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The NS has lost track

It was the highlight of the news this week: in 2025, Dutch train ticket prices will sharply increase. Price hikes are not an unfamiliar phenomenon, even in public transport. For example, in 2017 you paid €30 for a return ticket between Amsterdam Central Station and Rotterdam Central Station, an amount that has now risen to almost €36. And it doesn’t stop there, because train ticket prices are expected to rise by about 10% in 2025. The reason? It is the strategy of the Dutch Railways (NS) to compensate for its incurred losses. Although it seems like a logical choice at first, the question is whether this strategy is the right one. When making this choice, has the underlying cause of the losses been considered?

 

Rising prices

The recent annual report of the NS shows that the organization has made significant losses in recent years. The loss in 2023 amounted to no less than 191 million euros. This was a significant blow, although it was not the lowest point. In 2022, the company suffered an even greater loss of up to 421 million euros. The cause of these red numbers? Primarily, the decrease in the number of kilometers that passengers traveled since the outbreak of the coronavirus pandemic, as people increasingly work from home. However, there is another underlying cause. The NS’s services do not always meet the needs of its passengers, and it therefore fails to create value for them.

 

Job to Be Done

To provide real value to your customers, it is crucial that your organization responds to their job to be done. This concept, introduced by Harvard Business School professor Clayton Christensen, emphasizes that everyone has specific tasks they want to accomplish. By addressing these, your organization can alleviate pain points and solve problems for your customers. Customers are not primarily concerned with a specific product or service, but with accomplishing their job to be done. For travelers, it is about getting from A to B. Moreover, it is important for many of them to do this quickly and comfortably. However, it is essential to recognize that people can have multiple jobs to be done. For instance, someone may also need to work while traveling. These examples illustrate that there are many diverse jobs, both large and small, to be accomplished.

 

Customer Discovery

It is therefore crucial for organizations to know what their customers’ job to be done is. As soon as you lose a clear focus on this and your products and services no longer address these needs, you stop creating value for them. If this occurs, customers will switch to alternatives or competitors that do offer them this value. You may now be wondering: how do you find out what your customers’ job to be done is? This is achieved through Customer Discovery. Customer Discovery is the process of understanding who your target audience is and what problems they have that are worth solving. It extends beyond mere market research and enables you to get into direct contact with potential customers. You can read more about this in our Customer Discovery Guide. Once you gain insights into the jobs to be done of your customers, you can improve existing products and services or develop new ones to create more value.

 

Value Creation for NS Passengers

As mentioned earlier in this blog, travelers have several jobs to be done, including getting from A to B comfortably and on time. Currently, the NS is not adequately succeeding in responding to this in the right manner. A significant challenge is keeping the trains running on schedule. According to RTL Nieuws, in 2023, 89.7% of travelers experienced delays of up to five minutes. Although five minutes may not seem significant, it can make the difference between catching your connection or not, with all the subsequent delays that entails.

 

Moreover, there is the issue of overcrowded trains, often due to a shortage of equipment. Especially during rush hour on routes such as those between Rotterdam Central Station and Amsterdam Central Station, finding a seat is almost a sport. At times, travelers are packed so closely together that ‘sardines in a can’ becomes an apt comparison. This situation makes train travel far from comfortable and attractive.

 

Finally, the purchase of the Intercity Nieuwe Generatie (ICNG), a train that operates on the High-Speed Line. This train can reach speeds of up to 200 km/h and is intended to replace older NS equipment. The introduction of this new train is occurring in phases. At the beginning of 2023, two ICNGs were deployed during the regular schedule. Various technical tests were conducted to identify defects in a timely manner so they could be addressed. This approach seems like a “Stay Future Proof” strategy: start small, test, validate, adjust, and optimize.

 

However, despite the ICNG’s introduction appearing to be a step forward, it falls short in meeting the needs of the majority of passengers. Notably, the ICNG offers fewer seats for second-class passengers, where demand is highest. Conversely, more seats have been allocated for first-class travelers, a significantly smaller segment. Additionally, a considerable amount of space is reserved for luggage, even though only a small fraction of travelers requires this, given that most are commuting to work or school, not traveling with a lot of luggage. Furthermore, this train also experiences many delays and disruptions. In 2023, only 73.6% of these trains experienced delays of 5 minutes or less.

 

The NS has lost track

Will the price increases by the NS in 2025 really help the organization generate more income? The chances are slim. Why? Simple. The NS seems to have lost its way a bit in understanding what travelers truly desire. With frequent delays, overcrowded trains, and trains that resemble luxurious first-class lounges more than mass transit options, train travel is becoming less appealing. Ironically, the strategy to raise prices may actually be pushing travelers directly towards alternatives, such as cars. In my opinion, the NS needs to do more than just reconsider its pricing strategy; it must also focus on making train travel attractive again.

 

Sources: NS, RTL Nieuws

about the author
Carolijn Coolen
Thanks for reading, I hope you’ve gained some valuable insights from the article! I’m Carolijn Coolen, Strategy Designer at Stay Future Proof. Want to learn all about strategy, innovation and transformation? Reach out and let’s talk!
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