The Cost of Queuing Customers

Jim answers questions from fellow Drillers
(More questions with answers here, Work Overview here, Index of concepts here)

Topic Overview

Hi again folks, Jim Novo here.

If customers have to “wait” for service, does the inconvenience / possible frustration impact their value? Great question; problem is, most businesses don’t know how to answer it in a way that will be meaningful to the value of the business. You know our Drillers though, they’ll get about it with actionable results in mind. On to the Drillin’!

Q:  Are you familiar with (or can you refer me to someone who is familiar with) customer satisfaction around queuing up for service?

A:  This is a Frequently Asked Question for sure, and not one there is a lot of statistically believable data on…at least that people are willing to release.  Kind of a sensitive subject, as you might think…

Q:  I work for a large bank.  We have perceived queuing problems in some of our branches – generally due to layout restrictions. I say perceived because although a queue is long, it moves fairly quickly with the actual wait time to see a teller often less than 5 minutes (considered at par with our competition). 

However, customers grumble when they walk into the branch and see the line and continue to grumble out loud until they reach the teller  and then continue to communicate their dissatisfaction to the teller.  Do you know if any work has been done in this area with other large companies that tend to have long queues (like airline ticket counters, large retailers)?

Thanking you in advance for your response.

A:  I think this issue can be an illusion; let me tell you what I mean. 

For e-commerce, somebody like Gartner does a survey that says people hate shipping charges, and every web site kicks in “free shipping.”  Guess what? People have always hated shipping charges since 1850 when the catalog business started.  And why not?  It looks like extra cost to the customer.  But if you run your business correctly, you price with shipping in mind and manage costs so that you still make a profit.

It’s just the way the business works.  Given the choice, which do you think consumers would select of the two alternatives, higher product prices or shipping charges that are fair and reflect what the consumer knows is tangible cost of delivery?  Sure they complain – but they still buy.

People have always hated queues.  And why not?  They are frustrating and perceived as a waste of time.  And the alternative is?  Raise prices to the consumer to cover extra staffing?  But if you run your business correctly, you price with queues in mind and manage costs so that you still make a profit.  It’s just the way the business works.  Given the choice, which do you think consumers would select of the two alternatives, queues or higher prices?

So perhaps “queues” are being raised as an issue to deflect other service problems which are the real cause for whatever angst the company has, a “something to blame” which is not really the causation.

Regarding “solving your problem,” I don’t like benchmarking as a solution.  Your bank has a unique persona created by advertising, staff training, corporate initiatives, the kind of customers it attracts, and so on.  How can you benchmark against other companies who have a completely different persona?  

And – most importantly – does benchmarking really provide any insight that is financially relevant and actionable?  What action do you take knowing this information?  What if their bank queues up low value customers, and you are queuing up high value customers?  A disastrous decision could result.

Sounds to me like this issue is location-driven, which is perfect for an internal study.  What the real question is here, I expect, is this: are these queues costing the bank money, and how much would it be worth spending to fix the issue (ROI), if at all?

If this problem is specific to branches, set up a simple metric and use it to compare branches with no/short queues to branches with frequent/long queues.  Perhaps annual churn of high total value customers?  Annual churn of multi-product customers?  Percent defection of whatever-you-call-best-customers?  

Take three branches with long queues and compare them to three branches with no queues.  Do the queues make a difference where it matters – on the bottom line?  What if your best, most profitable customers never are in a queue, and so do not churn at a higher rate in branches with queues versus branches with no queues?  And then what does the bank think of solving queue problems?

Let me know if you have any other questions or need further help with this issue.  A great question, and a perfect example of one that needs to be asked in the context of customer value rather than customer volume.


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