Archive for the ‘Services’ Category

For a long time, one of my favorite service examples to discuss in class has been Disney’s FastPass system. In a nutshell, the program allowed guests to wait in a virtual line for a ride as opposed to having to stand in physical queue. When getting to a ride, guests would be quoted an expected wait for the regular queue as well as a time when they can come back to get in a short queue. That is, a family could decide whether they wanted to wait an hour in a line or come back in 90 minutes for a ride. I once had one of the engineers involved in launching the system as a student and he gave me all sorts of fun details (e.g., Euro Disney posed a challenge because the system had to be explained in so many languages). One of the most amazing things about FastPass was that it was free. That’s right: Disney was giving something patrons would value away for nothing.

Not surprisingly, that has come to an end.

The New York Times reports that Disney is implementing a new system that offers some free features (e.g., creating an itinerary in an app that updates automatically based on congestion) but essentially replaces the free FastPass program with one that requires a fee (To Skip the Line at Disney, Get Ready to Pay a Genie, Aug 18, 2021).

Here is Disney’s (hyperventilating) pitch for their new system:

The Old Gray Lady is a little less cheerleading. The “Lightning Lane” is essentially what until recently was the FastPass line.

Every ride at the resorts will continue to have a traditional standby queue. For those willing to pay $15 per person at Disney World and $20 per person at Disneyland, there will be Genie+. The upgrade, charged per day, allows visitors to choose the next available time to use the Lightning Lane at a variety of rides, including classics like the Haunted Mansion and newer favorites like Millennium Falcon: Smugglers Run. One of these selections can be made at a time, with the ultimate number of fast boardings that people can squeeze into a day depending on length of stay and overall attendance. (In other words, no stockpiling.)

However, some popular rides will not be available for Genie+ selection. For its most-mobbed attractions, Disney will offer Lightning Lane access à la carte — and the price will fluctuate based on date, attraction and park. (A bit like surge pricing for Uber.) Guests will be limited to two of these upgrades in a day.

The Times also opines that “Consumers have become increasingly accustomed to paying surcharges for special access and perks, many of which used to be included in the base price. The airlines have led the stratification.”

There are a couple of things to think about here. First, this gets fairly pricey, fairly fast. If you are at Disney World by yourself, it’s just fifteen bucks but if you are there with the family, $15 per person per day adds up. That says nothing about the rides they hold out of Genie+. They are looking at dynamically pricing these queues. There are some certainly interesting questions on how to do this. One thought is that you charge a high price for the Lightning Lane early in the day before the park is super busy. Intuitively, if your goal is to wring every nickel out customers, you want the regular free line to be kinda miserable by the time the main crowd is there. Starting the day with a high price on the Lightning Lane assures more customers pile into the standard lane early so that wait skyrockets before the park is at a peak load. (See this paper if you want to see where this idea comes from.)

Another issue is how Disney allocates capacity between premium and regular customers.

The calculus for families could come down to the value of paying for the ability to skip lines — and that will depend on ride capacity. People with Genie+ reservations will have priority over people in the regular stand-by line. If Disney chooses to allow up to 70% of a ride’s capacity to be set aside for Genie+, that could make it a better value, since that would means longer stand-by lines. (The company said that how the capacity divvies up will be similar to what was in place with the previous FastPass programs.)

“This shouldn’t be that bad because fewer people are going to use paid Fast Pass than they would free Fast Pass,” Testa said. “If they charge $20 per FastPass, relatively few people are going to buy that. So, it won’t impact the standby line as much.”

Disney is eliminating a beloved free perk at its U.S. theme parks, MarketWatch, Aug 18

Suppose Disney does not allocate very much capacity to the Lightning Lane, then the regular line moves fairly quickly and there is little or no reason to upgrade. Conversely, if you allocate a lot of capacity to Lightning Lane, the regular line is long and there is a strong incentive to spring for Genie+. The company can say they are going to be using a scheme similar to the old FastPass allocation but they have an incentive to starve the regular line of capacity.

And finally, do these schemes benefit customers? What I’ve always liked about the old FastPass is that this clearly worked for both customers and Disney. Customers spent less time in lines. What did they do with that time? They went on more rides (Disney reported greater ridership on “secondary” attractions) and saw more value from the experience. They also spent more in shops and restaurants. So Disney got both higher revenue from selling sodas and mouse ears while getting customers on more rides without laying out more capital.

