When it comes to increasing revenue, no matter the sector or industry, the formula is simple: Collect more and spend less. But when you apply this formula to specific industries, businesses, and government agencies, it gets more nuanced. In this post, we’ll focus on seven ways to collect more revenue. Part 2, to come later this month, will continue the series with ways to spend less.
For transit agencies, budgets are funded by a mix of municipal government allocations, federal grants, and monies collected at the farebox. Expenditures are divided into capital and operating buckets. This makes it challenging to determine where to focus efforts to raise revenue. The changing priorities of the federal administrations who control grant funding add to the difficulties of making these decisions.
“There isn’t just one way to look at revenue operations,” says Bill Kerr, commercial general manager at Genfare. “We can talk about driving equity and taking whatever form of payment is in the rider’s pocket. Or we can flip the script and focus on efficiency and effectiveness. These aren’t unique ideas, and no matter how you look at it, the goals are the same.”
More revenue = more ridership
For transit agencies, collecting more money generally means increasing ridership. With the exception of once-in-a-lifetime events like the COVID-19 pandemic, variations in ridership are relatively minor for need riders, but can be quite large for choice riders. For most transit agencies, this makes choice riders the ideal group to target for ridership increases on your buses, trains, and ferries.
There remains a large hump to get over in bringing choice riders back, but with the right approach, it’s not insurmountable.
“During the pandemic, ridership was way down, and now people are going back to work but are still concerned about riding transit due to the perception of high crime on transit. People only remember the negative experience and it’s hard to bring it back around,” says Bill. “How do you get choice riders back on to bring the proportion of rider types back to reasonable levels? It’s all about reducing friction.”
Here are seven tactics transit agencies can use to raise ridership:
1. Know your riders
The first step is to understand your community so you can tailor solutions to meet the needs of everyone in it. Essentially, who do you serve in your community today and what behavior do you want to influence to improve their experience?
More than ever, ridership data can be linked to individual riders, providing more opportunities to analyze and target the various rider personas you serve. This can help you provide a service of greater value to attract daily commuters, tourists, students, low-income workers, or even people who only ride transit when it helps them avoid traffic or parking headaches.
Read Pillar 1 of equitable mobility: Know your community
2. Promotions
“Promotions can get riders over the hump of the initial adoption of transit,” says Bill. “When you are going through a transition from a basic system to expanding payment channels, changing rider behavior can help you get more value from your investment.”
For example, Palm Tran, in West Palm Beach, Florida, offered $10 in stored value to riders who downloaded their new mobile app during a promotional period. This provided an incentive for people to try the app, and once they experienced it, they were likely to keep using it and keep riding the bus. Even if they downloaded the app during the promotion but didn’t ride the bus right away, having the app already on their phone and preloaded with funds made the later decision to ride that much easier.
Read the PalmTran case study
3. Events
Sporting events, festivals, concerts, and other events are a great way to get riders to try transit. Centro, in Syracuse, New York, promoted open payment at park and ride lots during the New York State fair and saw huge gains in ridership and adoption of new payment methods that continued to rise after the fare was over. Fairgoers were thrilled to skip the traffic and parking hassles near the fairgrounds and were delighted by the additional convenience of not having to stand in one line to buy a bus ticket and another one to board.
Read the Centro case study
4. Open payment
Adding open payment is one of the most effective ways to provide incentives for occasional riders and visitors to choose transit. Open payment eliminates the friction of figuring out fare structures, finding a place to purchase a transit card, or downloading an app. In Orlando, Florida, Lynx recently implemented open payment and has already seen large gains in ridership and reductions in cash payments.
“You can get more riders through tourism or special events with open payment. People don’t want to download an app or guess at whether they will ride enough to justify a period pass when they are only in town for a few days,” says Bill.
Read Getting riders on board with open payment
5. Simplify fare structures
Have you ever chosen a familiar restaurant or grocery store even when the idea of something new was more appealing, simply because you didn’t want to expend the energy to navigate the menu or aisles? That feeling of unfamiliarity can also be a hurdle for transit riders. Even when the route or schedule is easily accessible, riders might be intimidated by complicated fare structures.
Fare capping is one way to simplify fare payment for riders. Riders just tap a smart card, mobile app, bank card, or mobile wallet, and rest assured they are paying the best fare for their trip, week, or month.
Read Fare capping: The fair fare payment option
6. Educate riders
“It’s imperative to educate riders about how your transit system works,” says Bill. “People have to trust that it’s going to work. Education is a great way to drive revenue, reduce cash collection, and drive ridership.”
For example, if you’re offering open payment, explain that riders may see aggregated charges that reflect multiple rides – not overcharges for single rides. Fare capping can be explained visually or with examples. Signage on buses or at bus stations can go a long way and be augmented by online components.
When VIA, in San Antonio, Texas, launched new fareboxes, it embarked on a 936-hour grassroots effort to meet riders where they are and change how they pay for transit. Staff had face-to-face conversations with riders at transit centers and wore t-shirt with QR codes on the back so riders could watch videos explaining the new fareboxes during their commutes.
Read the VIA case study. (Coming soon!)
7. Bus rapid transit
“Bus rapid transit can be a good incentive because it eliminates traffic and parking hassles,” says Bill. Genfare is currently in the process of working with bus rapid transit implementations in cities like Miami. Although BRT requires a significant up-front infrastructure investment, it’s more cost effective and flexible than adding rail service, and has the potential to collect higher fares than local routes.
BRT stops can also be equipped with ticket vending machines to allow unbanked or underbanked riders to digitize cash, reducing the cost of fare collection.
Read Why your transit agency should be digitizing cash
Part 2 of this series will focus on spending less by reducing the cost of fare collection and driving efficiencies.