By: J. N. HALM
I believe that the entire customer service and customer experience discussion can be summed up in two words. Expectations.
Experience. A proper appreciation of these two words is all any business entity needs to deliver services that create the kind of experiences that keep bringing customers back.
It is a fact that under normal circumstances, every customer comes into a transaction with a certain expectation. Even if the transaction involves something the customer has never seen or heard of, an expectation is always formed before the experience. Whatever happens during the experience is therefore always measured against the experience.
Knowing this, it is the responsibility of businesses to ensure that they manage the expectations of their customers. Every bit of communication that the business sends out must be geared towards managing the expectations of customers.
The business must ensure that it promises not only something that it can deliver well but something that will also entice the customer. The rule of thumb is that it is always best to under-promise and over-deliver.
In the world of business, especially with online businesses, the need to under-promise and over-deliver is very pronounced when it comes to the time it takes to deliver a service or a product. The time it takes for a customer to receive service or a product can make or break a business.
A recent study published in the February 2024 edition of the prestigious Information Systems Research journal sheds light on this very phenomenon.
The research, based on detailed transaction-level data from a major food delivery marketplace, offers fascinating insights into how platforms can strategically set delivery time expectations to enhance customer loyalty and repeat business.
The Psychology of Waiting
There is a saying that “time is money,” but in the world of online food delivery, time is much more than that. It is a crucial component of customer satisfaction and loyalty. The longer a customer has to wait for their order, the more likely she is to become dissatisfied with the service. This is where the psychology of waiting comes into play.
Waiting is a subjective experience. A 30-minute wait can feel like an eternity if you were promised a 15-minute delivery, but it can feel like a pleasant surprise if you were told to expect a 45-minute wait. It is this psychological aspect of waiting that food delivery platforms can leverage to their advantage.
According to the study, titled “Strategic Expectation Setting of Delivery Time on Marketplaces”, improving actual delivery speed is an expensive proposition.
It might require hiring more delivery personnel, investing in better logistics, or paying higher wages to incentivise faster deliveries. However, there is an alternative strategy that can be just as effective but far less costly: setting conservative delivery time estimates.
By showing customers a conservative estimate of the delivery duration when they place an order, platforms create a buffer. If the actual delivery happens to be faster than the estimate, customers perceive it as a positive surprise.
If the delivery occurs within the estimated time, customers are satisfied because their expectations were met. It is a win-win situation that does not require significant additional investment.
The Impact on Future Purchases
The study’s findings are particularly enlightening when it comes to the impact of delivery time expectations on future purchase behaviour. When deliveries are faster than expected, customers are more likely to order again from the platform and from the same restaurant they ordered from previously.
It is as if the positive experience creates a halo effect around both the platform and the restaurant, making customers more inclined to repeat their business.
Interestingly, the study found no significant effect on future purchases from other restaurants on the platform. This suggests that the positive experience is primarily associated with the specific restaurant from which the order was made, rather than being generalised to the entire platform.
This is a critical insight for platforms that host multiple restaurants. It indicates that while setting conservative delivery time estimates can enhance overall platform loyalty, the biggest beneficiaries are the individual restaurants that deliver faster than expected.
There is also the concept of a “spillover effect” at play. When customers have a positive experience with one restaurant, they may become more open to trying other restaurants on the platform. However, this does not necessarily translate to increased orders from those other restaurants.
Instead, it might simply mean that customers are spreading their orders across a wider range of restaurants, resulting in no net increase in orders from any single restaurant other than the one that delivered faster than expected.
The Segmentation Strategy
Not all customers respond the same way to delivery time expectations. The study revealed interesting heterogeneities in customer behaviour based on factors such as past delivery experiences, whether the customer is new or existing, and whether the order includes delivery charges.
Customers who have had consistent delivery experiences in the past are less responsive to a single instance of positive or negative delivery performance. This makes sense. If you have been ordering from a platform for years and have always received your food on time, one late delivery might be easily forgiven.
Similarly, if you have had multiple negative experiences, one positive delivery might not be enough to change your perception.
New customers, on the other hand, are more sensitive to delivery time experiences. They are still forming their impressions of the platform and the restaurants on it. A positive first experience can set the tone for a long-term relationship, while a negative one might mean they never order again.
Orders with zero delivery charges also showed different patterns compared to those with non-zero charges. This could be because customers who pay for delivery have higher expectations and are more disappointed when those expectations are not met.
These findings suggest that platforms can implement a segmented strategy when it comes to setting delivery time expectations. For new customers or those placing orders with delivery charges, it might be particularly beneficial to set conservative estimates to increase the likelihood of a positive experience that will lead to repeat business.
The Trade-off: Current vs. Future Demand
One might argue that setting conservative delivery time estimates could deter customers from placing orders in the first place. After all, who wants to wait 45 minutes for food when they are hungry? However, the study’s additional analysis and an experiment conducted on Amazon Mechanical Turk provide compelling evidence that the gain in future demand outweighs the loss in current demand.
In other words, while some customers might be put off by the longer estimated delivery times, the increased loyalty and repeat business from those who experience faster-than-expected deliveries more than compensates for this loss. It is a classic example of short-term pain for long-term gain.
The Paradox of Expectations
The study’s findings highlight a fascinating paradox in customer expectations. On the one hand, customers want fast deliveries. On the other hand, they value deliveries that are faster than expected even more. It is not just about the actual delivery time but about the gap between expectation and reality.
This paradox presents a unique opportunity for food delivery platforms. By carefully managing customer expectations, they can create a perception of speed and efficiency that enhances customer satisfaction and loyalty without necessarily increasing their operational costs.
In an industry where margins are thin and competition is fierce, this strategy could be a game-changer. It allows platforms to focus on what they do best—connecting customers with restaurants—while leveraging the psychology of waiting to enhance the overall customer experience.
As someone who has experienced the joy of faster-than-expected food delivery, I can attest to the power of this strategy. It is not just about the food; it is about the entire experience. And when that experience exceeds expectations, it creates a bond between the customer, the restaurant, and the platform that can drive long-term loyalty and success.
The next time you order food online and are told to expect a 45-minute wait, remember that there might be more to that estimate than meets the eye. It could be part of a carefully crafted strategy to ensure that when your food arrives in 30 minutes, you will feel like you have won the waiting game.
