The Impact of Waiting Time Guarantees on Customers’ Waiting Experiences

This publication is available in alternative media on request. The Pennsylvania State University is committed to the policy that all persons shall have equal access to programs, facilities, admission, and employment without regard to personal characteristics not related to ability, performance, or qualifications as determined by University policy or by state or federal authorities. The Pennsylvania State University does not discriminate against any person because 'The authors are grateful to Professor James E. Ward for his assistance in designing the software for the animation of a waiting experience. They acknowledge the helpful and constructive comments contributed by two anonymous reviewers, the Area Editor and the Editor on previous versions of the paper. The generous financial support from the Purdue Research Foundation and the Institute for the Study of Business Markets at the Pennsylvania State University are also gratefully acknowledged. Waiting time guarantees improve customer satisfaction but be sure to meet them. 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. In order 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 …