business and smart CRM management, improving the communication in different channels, such as the website, messaging, email or mobile phones for the purpose of creating a permanent real-time relationship with the customer. Always connected. Beginning with simplifying the barriers in the purchase process to the extent possible, making the process to get a train ticket easier and more convenient and aiming towards a zero use of paper. With the aforesaid objective of putting the customer at the heart of the business and placing Renfe at the forefront of progress in order to compete in a deregulated market, the company developed an ambitious Business Plan with the purpose of fostering high-speed rail versus air transport and consolidating its overriding position upon the arrival of future competitors for domestic traffic in mainland Spain, as other bigger, more profitable and more efficient European groups. Before launching this Business Plan, a large study had of course been carried out in order to identify which were our weaknesses and which commercial aspects of our services and products could be improved. The study found out that:

• AVE offered high prices and rather inflexible fares. Customer perception. • The occupation level was not enough, it was low, subject to seasonal fluctuations, and there was a low investment optimization. • Little attraction of new clients, especially among the youngest population. • Medium- and long term impact of collaborative commerce on transport. • Based on this analysis, we fixed the following objectives: • Establishing more affordable rates for everyone; prices for all segments of society. • Increasing the occupation level of the trains. • Modernising and adapting the supply to demand. • Attracting more passengers and boosting a great loyalty programme. • Becoming more efficient in customer management. • Creating a portfolio with services complementary to railway (cars, hotels, etc.) • Creating a great intermodality model with other forms of transports with AVE as the central axis.

456 360.revista de alta velocidad Customer personalisation and service efficiency: the pillars of the new Renfe business policy

Thus, with these findings in mind, from the 8th of February 2013, Renfe started to implement a new strategy based on actions aimed at increasing the flexibility of the offer by introducing a dynamic price system, so that the nature of the ticket price would become mobile. This, by the way, was a widespread form of work in other modes, but it had never been implemented in Spanish railway.

The most relevant measures regarding prices adopted at that time were:

ÛÛ AVE General Rate -11%

ÛÛ AVE/LD Return Ticket -20%

ÛÛ AVE AVE Pass -35%

ÛÛ AVE/LD Promo Rate up to -70%

ÛÛ AVE/LD Youth Card -30%

ÛÛ AVE/LD More frequency and new routes

And from the date of implementation of this new business policy including, as it can be seen, great discounts on the most common rates, the railway use started to increase. This increase led rail transport to outperform air transport in 2014 for the first time ever, becoming, according to INE (Spanish National Institute of Statistics), Spaniards favourite means of transport and reaching 50,000 more passengers than airplane for trips within Spain. Beyond this, today, 4 years after the beginning of this groundbreaking business policy, Renfe can boast it has attracted 9 million new customers, which means a 40% boost in the number of passengers and a 10% occupation increase. A significant detail is the fact that the occupation increases achieved over these years have taken place in every AVE corridor. This means that the beneficial effects of this new business policy have reached all the lines and not only the most used ones (such as Madrid - or Madrid - Seville), as it might have been expected. These excellent results have taken Renfe to deepen into this line of work and extend and expand this business strategy, delving deeper into the customer loyalty concept too. Major business milestones:

▪ 1993.- Quality commitments with the Customer

▪ 1994.- Punctuality commitment: “5 minutes late”

▪ 1999.- Outsourcing to the private sector of a 50% of train maintenance

▪ 2005.- Complete independence of Railway Infrastructure Administration (“Adif”)

▪ 2006.- Prices with less and less intervention

International Congress on High-speed Rail: Technologies and Long Term Impacts - Ciudad Real (Spain) - 25th anniversary Madrid-Sevilla corridor 457 Cañamero Palacios, Francisco

▪ 2007.- Prices discriminated by product

▪ 2007.- Web and Star rates introduction

▪ 2008.- New Rate Policy

▪ 2010.- “Revenue Management” Dynamic Rates

▪ 2012/3.-New Business Policy

▪ 2014.- New Company “Renfe Viajeros, S.A.” The company’s corporate purpose is the provision of traveller transport services by train, both national and internationally, the mediation in the provision of any tourist service, the organisation, offer and/or selling of combined journeys or tourist products, as well as the provision of other services or complementary activities linked to train transport.

