How Do Delay Announcements Shape Customer Behavior? An Empirical Study
Management Science, Forthcoming
47 Pages Posted: 29 Aug 2015
Date Written: August 1, 2014
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.
Keywords: delay announcement; patience time; customer abandonment; structural estimation
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