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Archive for the ‘Services’ Category

In a perfect world, technology solves problems instead of creating them. Things don’t always go that way. Take, for example, Starbucks’ mobile ordering. This is, in theory, a convenience for users of their app. They can place an order before hitting the store, pay automatically, and get their drink and food without waiting in line.

Or at least that is the theory. The reality is that a surge in mobile orders has created a bunch of headaches for the coffee chain. Here are some details from when they announced their earnings at the end of January (Starbucks Tempers Revenue Forecast, Jan 26, Wall Street Journal).

Mobile order-and-pay represented 7% of U.S. company-operated transactions in the quarter, up from 3% in the prior year. The number of its highest-volume stores for mobile order-and-pay, where orders placed via the app account for more than 20% of transactions during peak hours, doubled to 1,200 stores over the prior quarter.

The high rate of mobile ordering was blamed by Starbucks for increased waits and with that lost customers. In the last quarter, dollar sales were up because the average purchase size outweighed a 2% decline in transaction.

But just how bad is the delay? That’s the subject of a recent Business Insider piece. The headline pretty much lays out the article’s agenda: We went to Starbucks every day for a week to see how the coffee giant is dealing with its biggest problem (March 19). (more…)

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Di Fara Pizza is a small, single-location pizza place in Brooklyn. According to its Wikipedia entry (yes, it has a Wikipedia entry), it has been named to many, many lists of the best pizza in New York City. The place’s secret sauce is Dom DeMarco, the shop’s owner, who essentially makes every pie. He opened the shop in 1964 and is now 79. He doesn’t work too fast and really does everything right down to slicing basil on to each slice. Consequently, the lines can be a tad long. It is one of the principle things that on-line reviewers comment on:

It’s nice to see that the original pizza making man still has the passion to make pizza. But the wait is ridiculously long and people in there are just too pushy. “Next! What do you want?”

So how does that kind of wait affect their business and the customer experience? That was the topic of discussion of a recent episode of The Gist podcast (Your Food Will Be Ready When You Look Hungry Enough, Oct 12).

The guest of that episode is Dan Pashman, who describes his visit to Di Fara as well as the research he did to put together an episode of his own podcast, The Sporkful (Is This Pizza Worth Waiting For?, Aug 11).

Some of that reporting also ended up in an episode of Freakonomics Radio (What Are You Waiting For?, Aug 10)

That’s right: The man made one trip to Brooklyn and it resulted in three podcast episodes.

The Sporkful and Freakonomics episodes are worth a listening. Both talk about different aspects of managing queues. The former emphasizes more psychology and physiology (especially how waiting affects hunger) while the latter puts more emphasis on the economics of queue. (more…)

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Queuing has been in the news lately. First, the Wall Street Journal’s most recent The Numbers column was on queuing theory (The Science of Standing in Line, Oct 7). The story is in someways disappointing since it emphasizes the history of queuing over its current applications or general insights. However, it does feature this rather spiffy graphic contrasting service systems in which several servers pull from a common queue as opposed to each server having a separate line.

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I have been teaching the MBA core operations class this quarter. This week we just wrapped up talking about bottlenecks and capacity. I consequently found an article in The Guardian rather timely (The tube at a standstill: why TfL stopped people walking up the escalators, Jan 16). TfL in the article title refers to “Transport for London” which runs the Underground. The article reports on an experiment run at their Holborn station.

The experiment in question gets to a bit of escalator etiquette. Specifically, when using an escalator, should people stand to one side so those in a hurry (or in need of a work out) can walk up the escalator or should people patiently stand two abreast? Now if you prefer to chug up the stairs, you clearly lose under the second scenario. However, can it be the case that accommodating the walkers cost the system as a whole an unacceptable amount of capacity?

It’s all very well keeping one side of the escalator clear for people in a rush, but in stations with long, steep walkways, only a small proportion are likely to be willing to climb. In lots of places, with short escalators or minimal congestion, this doesn’t much matter. But a 2002 study of escalator capacity on the Underground found that on machines such as those at Holborn, with a vertical height of 24 metres, only 40% would even contemplate it. By encouraging their preference, TfL effectively halves the capacity of the escalator in question, and creates significantly more crowding below, slowing everyone down.

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The big news in the restaurant world this past week is that Danny Meyer, one of New York City’s most prominent restaurateurs, is going to be abolishing tipping at all his establishments. He discussed the move on CBS.

(He also had an interview on CNBC that covered a lot of the same ground plus a few other points that I will mention below.)

Tipping — at restaurants and in hotels — is something we have covered before. As much as I like the idea of linking pay to performance, I think that tipping is a pretty miserable custom. Meyer touches on some of these points in explaining why he is banning the pourboire. But he also highlights a completely different issue: Attracting and retaining talent.

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Call center agents often sound robotic — and that may well be by design. Having agents follow a script helps keep service times predictable, supports delivering consistent service, and possibly reduces training costs. The same logic holds for other forms of electronic customer service interactions — be they chat sessions, emails, or Facebook posts.

But not every firm follows this model, relying instead on unscripted interactions to build relationships with customers. Among these is Dollar Shave Club, a subscription razor service with 2.2 million members (Why Dollar Shave Club invests in unscripted customer service, Los Angeles Times, Sep 26).

The company employs about three dozen member service agents who answer phones and emails, conduct online chats and reply to queries on social media — all while channeling the brand’s distinctly playful and irreverent tone.

The strategy isn’t easy. Training takes weeks. Finding the right personalities is challenging. It would be cheaper and less hassle to contract with a third-party customer service firm, which Dollar Shave Club does to complement its in-house team.

But online retailers, including pioneers Zappos and Bonobos, have found the investment in unscripted customer service worthwhile. The interactions, they say, feel more authentic and help humanize e-commerce brands that are, by their very nature, faceless.

So when does a scriptless approach pay off? (more…)

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We have written in the past about some of the challenges of staffing retailer operations. Given competitive markets and an ample supply of labor, many firms have employed staffing models that may be kindly described as aggressive — although some might prefer to call them abusive (see, for example, here, here and here). In essences, firms want to avoid overstaffing but also don’t want customer service to suffer. Employees are caught in the middle of those goals as employers demand more and more flexibility from them.

But to some extent that has been changing. Labor markets have tightened and regulators have begun asking questions. Consequently, firms have backed off some of their more noxious practices (at least in some jurisdictions). Among the leaders here has been Starbucks. Last year it committed  to posting worker’s schedules at least 10 days in advance and to giving workers more consistent schedules. Further it said it would no longer have workers doing “clopenings” — closing the story one night only to have to be there for the opening the following morning. As the New York Times tells it, the transition hasn’t been so smooth (Starbucks Falls Short After Pledging Better Labor Practices, Sep 23).

But Starbucks has fallen short on these promises, according to interviews with five current or recent workers at several locations across the country. Most complained that they often receive their schedules one week or less in advance, and that the schedules vary substantially every few weeks. Two said their stores still practiced clopenings.

(more…)

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