Customers left rail when rail no longer provided the service they required. VR (and others) ran trains on days of the week and at times that suited then with little to no regard of any commitment to the customer. Back then (before internet, mobile phones, bar codes and more recently Radio Frequency ID Tags (RFID)) it was reliant on people doing the tight thing and neither the railways nor their staff took responsibilities for issues they created.
One example is even if people prebooked something to be carted there was no way to be sure it would. I have been told stories by railwaymen (drivers and station staff) of turning up and there was no space so urgent parcels and other perishable goods or livestock were left behind. Some examples are livestock being booked in then delivered to the station yards on the morning the train was due with all the paperwork signed then coming back a fortnight later to find the original cattle still in the yard where they had been without food or water and most of them were in such poor condition they had to be put down. It turns out that the train picked up extra, unbooked, loading at earlier stations so just left the cattle there. Nobody contacted the poor farmer so the animals were left unattended.
A truck could come and load at the farm and the driver was responsible for the animals until delivered. This made it much easier for the farmer so that even if the cost was higher it provided better value to the customer and they didn't have the losses either.
There are also stories of fragile parcels being thrown onto the platform from moving trains, milk cans being left on the station as they ran out of time to load them etc.
Finally Ford, International Harvester and other manufacturers used to have to fairly regularly stand down staff (without pay) as the parts they needed for their assembly line failed to arrive within days of the scheduled time. This meant they also had the costs (including productivity losses) of having the factory stop and start at unplanned intervals. This is one of the reasons that Ford started running trucks from Geelong to Broadmeadows. The reduction in the costs in the inventory in transit more than covered the increased costs of running the trucks and then there was the reliabilty which eliminated most of the plant shutdown and startups.
I am not anti-rail I am however against bad customer service which is not just common to rail, if there was a real alternative to Telstra for most of the country (especially outside capital cities) it would be suffering the same issues. Australia Post has dropped the ball and is making the same mistakes that rail did from the 1950's until the early 1990's. Toll Road companies are equally as bad as are some trucking companies.
Thankfully sections of the rail industry can see this and are providing services the customer needs that they can make money on too. Hopefully these players are successful