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The Impact of Waiting Time Guarantees on Customers' Waiting Experiences

Author

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  • Piyush Kumar

    (Jesse H. Jones Graduate School of Administration, Rice University, Houston, Texas, 77005-1892)

  • Manohar U. Kalwani

    (Krannert Graduate School of Management, Purdue University, West Lafayette, Indiana 47907-1310)

  • Maqbool Dada

    (Krannert Graduate School of Management, Purdue University, West Lafayette, Indiana 47907-1310)

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.

Suggested Citation

  • Piyush Kumar & Manohar U. Kalwani & Maqbool Dada, 1997. "The Impact of Waiting Time Guarantees on Customers' Waiting Experiences," Marketing Science, INFORMS, vol. 16(4), pages 295-314.
  • Handle: RePEc:inm:ormksc:v:16:y:1997:i:4:p:295-314
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    File URL: http://dx.doi.org/10.1287/mksc.16.4.295
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    Citations

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    Cited by:

    1. Wei-Lun Chang & Ling-Yao Huang, 2016. "Measuring service experience: a utility-based heuristic model," Service Business, Springer;Pan-Pacific Business Association, vol. 10(1), pages 1-30, March.
    2. Antonides, G. & Verhoef, P.C., 2000. "Consumer Perception and Evaluation of Waiting Time," ERIM Report Series Research in Management ERS-2000-35-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    3. Baohong Sun, 2006. "—Technology Innovation and Implications for Customer Relationship Management," Marketing Science, INFORMS, vol. 25(6), pages 594-597, 11-12.
    4. Ruth N. Bolton & Katherine N. Lemon & Matthew D. Bramlett, 2006. "The Effect of Service Experiences over Time on a Supplier's Retention of Business Customers," Management Science, INFORMS, vol. 52(12), pages 1811-1823, December.
    5. Pengfei Guo & Paul Zipkin, 2007. "Analysis and Comparison of Queues with Different Levels of Delay Information," Management Science, INFORMS, vol. 53(6), pages 962-970, June.
    6. repec:eee:joreco:v:22:y:2015:i:c:p:96-106 is not listed on IDEAS
    7. Doll, Monika & Seebauer, Michael & Tonn, Maren, 2017. "Bargaining over waiting time in gain and loss framed ultimatum games," FAU Discussion Papers in Economics 15/2017, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    8. Weixin Shang & Liming Liu, 2011. "Promised Delivery Time and Capacity Games in Time-Based Competition," Management Science, INFORMS, vol. 57(3), pages 599-610, March.
    9. Roland T. Rust & Tuck Siong Chung, 2006. "Marketing Models of Service and Relationships," Marketing Science, INFORMS, vol. 25(6), pages 560-580, 11-12.
    10. Ken Butcher & Asad Kayani, 2008. "Waiting for service: modelling the effectiveness of service interventions," Service Business, Springer;Pan-Pacific Business Association, vol. 2(2), pages 153-165, June.
    11. Festjens, Anouk & Bruyneel, Sabrina & Diecidue, Enrico & Dewitte, Siegfried, 2015. "Time-based versus money-based decision making under risk: An experimental investigation," Journal of Economic Psychology, Elsevier, vol. 50(C), pages 52-72.
    12. Liberopoulos, George & Tsikis, Isidoros & Delikouras, Stefanos, 2010. "Backorder penalty cost coefficient "b": What could it be?," International Journal of Production Economics, Elsevier, vol. 123(1), pages 166-178, January.
    13. van Ackere, Ann & Haxholdt, Christian & Larsen, Erik R., 2013. "Dynamic capacity adjustments with reactive customers," Omega, Elsevier, vol. 41(4), pages 689-705.
    14. repec:eee:touman:v:33:y:2012:i:4:p:875-884 is not listed on IDEAS
    15. Caroline Tahar, 2012. "La prise en compte des temps et des délais dans les mairies : étude de la démarche d'une ville moyenne," Working Papers hal-00725522, HAL.
    16. Urban, Timothy L., 2009. "Establishing delivery guarantee policies," European Journal of Operational Research, Elsevier, vol. 196(3), pages 959-967, August.
    17. Praveen K. Kopalle & Donald R. Lehmann, 2006. "Setting Quality Expectations When Entering a Market: What Should the Promise Be?," Marketing Science, INFORMS, vol. 25(1), pages 8-24, 01-02.
    18. Gabriel R. Bitran & Juan-Carlos Ferrer & Paulo Rocha e Oliveira, 2008. "OM Forum--Managing Customer Experiences: Perspectives on the Temporal Aspects of Service Encounters," Manufacturing & Service Operations Management, INFORMS, vol. 10(1), pages 61-83, July.
    19. Oualid Jouini & Zeynep Akşin & Yves Dallery, 2011. "Call Centers with Delay Information: Models and Insights," Manufacturing & Service Operations Management, INFORMS, vol. 13(4), pages 534-548, October.
    20. S. De Man & D. Vandaele & P. Gemmel, 2004. "The waiting experience and consumer perception of service quality in outpatient clinics," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/229, Ghent University, Faculty of Economics and Business Administration.
    21. Krishnamurthy, Parthasarathy & Kumar, Piyush, 2002. "Self-Other Discrepancies in Waiting Time Decisions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 87(2), pages 207-226, March.

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