When we think about processes (for example, purchasing food in the fast food restaurant or calling a call center) we usually think about the cost of waiting, the fact that customers may leave the line without being served or may choose not to remain loyal to a specific firm due to poor service, but I am not familiar with models that consider the following behavior:
Cop accused of pulling gun while waiting for food: A Denver police officer has been charged with felony menacing for allegedly brandishing his gun at a McDonald’s restaurant after getting tired of waiting for his food.(San Francisco Chronicles, July 22nd. Hat tip to Margaret Pierson for sending it).
While this may seem anecdotal, I would like to refer to a larger study done on the drivers for consumer rage in the service sector, the “Rage Study”. Among other things, the survey studies how people that experienced poor service expressed their displeasure. Apparently, the responses vary between sharing the story with a friend (84%), yelling and raising a voice (24%-33%) to using profanity (9%-16%). In a different study, Prof. Anat Rafaeli from the Technion (The Effects of Angry Customers) studies the impact of angry responses on the performance of agents in a call center. The conclusion from her work is that the service provider’s need to deal with anger expressed by the customer may hurt his performance. So, next time you tell the call center agent on the phone how frustrated you are with the long wait and poor service, you should know that you may be making matters even worse.
The case mentioned in the article is of course a reminder (as if we did not already know) that time matters in the fast food industry. This is very consistent with what we preach in our operations management course – time is an important attribute of any process (service as well as manufacturing). Time is money says the proverb, but what is the right way to tradeoff between the two? Answering this question, and more generally, studying the impact of time as a measure of quality of service were at the center of an empirical study I conducted with Prof. Awi Federgruen and Margaret Pierson from Columbia University (“Does it pay to reduce your customers’ wait? An empirical industrial organization study of the fast-food drive-thru industry based on structural estimation methods”). We found, through an elaborate analysis of the fast food drive-thru market, that time has a more significant impact on sales volume than prices. In particular, if an outlet increases the waiting time its customers experience by 10 seconds, in order to keep its sales volume at the same level, it will have to “compensate” its customers by reducing the price by 60 cents (where the price of a meal usually does not usually exceed $6). A similar analysis shows that a seven second improvement in a chain’s waiting time (which can be achieved by changing processes and improving efficiency) may add up to 3% to McDonald’s market share and 1.3% to Wendy’s market share.
To summarize, we all understand that “time is money”, but exactly how much time is worth how much money has no trivial answer. Moreover, there are other factors beyond money that one should consider when managing time and service quality, and the “rage study” has many good examples of these.