Passenger Transport Companies (PTCs): How to Boost Profits When Revenue Falls - Invest in Marketing
- VOLUME XVI, ISSUE 29
- Executive Insights
Passenger Transport Companies (PTCs) routinely spend millions on marketing. And with good reason – effective marketing campaigns attract new customers, cement loyalty with existing customers and crucially, generate revenue. Yet during tough economic times, marketing spend is one of the first budget items to be cut, despite evidence that increasing, or at the very least, maintaining marketing expenditure is a valuable tool for boosting both revenue and profitability.
Recent analysis from L.E.K. Consulting confirms the marketer’s claims - PTC’s who underinvested in marketing during hard years saw revenues decline, while those who invested achieved a marketing expenditure ROI of more than 500%.
So why do PTC marketers face such difficulties in convincing the Board of the impact and ROI of marketing spend when defending their budgets? In L.E.K.’s experience, it comes down to an inability to accurately isolate non-marketing growth drivers – such as economic conditions, employment and pay, inflation, and service performance- from marketing-derived drivers.
In this Executive Insights, L.E.K.'s Andrew Allum presents a proven solution to this common PTC marketing challenge. By accurately filtering out non-marketing factors and deploying a high degree of analytical rigor in the ROI calculation, L.E.K. successfully shows a clear relationship between marketing expenditure and revenue generation.
Illustrated with real life cases, L.E.K.’s model effectively isolates the impact of pure marketing and demonstrates that cutting back has an adverse effect. The insights from L.E.K.’s analysis have enabled senior business decision makers and marketers alike to accurately determine the optimum level of marketing investment to drive revenue and profit growth.