What a Freedom of Information request revealed about East Coast Rewards

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• Rob says:

  8 Mar8 March 07:17

  its not that profitable – isn’t this a multi-billion pound franchise? Looks more like a rounding error in the bigger scheme of things…?

  • Danksy says:

    8 Mar8 March 07:24

    I agree to a point, but most businesses would take a £2.3bn rounding error!!

    • Blair says:

      8 Mar8 March 08:04

      And even a £2.3m rounding error is acceptable.

      • Danksy says:

        8 Mar8 March 19:31

        Lol 😀

    • Lloyd says:

      8 Mar8 March 08:08

      million not billion!

• Chris says:

  8 Mar8 March 08:15

  The problem that made EC Rewards unattractive to any potential bidder was the fact the EC management didn’t move it on at any point until the last couple of months and that was probably Virgin looking at the points liability.

  Fares went up every year but the points required never went up, so every time there was a dare increase an already very attractive scheme looked even more attractive. Everytime there was an increase there should have been a devaluation whether or not the scheme made money. At the very least it should have been run with the aim of standing still.

  Virgin have ran Flying Club for years and I’m guessing someone looked at this scheme and almost laid an egg.

  The scheme has gone and will not be back that’s for sure. While the attempts to save it have been admirable some of the diatribe online particularly Facebook has been a joke and is embarrassing.

  Some of the names Soutar and Branson have been called over the last week have been shocking and these people should be blocked from posting.

  Also food for thought – whilst Nectar is pretty poor had the franchise been 100% Stagecoach there probably wouldn’t even be that. EMT have nothing.

  • Save East Coast Rewards says:

    8 Mar8 March 12:12

    We would not have minded if East Coast enhanced the scheme BA style as long as it was still significantly better than Nectar.

    One suggestion I made was they keep EC Rewards as the base currency and add Nectar and Flying Club as transfer partners. That way they could keep any obligations to Nectar while also offering a scheme that encourages travel.

  • Paul says:

    8 Mar8 March 18:40

    You make some good points Chris! I think perhaps they should have put the number of points up in line with ticket prices, however the new scheme with Virgin is awful, and at the very least they should have kept the set number of points to get a ticket, rather than just give you vouchers.

    As for the things that people have said on Facebook, some people are not as good as others at expressing their frustrations but I think its good to see that so many people are passionate about the issues, and lets face it neither Soutar or Branson are whiter than white in their dealings (although they would like to appear so!)

    • Rob says:

      8 Mar8 March 19:49

      It is more passion than you will ever see spilt over Nectar, that’s for sure! I think any announcement that Nectar was being closed would be met with a mild shrug of the shoulders at most.

• Rob says:

  8 Mar8 March 09:48

  Saying that the cost of redemption sales is nil IF people only use it for additional trips is a big IF. Also the effect of more people on the trains would still have a higher cost to serve even if the cost was nil.

  But I don’t live anywhere near the east coast franchise so maybe I am being to forgiving.

  • mark2 says:

    8 Mar8 March 10:05

    Surely it is only zero cost if also the seat would otherwise have been unsold for cash.

    • Rob says:

      8 Mar8 March 10:54

      You have to assume, like BA, that you only release seats you won’t sell.

    • JQ says:

      8 Mar8 March 12:27

      But seats on non-reserveable trains are unlimited in theory, or did EC only let you redeem for reserveable tickets?

      • Oyster says:

        8 Mar8 March 12:54

        You needed a reservation. Just like normal advance tickets.

• tony says:

  8 Mar8 March 10:21

  Yep, I’m saying this is a huge assumption to claim the journey wouldn’t otherwise be made – I know I redeemed tickets for both myself and my wife that we needed to make. There are also going to be a lot of small business owners who would simply use the rewards scheme as a way of keeping costs down.

  Let’s say the average cost of a 1st class advance ticket is £50. If 1 in 12 make a redemption like this over that nine month period then you’re back to zero – and with the catering (& especially the alcohol) there was a real cost associated to each redemption, too.

  • Chris says:

    8 Mar8 March 11:24

    Yes, that was how I looked at it also. As Raffles said you would assume they would only release seats they wouldn’t sell, however quite often peak time trains were in there as well which made it look even more attractive.

    If you were redeeming for a standard class ticket, lounge pass or wifi the cost to EC would have been negligible. Redeeming in first class would have cost more but probably not much. Factoring in food and say two rounds of drinks as well as the tea and coffee you are probably looking at between £6 and £10 a head tops – bearing in mind they will get the stuff at cost.