Within the framework of the new Renfe business strategy complying with the planned targets, an innovative Marketing Plan was launched following steps:

• Segmentation and characterisation of the CRM market • Product portfolio review and new commercial offer design • Promotion of value-added products (Train +) • Access to new sales and marketing channels • Designing and developing a new commercial communication line • Introducing connectivity on board and a new entertainment platform • New customer policy for Renfe Empresas (1,500 associated companies)

All these actions had an essential objective for the company: increasing the number of loyal customers. All of this aiming at having not only more committed passengers, but also more satisfied travellers. Thus, after a boost of 45% in the number of passengers in just 3 years thanks to the low-price policy and more services, the company took up a new challenge: getting to know better the customer to keep growing and be profitable. To this effect, Renfe relaunched its loyalty programme, opening it to all distances (commuter rail and medium distance) and introducing a series of further benefits for train users in order to avoid customer churn in favour of other modes. Boosted in June 2015 with the launch of +Renfe, the loyalty programme has grown almost 78% from that moment up to the current 1.2 million members, generating customer knowledge, which helps to understand consumer habits and preferences. The +Renfe programme seeks to obtain more customer knowledge, revert the benefit of the programme in the very business model, create induced demand through point exchange, reduce customer churn and create a new Relational Model with the customer. Renfe has understood that getting to know the customers is essential in order to understand their consumer habits and preferences. The goal being pursued is adapting the company service to the customer demands, having a more personal relationship with the customer and launching segmented and exclusive offers in order to make them travel more repeatedly.

458 360.revista de alta velocidad Customer personalisation and service efficiency: the pillars of the new Renfe business policy

Renfe has also renewed its website (www.renfe.com) in recent years as part of its strategy to boost online ticket sale. At present (July 2017), online sales meant 46.14% of the total sales, that is to say, only through the internet channel, Renfe has sold 14,026,881 tickets between January and July. In recent years, the tickets purchased through www.renfe.com have risen from 26,040 in 2000, when the channel was implemented, to almost 54 millions at year-end 2016, with a 47.40% share. Renfe website, one of the most visited in the transport industry, reached more than 136 million visits in 2016; 56% of them came from mobile devices. In order to make online browsing easier, more user-friendly and accessible, Renfe is constantly upgrading its website. Renfe has also developed a new portal (www.renfeviajes.com), which offers a number of products related to travel. Besides checking train schedules or buying tickets, the website allows purchasing other products linked to the trip, as hotels, rental cars, theme park tickets or a complete holiday package. All of this at a guaranteed minimum price and with every guarantee offered by Renfe and its partners in this project. This online channel is available on the usual Renfe web address, www.renfe.com, or on the portal www.renfeviajes.com. To launch this website, Renfe has relied on leading companies of the industry, which sell their products through the brand www.renfeviajes.com. The three companies working with Renfe on this project are: Orizonia, the first issuing travel group focused on holiday products; Muchoviaje, a company marketing hotel services around the world which leads online sales in the leisure sector; and AutoEurope, vehicle rental consolidator. The incorporation of the travel portal into the company website is a part of Renfe’s strategy to promote online sales. At the same time, Renfe has also fostered in recent years a series of commercial measures aimed at making sales easier in through all channels: reducing to 0% the processing fee for the online ticket purchase, enabling auto-checking machines for ticket sales in most stations and expanding the sale period to 120 days. The minimum time required for online ticket purchase has also been reduced up to 15 minutes before the time scheduled for the train departure. Beyond this and as a part of this commitment with our clients, last November Renfe introduced its WiFi platform PlayRenfe, unique in the world, in AVE trains. PlayRenfe is more than a simple WiFi signal distribution service. It responds to the digital transformation and innovation strategy that Renfe is offering the customers of its AVE services. This platform is a new WiFi connectivity window, which also includes exclusive contents for every type of traveller and new services. The actual project has a remarkable technical complexity and sets a new milestone in the history of high speed in Spain, becoming a reference in the railway industry worldwide, as it pioneers both connectivity during the trip and a content and service platform including live TV broadcast, something unique in the world. PlayRenfe includes, on the one hand, the supply, installation and maintenance of an comprehensive WiFi system on board the whole AVE train fleet; and on the other hand, the deployment of a network to cover over 1,600 km of high-speed tracks, including 75 tunnels and 540 LTE coverage locations on a combined and specific 800 and 1800 MHz network, combined with a satellite solution. The aim of the new PlayRenfe service window is to offer added value to the on-board WiFi connection, long demanded by passengers, with a full offering of contents included by Telefonica: latest film releases, TV shows, music, books and it even includes the possibility, for the first time ever, to stream live contents while travelling at 300km per hour. It is a customised on-demand service designed for every type of customer (family, leisure, business, etc.).

