John:
I'm waiting for a long-running job to complete on a computer, so I thought I'd mention something that always drives me crazy about these conversations.
wow... that was a long running job... this short note turned into a whole stupid editorial... sorry
Annoying Background:
In the consulting industry (whether legal, medical, computer, engineering, or *any* other kind of consulting), "billable hours" is the ONLY measure of real revenue. For us, it's the product we sell. We might change the rate, we might cut special package deals, we might get some co-development sales for products, we might even do some pro-bono work. But, we live and die by racking up hours. Every crazy fun thing we enjoy (annual events, monthly meetings, new laptops, advanced training, etc.) is paid for by billed hours -- our product sales. We all know this, and so we do our best to execute at a high level, and bill all the hours that our client will pay. After we're done, we enjoy what's left.
For rail fans, employees of the railroad, local citizens, and the Friends of the C&TS, everything we enjoy about the railroad is part of that "crazy fun" that isn't part of revenue generation. Without product sales, i.e., tickets sold, we can't have fun. The logical extension is that for the operator and all us hangers-on,
everything is really about selling tickets.
Because we're never satisfied with a certain level of fun, we can't be satisfied with a certain level of sales. 40,000 seats might keep the doors open, but it won't pay for a rotary run or best boiler color competition. 50,000+ seats is nice, and it might pay for a rotary run or technicolor trains. 60,000+ seats is better, and it might pay for winter weekend trains over the pass, but it won't pay to rebuild 483.
It's worth noting, that without selling product, any cash you find always comes with restrictions. CO/NM state allocations to the C&TS and charitable donations are always targeted to a particular use. To some degree, the commission would be better off with a commercial loan; at least you know what the loaded cost of paying off a loan is.
Current Situation:
For the C&TS, product sales are three things: ticket revenue, meals (usually tied to the number of train seats sold), and direct sales of memorabilia (usually limited by grumbling from local merchants). Of these, only ticket revenue is something the operating company can manage. Of course, ticket revenue is directly tied to just a few things: the quality of the product (ride experience) and the quality of the sales effort (marketing, travel/tourism relations, and word of mouth).
Ride experience is the only thing the operators have made consequential efforts at. Even knowing this, the C&TS ranged from a high of six locomotives with John Bush to a low of just the lonely 487 in one year. Measurable improvements to the track recently have made ride quality better after years of bruises and broken cameras. Osier lunches have always been reasonable, and under Stephen Flowers are actually the best meals in the area. The up-scaled car interiors (parlor, tourist, and coach) are significant changes also.
Unfortunately, the operators efforts at ride experience haven't really improved the overall product quality seen by a tourist. Lodging, meals, and shopping at both ends have decayed significantly and markedly outweigh the track, meal, and rolling stock improvements.
Marketing has been ignored for the majority of the 40 years the C&TS has been around. Perhaps it's because the operators have a railroad background rather than an amusement/tourism background; in any case the small amount of money is mostly wasted. We sometimes hear about how things used to be marketed. Right now, the C&TS has (un- or sub-?) consciously decided to ignore 20+ million potential consumers just because... Well, I don't know why, but it's downright suicidal. Most of the 7+ million NM/CO citizens have either ridden the C&TS, or they are never going to. Texas, Oklahoma, and Kansas are easy road trip vacations away, and lots of us travel to Santa Fe or the Front Range for a week or two in the summer. Marketing to us in our local region is the only way the C&TS can help a family recognize the C&TS experience as something worth spending their limited travel budget on.
Let me give you an example of successful marketing of a mediocre product that every Texan has heard of: Ruidoso, NM. It's not *just* because they're the closest mountain destination from Texas; after all, it's just as easy to drive up US-285 an hour or two further to Santa Fe. Ruidoso has foot traffic because they make a concerted effort to market in Texas. People of all socio-economic groups go there, summer and winter, since they can see what to do from the literature and web-sites that Ruidoso and business provide. When they get there, they have fun, spend money, and figure out what to do "when we come back". Ruidoso is quite a contrast to what tourists say about the C&TS.
(the wife of a good friend heatedly told me they would never go back to Chama because the motel they stayed in "stunk"; my credibility with her for future vacation recommendations dropped like a rock after that).
Whether it's the current marketing person (! one person? shameful !) or a real marketing program, the C&TS has to change how they view their product, and who they believe their customers are. Perhaps it's a subconscious limitation, but the recent history of targeting sales to local riders is senseless. Big changes need to happen between now and next winter when people start planning trips.
Changes Needed:
What kind of changes need to happen?
1) Find the moneyto reach out to potential riders.
(co-market with motel chains!?)
2) Show up at travel events across the Southwest.
(stretch the marketing budget with a handful of interested people who work together to learn who to talk to, what to say, and what to promise at these events)
3) Show up in traditional media.
(write a handful of articles with pictures for local papers to promote the train and the San Juan's; send simple PSA-ish videos with an accompanying interview opportunity to local TV news and morning programs)
4) Take advantage of blogs and social media
(it's not enough just to have a group on FaceBook... you've still got to market effectively to make social media actually produce customers)
In support of an expanded marketing effort and to make the effort effective there are clear improvements needed in Chama and Antonito/Alamosa:
1) re-open Cook-n-Books, Vera's and the steak house each summer, and keep them open year-to-year so people have choice.
2) beg a motel chain for a franchise (any national chain!) or work a deal with the Apaches to shuttle people straight from the yard to their Best Western and call it a "rail-casino package" (but make sure that the rooms are exceptionally well-maintained and clean).
3) work with Alamosa's Holiday Inn Express and Comfort Inn to shuttle people to the SLRG's Antonito train in the morning, and bus them direct from the Antonito yard in the evening.
4) make sure that every shop cross-sells to every customer
(did you check out the clothes next door? they have a blouse that would look great with this necklace!)
5) teach a quick elevator pitch to every local business, every employee, and every Friend member about the entire opportunity for the region.
Who would do the things listed above? Well, the first one is either local business owners, or an agent of the C&TS operator. The last two are a function of the local Chamber of Commerce working with the C&TS. The others are functions of the C&TS operator.
Pitiful Summary:
My original point in this is that the operator must pay all expenses (operating and capital) from ticket revenue, meals, and direct sales of memorabilia. If there's no cash left at the end of the operating year to do winter maintenance, any required capital expenditures, and execute an effective marketing plan, then there's not much point in being in business.
To make the revenue cover costs, you have to reach more customers. To do that, you really only can pull the two levers I've mentioned: Product Quality and Marketing. Primary responsibility for coordinating, managing, and executing all this has to be in the hands of an effective operator who treats the C&TS as a sales opportunity.
Notice that the Commission isn't listed anywhere in this story. Also notice that there isn't a single item on the list of proposed/needed changes that involves the actual operating equipment or physical plant of the railroad. Perhaps this is why the commission, railroaders, or rail fans haven't produced good sales numbers as the operator?
Edited 1 time(s). Last edit at 05/03/2010 12:25PM by Tom Stewart.
