The Impact of Waiting Time Guarantees on Customers' Waiting Experiences

Abstract

Customers often have to wait during the process of acquiring and consuming many products and services. These waiting experiences are typically negative and have been known to affect customers' overall satisfaction with the product or service. To better manage these waiting experiences, many firms have instituted a variety of programs not only to reduce the actual duration of the wait but also to improve customers' perceptions of it. In this paper, we examine the impact of one such initiative, namely, the institution of a waiting time guarantee, on customers' waiting experiences. A waiting time guarantee is a commitment from a firm to serve its customers within a specified period of time. If the firm fails to meet this commitment for some customers then it compensates them for the delay. Today, a large number of firms in a variety of industries such as fast food, banking, industrial distribution, and healthcare offer such time guarantees to their customers. We develop a utility theory-based model of customers' satisfaction with waiting in line. The model is based upon the assumption that when a customer joins a queue he or she has some prior beliefs about the distribution of service times at the firm. The customer estimates the likely duration of the waiting time on the basis of these beliefs about the service times and the observed queue length. We further assume that as the customer observes the service times for other customers who are ahead in the queue, he or she successively updates these beliefs about the distribution of service times in a Bayesian manner. We then posit that the customer's satisfaction both during as well as the end of the wait is determined by the difference between the customer's updated and the prior estimates of the total waiting time. We apply the model to derive select hypotheses pertaining to the impact of a waiting time guarantee on customers' waiting experiences. These hypotheses are based upon the assumption that an offer of a time guarantee is a signal of reliability from the firm and reduces customers' perceived variance around the expected service times. We empirically test these hypotheses using data from a series of interactive, computer-based laboratory experiments. In these experiments, we used the computer to create animations of reallife waiting experiences. The computer display consisted of a queue of customers waiting for service at a counter. One of the customers represented the participant in the experiment. During the course of the experiment, each participant joined the queue, waited in line for service, and then exited the system. At several points during the wait, each participant reported his or her level of satisfaction with the waiting experience. Our results suggest that if customers observe the service times to be less than expected, their satisfaction increases monotonically during the wait. Further, under such circumstances, the explicit provision of a waiting time guarantee enhances satisfaction both during as well as at the end of the wait. However, if customers observe the service times to be more than expected, then their satisfaction typically declines at the beginning of the wait but increases toward the end of the wait. Further, under these circumstances, the initial positive impact of the provision of a waiting time guarantee declines over time. Moreover, at the end of the wait, customers in guaranteed environments are actually less satisfied than those in unguaranteed environments. Overall, we find that a time guarantee, if met, increases satisfaction at the end of a wait; however, if violated, then it decreases satisfaction at the end of the wait. We discuss the implications of these and other empirical findings for the management of customers' waiting experiences.

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