Office of the Rail Regulator
Meeting the challenge of accurate and impartial retailing
keywords: click to search
Phrases in [single square brackets] are hyperlinks in the original document
Phrases in [[double square brackets]] are editorial additions or corrections
Phrases in [[[triple square brackets]]] indicate embedded images or graphics in the original document. (These are not usually archived unless they contain significant additional information.)
Meeting the challenge of accurate and impartial retailing
type Speech (full)
note John Swift, ORR
MEETING THE CHALLENGE OF IMPARTIAL TICKET RETAILING
IN THE NEW RAIL INDUSTRY
SEMINAR - PART II
ST JAMES COURT HOTEL, BUCKINGHAM GATE, LONDON SW1
18 JUNE 1997
JOHN SWIFT QC
The new railway presents challenges. Accurate and impartial retailing is one. I have already set out my conclusions in January. I therefore want to cover three particular areas today: first, to put accurate and impartial retailing into the context of my general regulatory objectives for train operators; second, to give a preview of the issues emerging from my mystery shopper survey; and third, to set out what I believe the next steps should be.
Regulator's Objectives for TOCs
A week ago, I published my regulatory objectives for train operators, on the same day that the Franchising Director published his latest bulletin on the performance of franchised operators. Both these documents, in different ways, focused on a key common objective - creating a better railway and delivering better services to passengers. It is a well known and often repeated fact that, to succeed commercially, franchise operators will have to increase revenue, increase their market share against other transport modes and convince more people that rail should be their first transport choice.
During the processes of Phase 1 - competition between new entrants for the right to operate passenger train services - the Franchising Director secured maintenance of socially required services and, increasingly, commitments to improved services in franchise agreements. We are beginning to see some of the first fruits of those commitments in the form of increases in service frequency; the first orders for new trains; and gradual introduction into service of refurbished trains. We are also seeing operators looking beyond their franchise commitments to new quasi open access services which should open up new journey opportunities and bring passenger and public interest benefits. I warmly welcome these developments. But I expect operators to do more: to treat their existing contracts as a launching pad for innovative further improvements.
Retailing and Commercial Aspirations
What, however, is unacceptable about the current situation is that for all the effort put into developing new services, for all the money committed to new trains, not a tenth of that has been put into the retailing, distribution and information systems that will get passengers on to those services and will earn the money that repays operators' investment.
Of course, new and refurbished trains are a highly visible sign of dynamic new operators making their mark on the railway. The photocalls would, of course, lose a certain something if you replace the shiny new-liveried train with a new ticket machine or a new passenger information leaflet. But if the same scale of commitment is not made to improve information and retailing systems, the investment in trains will not be adequately remunerated - a commercial matter for operators - and will not meet legitimate expectations of passengers.
What passengers want
Thus there is a critical link between retailing and information provision and commercial returns. But what do passengers want? A railway which is simple to use; to get reliable, accurate and appropriate information about services and fares with one 'phone call or with one visit to a station or travel agent; to be confident that they have got the information and product that is right for them and the journey they want to make.
I am not going to repeat today what I said in January's Policy Statement on Accurate and Impartial Retailing. The potential barriers to retailing and information improvements have been well rehearsed and, frankly, are beginning to sound lame and tired. We are not talking about rocket science. We are talking about joining a technological revolution that, at the moment, is leaving railways well behind. Speakers at this Conference are demanding improvements and encouragingly are expressing what they want to see in very similar terms. I also endorse Roger Ford's rhetorical question, 'When can Modern Railways have a free CD-Rom that gives information on services and fares?'. And I endorse Christopher Garnett's view that it is almost unbelievable that travel agents still write out tickets by hand. Other speakers mentioned the difficulties caused by having current systems cluttered by obsolete products that are no longer wanted or used.
It is clear that failure to address systems issues and failure to provide accurate information actually represents a cost to the industry. Costs in terms of mountains of paper and processing, costs in terms of additional capacity at TEBs because people ring twice or three times to check that the information they are getting is right. And lost revenue, from those who give up and climb into their car, or from those who perceive the process as complicated and unreliable and do not even bother. There is also a less quantifiable, but equally real cost: the cost of compliance with regulatory requirements if operators do not make real progress on the inputs which will deliver accurate and impartial information and retailing to passengers.
