The Greyhound Turnaround Story - Interview with Andy Kaplinsky, CCO
This is the first from a series “Marketing Rock Stars” that I am planning to conduct this year, interviewing senior marketing leaders about the current realities of transforming marketing.
Andy Kaplinsky is the Chief Commercial Officer of Greyhound (www.greyhound.com) with responsibility for strategy, marketing and transforming the customer experience. Andy has a pretty unique - but cool - background for this role. He has a primarily Finance background, with his last role as the Chief Financial Officer at Greyhound. He was so passionate about the potential for transforming Greyhound, that he stepped out of the CFO role in order to roll up his sleeves and lead change from the front. However, given Andy’s Finance background, he takes a very data driven ‘value creation’ approach to marketing - an approach that I think others can learn from.
Q: Describe the strategic (and marketing) situation and priorities when you first arrived at Greyhound
Founded in 1914, Greyhound is a classic American brand. However, with the rise of cheap competitors, we had focused on price for too long, and under invested in the customer experience. Travelling with Greyhound wasn’t sufficiently differentiated from our competitors. The company was also facing multiple operational problems, including an outdated IT backbone focused on finance and capacity planning, but not serving our customers. Our people were pretty demoralized and our departments were functioning in silos.
The main marketing challenge was that for many potential customers, the assumption was that travelling with Greyhound would involve travelling alongside sketchy individuals, from pickup points in dubious parts of town, on outdated buses, but that’s a mis-perception as we’ve done so much to improve the business. And since we have spent so little on marketing in recent years, we have simply not been in our potential customers’ consciousness. As part of the strategy overhaul, our positioning has moved away from competing on price alone. We aim to be 1) the best of all the bus companies, and 2) “the smart choice for travel” as an alternative to trains, planes and automobiles. We started aligning the Greyhound brand as a modern company - part of the ‘sharing economy”, with convenient routes, comfortable chairs, wifi and entertainment.
Q: Who is your target customer, and how does that impact your marketing priorities?
We primarily target millennials, who value their money, are looking for good travel deals to stretch their travel budgets, and who have a bit of a sense of adventure - often (but not exclusively) students and city dwellers who appreciate the convenience of avoiding driving in traffic, parking or waiting in lines at airports. We need to get our message about the quality Greyhound experience to these people. Finding these groups means totally abandoning the wasteful, mass marketing of the past. This stuff requires precision marketing that ‘old’ media just doesn’t offer.
To add to this complexity, different routes were restructured at different times and our fleet improvement program ramped gradually across the country, so we had to tell our ‘new/ improved’ story as each route was upgraded. For example, once the New York to Boston route was upgraded, we could target potential customers for that route, while ensuring that we didn’t over-promise to customers who might still travel on a route that hadn’t been upgraded.
What role does customer data play and how is it utilized to achieve the business goals?
Research shows that 50m people in the US and Canada would use a bus. However, only 13 million people use Greyhound each year. Therefore, our marketing needs to:
1. Increase our share of trips for those 13m people - we know that of the average 7 total trips that bus riders take per year, they only use Greyhound for an average of 1.8 of those trips.
2. Find and target the other 37m potential Greyhound customers.
3. And eventually expand the potential market into new demographics
Of our 13m customers, our database only includes 5m people, with about half being loyalty program members, so we have a lot of work to do to have meaningful data on all of our customers. Getting them to give us their email address, or download our app, is often the best first step for this.
In the meantime, there is still a lot more that we can do with the current data. We send all of our customers journey update emails as a part of our customer communication strategy. However, that is pretty basic. Using Epsilon data, we are planning to create profile segments of the 2.5m users in order to better understand and segment them. For example, what routes they might use, or why they might want to travel (or have traveled in the past). We can then target customer segments with much more precise messages.
Q: What are your core metrics and how do you measure results?
We used to focus on sales-to-advertising ratio, but that can lead to unexpected consequences. We look at traffic metrics and conversion by source to look for opportunities across our marketing tactics. And we are beginning to measure engagement from those who visit us from our ads by understanding their activity on our website and re-targeting with more personalized messages. Eventually, we will be exploring ways to measure customer lifetime value to unlock and understand the true potential of our marketing activities. Also, with our focus on customer engagement, a key operational metric for us is the Net Promoter Score, which we are using to measure our progress toward delighting our customers and giving us insights into the critical pain and joy points along the entire customer journey.
Q: What are the key marketing capabilities that you need to build in order to achieve those goals?
When I arrived, our marketing department was functionally siloed, and the CFO owned pricing and product. The traditional advertising team was separate and fundamentally 'old school'. We had no real consumer insights or CRM team, so we had to build it from scratch.
Currently we are building a Business Intelligence group to pull everything together using Tableau. We brought in pricing experts and now all marketing and customer experience is consolidated under me. The team has grown from 50 people to 75, which was paid for by cutting back on 'mass marketing' (offline brand building budgets).
Q: How aligned are the CEO and other execs around the role of marketing?
I would say the key people are very aligned. For example, we have a joint technology roadmap, hence we use same dashboards for all functions. There are some mirrored marketing and IT key roles who sit together with aligned goals, focused on e.g., the mobile app, consumer data, pricing and capacity planning.
A major driver of the NPS score is on-time performance, so we have a dashboard by location which is exposed to and viewed by all key people.
Q: How are you leveraging new creative ways to reach your potential customers?
We are refocusing our ad budgets on more precise targeting via email and social media. We only want to target people if they are the right demographic (millennials 18-34, lower income, with reasons to travel). Even better is for people who we can predict which routes they might take (e.g. a student in New York with family in Boston could be targeted with details of that particular route). We also are currently tapping into influencer marketing, which we see as a great potential channel for us. For example, we are currently working with travel bloggers, who are very appealing to the younger crowd. And we are very excited about one we just launched where we challenged a very talented musician to make a rap video using our bus as his instruments. Our videos perform very well with our existing customers (targeted via email marketing or custom audience targeting on Facebook).
We are also looking into partnerships with other brands, for example, we partner with Parking Panda to assist our customers with parking near our terminals and we have a very successful partnership with Priceline to see hotel rooms. We also integrate with Google Transit to get our buses listed as public transportation options for people.
Q: What keeps you up at night?
We’ve come a long way: we are growing when our competitors are shrinking. On time performance used to be 62%, but is now up to 80%. Our marketing has gone from being a cost center to a value creation group. With all the support across the board we have ambitious plans, and the changes that we have made so far are exceeding our expectations. But the complexity of what we are doing and the speed at which we are trying to go, sometimes causes unexpected consequences. My biggest fear is not being able to achieve our aggressive timeline and while I am confident in what we are doing, I am afraid of over-promising and under-delivering.