For companies, all lines come at a cost. Customers often avoid shopping where they will have to wait in line. Researchers have long assumed the costs a company assumes for their lines are based on the value of a customer’s time. However, Subodha Kumar argues this assumption is misleading.
Kumar points out that the cost to the company is equal to how much less customers spend for each second of waiting. The customer’s perception of the line influences their purchasing decisions, in addition to how much they value their time.
To adjust for this assumption, Kumar develops a model that instead asks companies to determine when the costs of the line are equal to the resources companies use to shorten lines. He suggests that companies run experiments to learn how different variables—such as the forms of entertainment for people in line, the use of technology in lines and the number and quality of workers—influence changes in customers’ spending.