Hello Again

Hello again
15th August 2008
© Miles Calcraft Briginshaw Duffy, August 2008

Our strategic building blocks
Task What are we trying to achieve?
Target Who do we need to talk to?
Message What do we need to say to them?
Tone How do we need to say it?
Response What do we want them to do?
Channels Where do we reach them?

Task What are we trying to achieve?

You have some very ambitious targets
Sources: Pitch Brief, Mintel 2008

You also have 4 potential sources of growth
The number of trips per

Rail’s share of leisure trips in
person in the UK has been
the UK is just 2% 4
declining for a decade 3
TRAVEL MODAL
GROWTH STEAL
FREQUENCY COMPETITIVE
STEAL
VT currently provides just

49% of your active base has 3.7% of the 600m
only purchased once 1 non-commuter UK
passenger journeys 2
Sources: 1 CMD Data, 2 Mintel 2008, 3 National Travel Survey, 4 Transport Statistics Bulletin 2006

You will need to develop all of these to meet your targets
3.9m 3m
21.8m journeys 31.2m journeys
1.5m 1.2m

But travel growth is particularly important
Get people to travel more to

Virgin Trains destinations
By train
Specifically, by Virgin Trains
More often
Not only is travel growth the biggest volume opportunity

in its own right, it is also the gateway to all other tasks

Stimulate travel then maximise

Task modal/competitive steal and frequency



Prioritising the different audiences
The specific nature of The scale and nature

the extra capacity of the task
Leisure travellers should be our key focus

Although we should be careful not to alienate
business travellers
And should encompass commuters
in key locations

We have many tools to help us understand this audience
Needs/Attitudes Geography Needs
‘Ocean’ Station Lifestage

Segmentation Segmentation (Affluence)
Engagement Past Behaviour
Customer Only: Recency, Booking History

Frequency, Value
But where and how do we use these to improve the

effectiveness of our communications?

We need to understand the most appropriate role for each
Engagement
Recency, Frequency, Value Drives CRM contact strategy and budget prioritisation
Past Behaviour Used to tailor creative to reflect past booking behaviour

Booking History (Need investigative analysis to determine value of approach)
Geography Required to deliver meaningful destination-driven

Station Segmentation communications (across direct and local marketing)
Needs Key differentiator used to tailor creative by travel requirements at

Lifestage (Affluence) destination & onboard (not to create stereotypical executions!)
Needs/Attitudes
‘Ocean’ Segmentation Profiles enrich all creative briefs, rather than driving selections

And then bring the tools together
Direct
RFV
‘Ocean’ Segmentation
Booking
History
Local
Geography
National/
Regional Lifestage
(Affluence)


Target Leisure travellers, segmented effectively


We agree with your over-arching brand positioning
Most Valuable Travel Time
Time Time Our Value for Sustainability

efficiency enrichment people money

However, we don’t think you should brand VHF separately
• Ultimately, the brand we are building is Virgin Trains

•
• VHF is a perfect exemplar of the Virgin Trains brand positioning and pillars
•
• Therefore, it doesn’t require its own name or branding
•
• And could actually confuse customers, if it were given one
We believe the benefits of VHF would be communicated more

strongly without a sub-brand “getting in the way”

This brings us to the key tension in the brief
How to communicate
Without making
the benefits of VHF
Virgin Trains a
in an exciting,
hostage to fortune
enticing way

This is a linguistic minefield
A re
volu
tion
. ..
n... You will...
c a
You
ry
Love eve .. The
second So good. best
...
Any concrete promise of radical superiority

would be highly risky for Virgin Trains and VHF

The proposition we shared with you last time
Do more, with Virgin Trains
Too didactic
Un-Virgin
Still a promise

How our thinking has evolved
Not a promise But an invitation
Concrete statement Open ended question
From us To you
1 way Interactive
A guarantee to experience A chance to experience us

us at our best at our best


Target Leisure travellers segmented effectively
An invitation to travel with us, rather

Message than a concrete promise
Channels Where do we need to say it?


Target Leisure travellers segmented effectively


The Virgin brand can encompass different tones of voice
Youthful Intelligent
irreverence wit
While many values are shared across all companies,

the precise tone must be influenced by market, audience, task etc

What is the right tone for Virgin Trains?
Youthful Intelligent
irreverence wit
Like a great train journey:

inspirational, magical, thought-provoking


Tone Inspirational, magical, thought-provoking



We want them to book online in advance on virgintrains.com
• Most cost-effective booking channel for Virgin Trains

•
• Encourages a shift from ‘walk up’ to ‘plan in advance’
• Helps tackle price perceptions
Crucially, creates data, from which we can build a CRM programme

We need to encourage people to do this
• Give them clear direction

Every communication should ask people to ‘book in advance at virgintrains.com’
• Incentivise and reward their ‘good behaviour’

We have developed a reward scheme, fully integrated into the website
Once we’ve got them there, the site needs to be right…

What do people want and expect from virgintrains.com?
“Easy. That’s all I want.” “I suppose I’d expect [the “I’d try Google for travel
(Booked on virgintrains.com)
Virgin Trains website] to ideas.”
be quite fancy.” (Booked on thetrainline.com)
(Walk up)
The audience have the answers

We need an online experience that works for everyone
User mindset: Browse Seek
Type of content: Inspiration & Information &

Brand engagement Functionality
Result: Convert to seek! Buy tickets!