How does that change when they charge for the service? It’s hard to see how this makes things better for visitors. If the same or fewer customers pay for the privilege, then customers who would have used the free service are stuck in the line and that’s a loss for both them and the firm. On the other hand, if they manipulate capacity allocation so that ponying up is the only way to get on lots of rides, more customers are forced into the system and don’t have that much to show for it since the Lightning Lanes are all jammed up.

I should acknowledge here that there is a counter argument here that says that giving away FastPass access is inefficient. If FastPass is free, even customers who have a low cost of waiting will exercise the privilege — squeezing out customers who a high cost of waiting. That potentially may hold but I am a bit dubious. If one looks at a standard queue (i.e., one where customers enter, are served and leave as opposed to an amusement park where customers move from attraction to attraction), combining pricing and priority queues often lowers overall consumer surplus even as it assures that the “right” customers get short waits. (See here: Gratuitous Self-Citation.)

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First in, first out (FIFO) is the service discipline that we are all most familiar with. If I get in line at the cafe before you do, I get to place my order first. Simple. Fair. But is that the best scheme for running the queue for covid tests?

That’s basically the question asked by a recent post on Marginal Revolution (Stack-Push-Pop COVID Testing, Aug 7). The basic complaint is that delayed test results are useless test results. Hence, there should be an emphasis on turning around results quickly while not wasting resources on past-due samples. Deviating from FIFO is one way of achieving this.

One way of thinking about this is to use a stack or last-in first-out (LIFO) model for testing. In a stack model the newest test request is pushed onto the top of the stack and the next test to be processed is popped off the top of the stack. One disadvantage of this model is that some test requests will never be processed (they should be removed from the bottom of the stack and returned as null results). Some people will be angry.

But the stack model of testing has a huge advantage over first-come, first-served. Namely, just as many tests will be completed as under the current model but the tests results will all come back faster and be much more useful.


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One of my favorite examples I have learned from doing this blog is Chronodrive, a French chain specializing in pick up groceries. Specializing in the sense that this is all that they do. It makes for a nice example since it allows for a contrast between a firm that has tailored all of its operations for one niche against conventional supermarkets that have tried tacking on pick up or delivery onto standard stores.

Of course, in the current environment, lots of firms have had to tack on pick up or delivery options onto their existing stores. To paraphrase Don Rumsfeld, sometimes you have to serve customers with the processes you have, not the processes you might want or wish to have at a later time. But will pick up — some form of click and collect — have legs?

The Wall Street Journal reports that for both restaurants and grocery stores, pick up has been a good business and has been holding up even as states have reopened (Pickup Gains Ground Over Delivery, June 25).

Pickup grocery sales were up 81% in the week ended June 13 from the start of this year, according to Nielsen, while delivery sales rose 33% in that time. At restaurants, carryout accounted for 42% of orders by dollars in May, according to data from research firm NPD Group Inc., compared with a 13% share of sales for delivery. Carryout has maintained its share of restaurant sales since dining rooms began to reopen in May, NPD said, while drive-through and delivery have lost some ground to dine-in orders.


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OK, another story about pandemic driven lines. But this one has a twist. Yes, the virus is forcing lines to form outside of stores, but what would you give to be able to see the line before you left the house? Apparently, if you live across the street from a Trader Joe’s, your friends pester you enough about the current line situation that you set up a web cam or just tweet regularly (Is There a Line at Trader Joe’s? Social-Media Spies Are Keeping Track, Jun 12, Wall Street Journal).

The die-hard fans of Trader Joe’s may be waiting the longest. The grocery chain is known for its specialty items, cultlike following and ubiquitous lines that were bad enough before the pandemic. Now, even as the economy reopens, queues at several locations can stretch for blocks beyond the entrance.

Coming to the rescue is an informal network of Good Samaritans who are quarantined with prime views of a local Trader Joe’s. As a public service, they regularly tweet or broadcast updates on the lines outside.


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The British are famous for queuing. The stereotype has them as embracing orderly waiting their turn. But what if it’s waiting to vote in Parliament?

