Appetite for Disruption

Restaurants, retailers partner with STM Mobile Loyalty Program

Technology-enabled customer disruption is not strictly the province of retailers. Montreal’s public transportation authority, Société de transport de Montréal (STM), is in the midst of a successful pilot of a loyalty program that uses advanced geolocation and real-time mobile messaging to disrupt the public transportation customer experience. And in another sign of how traditional silos in the customer experience are falling, retailers are playing an active role. 

In May 2013, STM launched a pilot of an opt-in mobile loyalty program aimed at the 2.5 million holders of its “OPUS” smart cards that store fare purchases and personal passenger information.

“The key objective is to generate additional fare and non-fare revenue by focusing on customer retention and improving the customer experience,” explained Pierre Bourbonnière, director of marketing, STM. “We want to give customers incentives to take public transit more often.”

Instantly Gratifying Consumers

To that end, STM has partnered with 1,340 organizations, including 340 retailers such as IGA and Uniprix, as well as bars, restaurants, museums and theaters, to offer special discounts and incentives for using public transportation. Participating customers download a mobile iOS app and enter their OPUS number, which provides the basic information used to generate mobile offers. This avoids the use of loyalty cards or reward points. Customer data is split between two different databases and only combined at the moment a personalized offer is generated, thus satisfying Quebec’s strict consumer privacy laws.

“What kids want today is instant gratification, and we give it to them,” Bourbonnière said.

Getting Granular With Geolocation

Using the SAP Precision Retail solution, STM performs granular segmentation of customer data, and then combines behavioral information with real-time geolocation data to send real-time, individually targeted offers that are contextually relevant.

“If you’re walking past a coffee shop and get a special offer for coffee, you’ll probably take it,” Bourbonnière said. “Or riders on their way home from work thinking about what they’ll make for dinner that night will get a discount at a local supermarket.”

Results to date indicate that by leveraging leading-edge mobile, behavioral analysis, geolocation, and real-time communication technologies, STM has achieved disruptive results both for itself and its retail partners through this pilot.

So Far, So (Very) Good

“We were the No. 1 app in the Canadian App Store the first few weeks of the pilot,” Bourbonnière recounted. “We have sent 3.7 million offers in batches of 10, and the top 10 had a 67% click-through rate and a 64% validation rate. One-in-three offers had a 10% click-through rate, compared with the typical 1% to 2% click-through rate for that type of offer.”

Other results include 24% of pilot participants increasing their usage of public transportation, 57% discovering new destinations and 47% taking a friend along for at least one discounted offer. Results for retailers have been profitable enough that 10 large and 100 small retailers have agreed to start paying for inclusion in the app as STM expands the pilot into a rollout to 250,000 riders.

“We hope to have 250,000 members in the next 18 months and generate $4 million in fare revenue and $6 million in non-fare revenue [mostly from participating retailers] in the next three years,” Bourbonnière said. “We also plan to launch an Android app. We’re putting the right offer in the right time and place.”

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