    So to work out if it was profitable all those £6-£10s have to come off the total as well.

    Running the scheme probably never cost them anything but it certainly hasn’t made them millions.

    • Will says:

      8 Mar8 March 11:43

      Although one more thing that’s not factored in is the amount of u redeemed points outstanding. That’s quite an important number not mentioned above. Interesting nonetheless.

• callum says:

  8 Mar8 March 11:49

  I’m not really convinced the campaign had anything to do with the generous conversion deal (not that it is particularly generous, 3p of nectar points for each point, which could have gotten much more value with a redemption).

  And your assumptions that reward seats cost them nothing are wholly unjustified. I’d personally assume the opposite – that the majority of people who redeemed did so instead of paying for a trip – train travel habits aren’t remotely comparable to flying on BA, not least because the driving factor for the BAEC is to encourage you to fly them over the dozens of alternatives, something train companies don’t really have to do. Granted my viewpoint is just an assumption too, but why would Virgin give up such an allegedly profitable scheme? And if it’s so great, why has no other train company made one?

  • Save East Coast Rewards says:

    8 Mar8 March 12:03

    I personally think it was just a bunch of assumptions and bad planning on the part of Virgin. Their director of marketing used to work for Virgin Trains (the west coast one) where Nectar was a success because it never replaced anything (their Traveller scheme for high spenders still exists, now on East Coast high spenders are much worse off). They probably didn’t do much research into rewards and thought the same formula of offering Nectar would work just as well here.

    As for other companies. The Arriva group (Grand Central, CrossCountry, Chiltern, Wales) have sent out surveys asking what people would like from a loyalty scheme. Hopefully they have taken note of the popularity of EC Rewards (the timing of the survey seems to imply they’ve seen how many people used the East Coast scheme) and will launch something that’s not Nectar.

    • callum says:

      8 Mar8 March 12:12

      Which is all just one huge assumption based on your preconceived bias – you liked East Coast how it was and want it to stay that way.

      Everyone, including Arriva and Virgin Trains East Coast, have been well aware of its popularity for years. That is not the issue. The issue is whether it’s profitable or not – clearly they do not think it is. And as they are the ones with the customer data on it (your claim that the person in charge just randomly scrapped it and blindly installed Nectar is blatantly absurd), I’m more inclined to believe them!

      • Paul says:

        8 Mar8 March 19:05

        Callum, given that the old scheme had 670,000 members, you have to ask yourself why they didn’t keep the existing scheme, or even if it wasn’t profitable, why didn’t they engage with all the members?

        Even if their plan was to bring in Nectar all along, they could have avoided all the negative feeling and at least made it seem like they had got member opinions rather than they surveyed 2,000 people ( such a small percentage of both their reward members and indeed their overall customer base) and made themselves look better.

        As they didn’t do any of this and if they decided that the old scheme was far too generous, they have managed it all very baldy which makes me think that its likely they did randomly scrap it without too much though in the blind hope that people would think Nectar was a good ideas as its such a popular loyalty scheme already.

        • callum says:

          8 Mar8 March 21:30

          Because people whinging about not getting free stuff isn’t as useful to a business as you seem to think it is!

          I’m astounded so many people think this discontent comes as a shock to Virgin. Just like with the BA valuation, they have more than 2 brain cells and are well aware people prefer more free stuff to less free stuff. The more pertinent point is will scrapping the scheme result in less ticket income. They think it won’t. You presumably think it will – in which case, what do you know that they don’t?

        • callum says:

          9 Mar9 March 00:31

          Firstly, the vast, vast majority of their customers are not whinging about it online. Secondly, it’s not “business savvy” to avoid negative press at any cost. You genuinely think it makes business sense to spend/lose millions upon millions of pounds just to shut up a few whinging people who will give up and stop within a few weeks anyway? And you really think enough of these people are going to stop using the train to actually matter?

          So you know virtually nothing about the economics of it then – in which case, why on Earth should I listen to your business lessons on the subject?

        • Paul says:

          9 Mar9 March 10:06

          Callum, I didnt say avoid negative press at any cost!

          Its costs virtually nothing to survey their existing rewards members using online tools, so no, I dont think its worth spending millions on avoiding negative press – my point is that its very cheap to do so and so it just requires a bit of thought – surely thats what their marketing team is paid for.

          I also didnt claim that enough customers will stop using the service – that was just your interpretation of my comments, nor did I claim to have all of the answers in terms of lessons of business, and I am not saying that just because a few people complain that people will stop using the service.