The powers that be in London have decided that online voting won’t do and that MPs should vote in person. There was consequently an in-person vote on a measure mandating this but the actual vote was executed with the appropriate social distancing guidelines. Here is how Politico described what went down (House of Commons bans virtual voting, opts for a queue, Jun 2):

Standing in a long line stretching from the chamber through to Westminster Hall and out of the building, roughly two-thirds of MPs slowly edged their way into the chamber to cast their votes in a process that took just over 45 minutes.

The system replaces the usual “divisions,” which see MPs walk through either the Aye or No lobby and usually take around 15 minutes, even if all 639 voting members are present.

What might that look like? Check out the video from the Guardian:


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There are some things that simply cannot be solved with an online FAQ. And if you have a question that needs to be answered or a technical problem that needs to be resolved, that likely means you need to call into a call center. Demand at many call centers should be relatively unaffected — or even boosted — by the ongoing pandemic. The call volume at an ISP’s tech support has to go up as more people are working from home and every hiccup in their connection becomes clear to them.

Unfortunately, call centers are not great places to be during a pandemic. Management has an incentive to pack agents like sardines. Business Insider had an article about a South Korean call center which had a significant Covid-19 outbreak and whether you got sick was really determined by where you sat. That seems to suggest that call center agents should just be allowed to work from home. As Vox explains, many firms have tried that (One nation, on hold, May 13).

Many call centers have scrambled to send thousands of customer service representatives to work from home for the first time, a process fraught with logistical and technical hurdles. Others have continued to tell employees to come into the office — which they can do, since call centers have been designated as an essential service — but at reduced numbers. A growing number have seen workers get sick with Covid-19.


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The ongoing coronavirus crisis has changed many aspects of American life. According to the Washington Post is also has forced many people — particularly those in poor areas — into lines (Day-to-day, line-to-line, April 26). Here is their description of life in the Bronx:

[A] line of 32 people stretched out from the front door of the bank where the computers were still down and Halls was still sitting in his folding chair, watching his neighborhood come to life.

Across the street, a line was forming at the pharmacy. A few doors down, the line was growing at the credit union. Around the corner, people were lining up for the bus, for the lottery, for the check-cashers and the two hawkers at folding tables spread with $5 masks, $10 Advil and $20 cough syrup. Two months into the coronavirus pandemic, this is what life was becoming in one of the poorest and hardest-hit neighborhoods in America. A life of lines.


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One of the interesting challenges of managing services is managing customers. A car chassis going down an assembly line goes where you tell it to go. A customer moving through a store, not so much.

And that gets us to thinking about masks. Here in Illinois, like much of the country,  we have been under a stay at home order for several weeks. Obviously, we are allowed to run necessary errands like going to the grocery store. In the first several weeks of the stay at home order, there was (at best) limited guidance on how to behave on those errands. But municipalities have started to set clearer expectations. Evanston and some other towns in suburban Chicago have now mandated that you must wear a mask to go into a store. At the end of last week, the governor extended the state’s stay at home order and also made wearing a mask in stores a statewide rule .

Sounds good. But how do you enforce that? (more…)

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Escalators are back in the news! A little over a year ago, Transport for London (i.e., the London Tube) got some press for an experiment they ran essentially prohibiting people from walking up the escalators at one of their stations. (We posted about that here.) Now the New York Times has seen fit to revisit the topic (Why You Shouldn’t Walk on Escalators, Apr 4). The Times’ definitive stance has not gone unchallenged. Indeed, Gizmodo has an essay taking the opposite side (Why You Should Always Walk on Escalators, Apr 4).

The source of controversy here is that Transport for London found that escalators moved more people per hour and delays to get on the escalators were shorter when people were kept from walking up the stairs. This is obviously a paradox. From an individual point of view, walking up the stairs has to be faster. If each individual can move faster, how can the overall wait be worse?


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Last week I posted on the challenges Starbucks was having with an increasing number of mobile orders. Now, it seems that the company is going to test a different approach: A location that only takes mobile orders (Starbucks to test mobile order and pay-only store at headquarters, Mar 30, Reuters).

Starbucks’ headquarters has two cafes that serve the more than 5,000 company employees who work there. One of those cafes, which is available only to company employees, is among its top three stores in the United States for mobile ordering.

Mobile orders from the building will be routed to the new store, which will have a large window where customers can pick up drinks and see them being made.


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