Accuracy is the key. I understand that GNER is not aware of any customer complaint over the last twelve months about a mis-sold ticket. Interesting. But how does a passenger - particularly an infrequent passenger - know when he has been mis-sold a ticket? Where can he check and rely on the answer? I have certainly had correspondence from passengers who have telephoned NRES twice and had two different answers, then gone to the station and paid yet another price for their ticket. I have had the same experience myself when booking tickets for my visit to York, Leeds, Doncaster and return to London tomorrow. And how do operators know that they are not mis-selling tickets? As far as I am aware, there is no industry monitoring which focuses on the accuracy of information and retailing from the passenger's point of view. Why not? Is this not an essential element of accountability.
Mystery Shopper Results Preview
Well, I am beginning to get a good picture of the railway's current retailing and information performance from the emerging results of my mystery shopper survey. The survey focused very much on accuracy, and on the whole range of ticket transactions passengers make. It did not ask trick questions or set out deliberately to devise questions that would fool the most competent of staff. The survey was designed around a total of 11 different scenarios, from the most simple - a standard class ticket for immediate travel - through to advance purchase tickets, with and without railcards, and annual season tickets. For some scenarios, shoppers tested priorities of speed and price where there were alternative routes.
The full report from the consultants was delivered yesterday. We now have to analyse the results, but some issues are already clearly emerging. It should not come as a great surprise to anyone that the railway is generally very good at selling simple products such as cheap day returns and other immediate travel tickets. We would have had a huge problem otherwise. Neither should it come as a surprise that the level of accuracy drops as the enquiry becomes more complex. I should add here that I am using the word 'complex' as the railway uses it. For the passenger, there is nothing particularly complex about a question on travel for two adults and two children in a week's time, returning on a Sunday and wanting to know whether engineering works will affect the line.
But there are more interesting messages. Transactions that involved a first class ticket or an APEX ticket scored less well. Much less well in the latter case - which reinforces what I said in my Policy Statement, that there appears to be a real need to look at the 'retailability' of tickets and whether the industry has created products with little regard for how easily they can be sold. With new products being introduced, this is a live issue which should be a key priority for everyone.
One point that has often been made is that it is unrealistic of me to expect all retail outlets, from the largest to the smallest, to achieve the same level of performance. Initial results in fact show that overall, there is no real difference in levels of accuracy as between small or larger outlets. There is more analysis to do, but I expect it to confirm what operators should already know: that the best systems money can buy will be wasted unless they are operated by properly trained, competent and committed staff. So what are operators planning to do to take care of the human side of the equation? Commitment and customer care from individuals: excellent, but also unsuccessful if the systems are not up to the job.
So what are the next steps. Clearly, we need to complete the analysis of a huge mass of data, both across each scenario for the industry as a whole and then for each TOC. We will need to weight the results so that they properly reflect the relative volumes of different kinds of transactions.
I have already said that I will be publishing the results. I intend to tell individual operators about their results and will be looking for individual action plans to address areas of weakness at operator level. Those plans will need to be specific and monitorable, since they will form the basis on which improvements can be measured, and on which I can make judgements about whether progress is satisfactory.
I will also discuss with operators generally the issues which need industry-wide action: a systems project plan; staff training; information to passengers on fares; and reducing the complexity of fares. On all these issues, I will want to see clear deliverables, prompt timescales and a real impetus towards improvements. I do not rule out enforcement action.
There is a great deal of work still to do. My survey is just a beginning, to set a reliable baseline. Programmes of action will be needed, by TOCs individually and across the industry as a whole. We will need to look at how output objectives might be set, how the industry could undertake credible and robust self-monitoring, and how the Franchising Director and I could monitor and audit the results. Some action can be taken quickly, other plans will take longer to come to fruition. But operators must be clear that I am looking for significant improvements in the shortest practicable timescales.
Roger McDonald said in April that the industry should aim to exceed the expectations of the Regulator. Ivor Warburton said last week, on behalf of the train operators, that they were ready and willing to meet the Regulator's challenge. On behalf of passengers and the wider public interest, I expect operators now to turn those sentiments into the kind of action that will indeed deliver a better railway.
Railhub Archive ::: 1997-06-18 ORR-002