User Experience is Brand Experience
Your 7 stage booking process


Encourage and reward people for booking in

Response advance at virgintrains.com


Encourage and reward people for

Response booking in advance at virgintrains.com

Our approach
Channel Based on the Driven by the

neutral customer 4 business
journey tasks

Given its importance, we should use a broad range of
channels to drive travel growth
The number of trips per
Rail’s share of leisure trips in
person in the UK has been
the UK is just 2% 4
declining for a decade 3
TRAVEL MODAL
GROWTH STEAL
COMPETITIVE
FREQUENCY
STEAL
VT currently provides just

49% of your active base has 3.7% of the 600m
only purchased once 1 non-commuter UK
passenger journeys 2

In summary: our strategic building blocks

Drive traffic to Virgintrains.com and

Response ensure that it delivers on the brand
A channel-neutral strategy, dictated by

Channels the 4 commercial tasks

Our idea

Travel growth

Modal steal

Competitive steal

Frequency

Points or Prizes?
Points Prizes
PROS Transparent benefits structure
Ability to ‘save’ for significant reward
Immediate consumer gratification
Element of surprise – especially with ‘Wild
CONS Delayed consumer
Balance checking &gratification
redemption are additional
High set-up & management cost
Lack
Card’ofrewards
Less
transparency around benefit structure
control of reward
contact points with consumer Bulk of rewards deliveredredemption
on-board, reinforcing
Slow
Can beto used
deliver businessnon-direct
to capture impact customer benefits of travelling Virgin Trains
Requires
details significant delivery infrastructure Low set-up & management cost
Swift business impact
Bold: Consumer
Italic: Business

Travel Treats
Objectives

 Get people to ‘book in advance at virgintrains.com’

 Migrate people to book virgintrains.com not TTL or raileasy
 Keep them coming back

Who are they for ?


 Everyone who travels on Virgin Trains, but only if you book direct at
virgintrains.com
 Applicable to everyone – leisure, business, families, empty nesters,
shoppers, lake district holidaymakers, football fans, everyone!
•

How Travel Treats would work
Book online at virgintrains.com
Medium and Wild Card fulfilled Repeat bookers

Revolving list of rewards – ‘what would you like
higher this
value time?
/ more
by post chance of Wild Card
Low to Medium fulfilled on Train – hand voucher and Print

showVoucher
ticket / Code on ticket

Travel Treats
< £0.50 £0.50-£1 £1-£2 £2-£5 Wild Card
On the train On the train Train/Post Post Post
Infrequent More
Low value frequent
High value

Thank you

Appendices
1.Growth potential calculations

2.
3.CRM impact & costings
4.
5.Our approach to evaluation
6.
7.How we would handle the soft launch

1. Growth potential calculations

We estimate the opportunity from existing relationships
to be c. 1.5m journeys
•If 25% of our 644k active ‘one trip’ customers make 644,000 journeys
1 journey per year for the next 4 years
•If 50% of our 387k active ‘tentative’ customers make

387,000 journeys
2 extra journeys over the next 4 years
•If 75% of our 282k active ‘frequent’ (5+) customers

make 1 extra journey over the next 4 years 212,000 journeys
•If 90%*of our 325k multi-trip recently lapsed

customers make 1 extra journey over the next 4 years 282,000 journeys
Total: 1,525,000
* We use this figure because, on average, 10% of recently lapsed become long-term lapsed customers
Source: CMD Data

We estimate the opportunity from competitive steal
to be c1.2m journeys
•Using station footfall a proxy, we calculate that c. 30% of the Virgin Trains
network is competitively overlapped by London Midland*
•
•Assuming equal distribution of journeys across the network, this represents
6.54m of the total 21.8m journeys generated by Virgin Trains
•
•Applying the dramatic 18ppts share shift achieved in 04/05 on the London –
Manchester route with the introduction of Pendolino trains (but assuming this sort
of steal would take 4 years, not 1, under these circumstances)
1.1772m new rail journeys
* Based on Watford, Milton Keynes, Rugby, Coventry, Birmingham New St, Wolverhampton, Stafford,
Tamworth, Crewe & Stoke on Trent

We estimate the opportunity from modal steal
to be c.3m journeys
•We each make, on average, 20 trips per year of 50 mins or more

•
•83% of these long distance journeys in the UK are currently made by car
•
•There are c. 25m ‘main driver’ car users in the UK
•
•Which means there are 415m long-distance car journeys being made in the UK
annually (25m x 20 x 83%)
•
•Assuming a possible 5% annual modal shift
(3.7% 05/06 + carbon goodwill coefficient) 83m new rail journeys
•
•Of which Virgin Trains natural share is 3.7%
3.07m
Source: Annual Travel Survey 2006