International Congress on High-speed Rail: Technologies and Long Term Impacts - Ciudad Real (Spain) - 25th anniversary Madrid-Sevilla corridor 459 Cañamero Palacios, Francisco

Renfe also features access to all its digital services, such as checking schedules and tickets, Renfe Viajes (the new range of tourist services linked to railway), the loyalty programme +Renfe or useful information on any aspect of the trip. Renfe offers this platform as well as a new Marketplace for the relationship with its customers. The +Renfe programme customers and those who wish to join it free of charge, as well as those who travel First Class, will have direct free access to the connection and the contents. By doing so, Renfe aims at the creation of a new traveller relationship model, with priority given to those subscribed to its loyalty programme. But it does not end here. Our engagement with customer satisfaction goes even further. For this reason, Renfe introduced some months ago a new after-sales commitment for the clients of its commercial services (AVE, Alvia, , etc.) simplifying the reference times for its punctuality commitments and adding new bonus options in the event of a delay. Thus, in addition to the usual cash refund of the amount of the relevant ticket, Renfe introduced the option of receiving such relevant amount plus a further 20% as a discount on the purchase of the next ticket, or its accumulation with an extra 30% for the customers subscribed to +Renfe loyalty programme opting for the refund in Renfe points (redeemable for tickets or other tourist services from the partners engaged in the programme). The new Renfe after-sales commitment relating to its commercial sales expanded the voluntary punctuality commitment to any circumstances that might delay a train arrival, including also those circumstances due to force majeure (adverse weather, fire, service disruption by a court, government or police order, limitations stated by the railway infrastructure manager, etc.). Thanks to this measure, Renfe expects to keep a leading position regarding the level of commitment towards its clients and improve one of the most advanced after-sales models among European transport companies. Spain wants to travel by train Between May 2016 and April 2017, 11 Renfe lines reached an all-time high in terms of travellers. The lines are those connecting Madrid with Barcelona, Asturias, Valencia, Cádiz, Málaga, , Pamplona, León and Cantabria, and the lines Barcelona-Valencia and Barcelona- Zaragoza. All these lines reached historic levels until the end of April, positioning railway as the most used collective transport in Spain, well over airplane and bus for the routes around mainland Spain, where all three modes can compete. Furthermore, Renfe reaches a high for its AVE and Long Distance trains during July and August, when 5.8 million travellers used the company, AVE and Long Distance commercial services. This data means an all-time high representing the biggest passenger volume of the company for the two months of highest demand in summer, as this result shows a 2.1% improvement, 122,000 more travellers, compared to the same period in 2016. While high-speed commercial services (AVE, Alvia...) were chosen by more than 3.5 million travellers (+2.3%, 77,000 more travellers than in 2016), Long Distance services were the choice of 2.3 million clients (+2.1%, 47,000 more travellers). These data are complemented with public service trains, Medium Distance and Commuter, used by more than 64.5 million travellers during July and August, a 3.2% increase compared to 2016. This means that, altogether, the trains operated by Renfe have served 70.4 million travellers. Conclusion and next steps In financial terms, high speed is the most profitable current railway service. Furthermore, Spain is experiencing a significant growth in line with the great infrastructure investments carried

460 360.revista de alta velocidad Customer personalisation and service efficiency: the pillars of the new Renfe business policy

out over the last decade. Thus, high speed commercial services meant little more than 20 million travellers in 2011; today, this service involves more than 35 million travellers. And as AVE network is further completed, we are confident that railway will continue to attract many more users, thereby increasing its profitability. In order to adapt to the open and deregulated future scenario, one of the pillars of the business policy is the evolution from a service segmentation strategy towards personalisation, using new technologies and CRM customer knowledge as tools to achieve it. The next steps must be targeted to constantly improve customer information regarding both the service and the commercial offering. New technologies allow real-time connection, which will enable the company to develop a personal relationship with every customer to continuously adapt the offer to his/her needs. This effort will be soon translated into a space we call “Dedicated Customer Portal”, which will be introduced before the end of the year. At the moment, almost 50% of the company sales are made through the online channel. With the Dedicated Portal, we seek to strengthen this channel through process customisation and simplification. There is also a project to implement ChatBots to improve communication procedures with the client. In conclusion, deregulation forces us to be more flexible. To know what our customers need at any time and offer efficient real-time solutions responding to this requirement. Today, Renfe is taking firm steps to improve its relationship with travellers. New technologies must help us delve into it in order to achieve an even more satisfying and complete relationship, making train the preferred transport mode for all citizen groups, both national and foreign, for their travels around mainland Spain network. This effort is not and will not only be addressed to current users of train services; we also seek to maintain a direct relationship with any potential customer of other modes whom we can offer the possibility of accessing a service like ours, in which we believe he/she can be interested. There are now many potential customers who, for whatever reasons, are not interested in railway. We want to know what we have to do to change their minds. And we will strive for it.

International Congress on High-speed Rail: Technologies and Long Term Impacts - Ciudad Real (Spain) - 25th anniversary Madrid-Sevilla corridor 461