How do delay announcements shape customer behavior? an empirical study

Qiuping Yu*, Gad Allon, Achal Bassamboo

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

26 Scopus citations

Abstract

In this paper, we explore the impact of delay announcements using an empirical approach by analyzing the data from a medium-sized call center. We first explore the question of whether delay announcements impact customers' behavior using a nonparametric approach. The answer to this question appears to be ambiguous. We thus turn to investigate the fundamental mechanism by which delay announcements impact customer behavior, by constructing a dynamic structural model. In contrast to the implicit assumption made in the literature that announcements do not directly impact customers' waiting costs, our key insights show that delay announcements not only impact customers' beliefs about the system but also directly impact customers' waiting costs. In particular, customers' per-unit waiting cost decreases with the offered waiting times associated with the announcements. The results of our counterfactual analysis show that it may not be necessary to provide announcements with very fine granularity.

Original languageEnglish (US)
Pages (from-to)1-20
Number of pages20
JournalManagement Science
Volume63
Issue number1
DOIs
StatePublished - Jan 2017

Keywords

  • Customer abandonment
  • Delay announcement
  • Patience time
  • Structural estimation

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research

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