          My point is that its very easy to manage the messages on social media, and the fact that they appear to have ignored customers concerns rather than address them makes me think they have just mismanaged the whole message around rewards and Nectar – which would suggest to me that they don’t really know what they are doing.

        • callum says:

          9 Mar9 March 13:35

          Paul, I didn’t say spend millions on doing a survey… If they did a survey, they would discover people prefer the old scheme (though as that’s blatantly obvious I have no idea why a survey needs to be done at all). Unless you’re suggesting that they just ignore the survey results, keeping the old scheme would cost them millions.

          No it isn’t… The only way to “manage” them would be to have someone censoring the page – which will probably annoy people even more. People do not want to get less rewards for the same purchases, and will not hesitate to throw a hissy fit on the Virgin Trains Facebook page regardless of how much Virgin try and spin Nectar to be a good thing. It’s incredibly easy to criticise, but unless you can suggest a better tactic then you have no basis whatsoever to make claims like “they don’t know what they’re doing”.

        • Paul says:

          9 Mar9 March 18:39

          Callum, I just did suggest a better tactic!

          They should have surveyed the existing members, to make them feel listened to – it doesn’t matter weather they were listened to or not, they could have done it just to make them feel better – its all about how you position these things.

          They then announced that they only surveyed a random sample of 2,000 customers which weren’t even part of the rewards scheme.

          Its too late for them now, but the reason I claim that they don’t know what they are doing is because they released that information about the survey they did do.

          They already knew that they had 670,000 existing members so no one is going to agree with them that 2,000 random customers opinions gives you an insight into existing customers wants from a rewards scheme.

          Are you telling me these are the decisions of an informed marketing team?!

        • callum says:

          10 Mar10 March 00:00

          So your suggestion for a better way to handle this is for them to ask people what they want, they say they want it kept how it is, Virgin says tough it’s changing and then somehow they “feel listened to”? Do you really think their customers are that thick?

          Actually, most people who understand how statistics work would agree it could give a decent insight into this. The exit poll for the last general election surveyed 16,000 people to cover the votes of 30 million people. They predicted the Tories would get 307 seats, they got 306. They predicted Labour would get 255, they got 258. Seemingly small sample sizes to a layman can actually be incredibly accurate.

          I see no reason as to why they couldn’t be the decisions of an “informed marketing team”. While you say you’ve given an example for a better tactic, I don’t think it even touches on how Virgin should have marketed Nectar better than they have done.

        • Paul says:

          10 Mar10 March 09:23

          No, Callum I dont think customers are that thick, but I do think it would make them feel listened to, and Virgin would have a much stronger argument to say that they had consulted with rewards members about what they want.

          Your information around statistics would be relevant but its fundamentally flawed. They didnt survey 2,000 rewards customers. They surveyed 2,000 random customers and they made it pretty clear that they didn’t specifically target existing members.

          I would agree with you if they had sampled 2,000 existing rewards members but they didnt.

        • callum says:

          10 Mar10 March 13:21

          Well it certainly sounds like you think they’re utter morons! You’d have to be if you’d feel “listened to” when a company asks you what rewards scheme you want then completely and openly ignores it! (Unless your suggestion was that they fabricate the survey results?) For the ten millionth time, its MIND-NUMBINGLY OBVIOUS that people prefer more free stuff over less free stuff. Your insistence that that question needed to be asked is beyond absurd.

          Virgin surveying it’s customers is a completely valid methodology – they are not there for the sole purpose of catering to East Coast Reward members. Other people do matter you know!

• Aeronaut says:

  8 Mar8 March 12:40

  All rail ticket retailers get a 5% commission, that’s how the system works. It used to be 9% until fairly recently.

• Lady London says:

  8 Mar8 March 14:31

  Fascinating. Just think how much more profitable an airline frequent flyer scheme must be then..

  Wonder if we could get the equivalent information on the Avios scheme by a Freedom of Information request? that would set the cat amongst the pigeons ! 🙂

  Well done Raffles.

  • mark2 says:

    9 Mar9 March 10:34

    I think that it is fortunate that BA aren’t subject to FOI information; if they were they would still be nationalised and I doubt that we would be getting Avios!

• Joe says:

  8 Mar8 March 15:36

  Do you know if they will be bringing traveller to East Coast?

  • Save East Coast Rewards says:

    8 Mar8 March 15:59

    They did promise extra benefits for their loyal passengers (this wasn’t on their original lists of things to be offered but was added a week or so after we started campaigning). At the time I thought it may be something like Traveller or one of the older schemes such as GNERtime which rewarded their high spenders.

    However, when I asked on Twitter I was told these additional benefits would not be launched until 2016.

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