Reference no: EM131630371

Question: Société de transport de Montréal (STM) Implements Innovative Mobile App

Montreal, in the Canadian province of Quebec, is considered one of the world's most livable cities. The city, whose official language is French, is the culture capital of Canada with opera, museums of history and fine art, a symphony orchestra, cathedrals, many fine restaurants, and international jazz and comedy festivals. The Société de transport de Montréal (STM) is the bus and metro public transit system serving roughly 1.4 million daily passengers in the greater Montreal area. STM riders can use a rechargeable smart fare card-called Opus-on which riders can add and maintain a balance to cover their transit fares.

STM tracks use of the Opus card to capture passenger riding history. This data has revealed an alarming problem-STM is losing about 13 percent of its riders through attrition each year. Analysis shows that this attrition can be attributed to a variety of causes, including deaths and moves out of the city. STM also determined that some amount of attrition is due to university students who, upon graduation, quit riding the STM and purchase or lease an auto to commute to their job.

After a year of looking at options, STM decided to launch a six-month pilot loyalty project to combat this problem. The scope of the project, which is limited to about 20,000 current riders, will test if the proposed solution works, identify full implementation costs, and identify any potential barriers to success as well as unintended consequences of the program. Results from the pilot will be used to modify the initial solution and/or rollout plan. The pilot project must meet certain predefined success criteria in order to support a recommendation for a full rollout.

The foundation of the loyalty program is a mobile app called STM Merci, which presents riders with exclusive, personalized offers based on their user profiles, travel habits, and level of ridership: top-tier, mid-tier, and first-tier. For a particular offer, for example, tickets to the Opera de Montreal, 100 top-tier riders might receive an offer for free tickets, while 100 mid-tier riders are offered 50 percent off tickets and 100 first-tier riders are offered 20 percent off tickets. STM hopes to recruit a large number of event and commercial partners willing to participate in the program in return for the strong geo marketing opportunities created from having riders view an offer on their mobile phones, often when they are literally feet from the promoted commercial location.

The STM Merci app can also communicate useful information to riders in real time. For example, it can let riders know that by taking a slightly later car from their usual station on a given day, they would have a much better chance of getting a seat. Or it could point out when they were spending more on single fares than the cost of a monthly pass (about $77 per month).

The app is carefully designed to allow riders to select how they want to interact with the STM Merci system. Riders who enter their Opus card number into the STM Merci app will receive more targeted and relevant offers based on the data in their profile. For example, riders whose profile indicates an interest in painting might receive an offer for a discount admission to Montreal Museum of Fine Art. Sushi lovers might get an offer for a free appetizer at a restaurant within a stop or two of their current location.

The data needed to support the STM Merci app is split into two separate databases to protect riders' right to privacy. Data deemed critical to running the STM operation-such as a rider's email address and ticket purchase history-are stored in one database under the rider's first name. This data is used to notify riders about delays, closures, and other mission-critical issues. Noncritical rider profile data, including food preferences, hobbies, and interests, is stored in a second database under the rider's last name. No marketer can access the two databases and merge them to send messages to an individual rider. This separation of databases satisfies Quebec's strict privacy laws, which prohibit collecting rider data beyond what is deemed critical for the organization.

Critical Thinking Questions

1. Identify four success criteria for the STM Merci pilot project that address retention of riders, cost/benefits, recruitment of STM Merci partners, and usability of the application. The criteria should specific, quantifiable, and time constrained to occur within a certain time period.

2. Do you believe that the database design will safeguard the privacy of STM riders? Why or why not? If not, what further changes are needed? 3. How might STM Merci pilot project members identify additional capabilities or features that could be added to the STM Merci app to encourage increased ridership?