In the November 2nd, 2007, edition of the Christian Science Monitor I got uncharacteristically consultant-like. My op-ed is below the fold.
FAIRFAX, VA. — Needing help booking a flight, you call your favorite airline’s toll-free number. After punching a few buttons to work through the menu of options, you finally connect to the bank of live agents. Sort of. A recorded voice says that “all agents are currently busy…. Please hold on.” Elevator music plays to assure you that you’re still in the queue. You wait. Your time is valuable, so you hope that in no more than a minute or two you’ll hear a live voice say “Hello, this is Jane. How can I help you?”
But one minute becomes two, two become four, and you hear only elevator music. After eight minutes, you’re tempted to hang up. But doing so means all your waiting is in vain. So you hang on. But each passing moment is growing evidence that you’ve called at a busy time.
How long should you wait?
It’s not just a rhetorical question. It goes to the heart of economic problem-solving. As things stand, callers stuck on hold compete for scarce resources – live agents – with the currency of patience. That’s cause for uncertainty and frustration. Some companies have recently tried to reduce that uncertainty by giving callers the estimated time that they’ll have to wait.
But economics points to a better solution: Switching from the currency of patience to the real currency of dollars and cents. Setting a market price for speed of help would do much to bring speed and harmony to caller queues.
For example, customers could pay a fee to guarantee that their call will be answered within, say, 90 seconds.
Many people will grimace at this suggestion, asking why companies should make money off the need of many of their customers to get expedited service. But all of the money that firms earn comes from exploiting customers’ need for something. Why is it worse for an airline to make money from customers’ desire for quick help on the telephone than to make money by flying them to a distant city?
The reality is that the demand from customers often exceeds the supply of live help from telephone service agents. That’s why queues develop.
If God were running the company’s switchboard, He wouldn’t rely upon this first-come, first-served method to allocate agents’ time. Surely, He would move to the front of the line those callers who have especially urgent needs as well as those callers whose costs of waiting idly on the telephone are especially high.
Charging for expedited service might help mimic this better way of determining which callers get quicker access to live agents. The reason is that customers who value speaking with a live agent will very quickly become the ones who pay for the expedited service.
Offering callers the option of paying to be moved up the queue will clearly help callers who need service quickly. But this option might also help callers whose need for quick service isn’t particularly intense. The reason is that the additional customers paying for expedited service will probably necessitate the hiring of more personnel to answer calls (and the additional sums will enable them to do so).
If the firm does not hire additional agents to answer the phones, the quality of the service supplied to those customers not paying for expedited service would fall, thus prompting many of these customers to switch their business to other suppliers. Remember: The firm offers a certain level of access to live telephone agents in the first place precisely because it fears that failure to do so will cause too many customers to flee to other suppliers. Firms that start charging for expedited service have every incentive to ensure that the time the bulk of their customers must wait does not lengthen.
A great thing about competition is that it is very good at determining which business practices really do best serve consumers’ needs. Perhaps offering customers the option of paying to reduce their telephone times will not work. But if I were running Delta Airlines or Home Depot, I’d give it a try.