We estimate the opportunity from incremental
market growth to be c1.8m journeys
•Current annual leisure travel market growth 1%
•This equates to c.1.5 billion journeys over 4 years
•Of which rail’s projected * share is 3.32%

49.8m
•Of which Virgin Trains’ current share is 3.7%
1.84m
* 2.21% + 50% to reflect rail initiatives and favourable consumer trends

Source: National Travel Survey 2006

However, there is a more aggressive view of the market
stimulation that could be achieved
•1037 trips x 22.2 minutes per trip = 384 hours travel per person per year
•Assuming we all devote a similar amount of time to travel, but the trip time improves
to 1997 levels
•384 hours ÷ 20.4 minutes per trip = 1129 trips = + 9%
•We have 4 years, not 10, so let us say 4%
•There are 98m medium range rail trips (50 – 100 miles) in the UK annually
•98m x 4% = 3.92
Source: National Travel Survey 2006

2. CRM impact and costings

Estimated impact and costings of the
CRM programme
Total cost*: £476k

Incremental transactions: 107k
Estimated Pax***: 207k
Incremental return: £6.2m
ROI**: £13
* Costs include postage, production and distribution – agency fees and incentives excluded
** ROI is estimated revenue per £1 marketing spend.
Average transaction value calculated from 07/08 data within CMD presentation
(£147m revenue / 2.5m transactions - inc. rounding)
*** Same source shows 4.9m pax from 2.5m transactions – 1.9 pax per booking
Volumes assume 70/50% penetration of emailable/mailable addresses. Actual penetration unknown
3. Our approach to evaluation

Our approach to evaluation
Overarching brand
perceptions
(Brand Tracking)
Attitudinal
Change Overall business impacts
Brand Building (Econometrics)
Specific impacts
(Regional Testing)
Customer Perceptions
Direct Response (Advocacy/NPS)
Immediate
Action Immediate Impact
(Response
Tracking/Matchback)
We need to develop an evaluation framework that brings together the tools

available – especially given the inherent gaps in reporting of non-direct
bookings

4. How we would handle
the soft launch

How we would handle the soft launch
Internal Geographically Contingency

communications targeted email email
More broadcast, but still

“controllable” media e.g.
radio and press advertising
Full launch

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Hello again

15th August 2008

© Miles Calcraft Briginshaw Duffy, August 2008

Task What are we trying to achieve?

Target Who do we need to talk to?

Message What do we need to say to them?

Tone How do we need to say it?

Response What do we want them to do?

Channels Where do we reach them?

© Miles Calcraft Briginshaw Duffy, August 2008

Task What are we trying to achieve?

Target Who do we need to talk to?

Message What do we need to say to them?

Tone How do we need to say it?

Response What do we want them to do?

Channels Where do we reach them?

© Miles Calcraft Briginshaw Duffy, August 2008

Sources: Pitch Brief, Mintel 2008

© Miles Calcraft Briginshaw Duffy, August 2008

The number of trips per

VT currently provides just

© Miles Calcraft Briginshaw Duffy, August 2008

21.8m journeys 31.2m journeys

© Miles Calcraft Briginshaw Duffy, August 2008

Get people to travel more to

Specifically, by Virgin Trains

Not only is travel growth the biggest volume opportunity

© Miles Calcraft Briginshaw Duffy, August 2008

Stimulate travel then maximise

Target Who do we need to talk to?

Message What do we need to say to them?

Tone How do we need to say it?

Response What do we want them to do?

Channels Where do we reach them?

© Miles Calcraft Briginshaw Duffy, August 2008

Stimulate travel then maximise

Target Who do we need to talk to?

Message What do we need to say to them?

Tone How do we need to say it?

Response What do we want them to do?

Channels Where do we reach them?

© Miles Calcraft Briginshaw Duffy, August 2008

The specific nature of The scale and nature

Leisure travellers should be our key focus

© Miles Calcraft Briginshaw Duffy, August 2008

‘Ocean’ Station Lifestage

Engagement Past Behaviour

Customer Only: Recency, Booking History

But where and how do we use these to improve the

© Miles Calcraft Briginshaw Duffy, August 2008

Past Behaviour Used to tailor creative to reflect past booking behaviour

Geography Required to deliver meaningful destination-driven

Needs Key differentiator used to tailor creative by travel requirements at

© Miles Calcraft Briginshaw Duffy, August 2008

© Miles Calcraft Briginshaw Duffy, August 2008

Stimulate travel then maximise

Target Leisure travellers, segmented effectively

Message What do we need to say to them?

Tone How do we need to say it?

Response What do we want them to do?

Channels Where do we reach them?

© Miles Calcraft Briginshaw Duffy, August 2008

Target Leisure travellers, segmented effectively

Message What do we need to say to them?