The duration of the waiting time at checkout is a key service attribute that customers use to decide where to shop as well as to evaluate their service experiences.  In order to better manage these waiting experiences, retailers are investing significant resources in front-end process improvements and technology, such as redesigned service lines, self-checkouts, pagers, and self-scanners.  It is widely believed that investments in such improvements are worthwhile because they enhance customers’ waiting time satisfaction and strengthen customer relationships.  However, in order to assess the total impact of such a process improvement, we need to understand whether its effect is local and confined to changes in customers’ waiting experiences with the focal retailer, or whether it propagates to also affect customers’ experiences with the retailer’s competitors.  Addressing this issue will enable us to evaluate whether or not current approaches that measure the impact of a process improvement by tracking changes in customer satisfaction with the focal retailer underestimate their total impact.

In this paper, we examine how competition influences customers’ waiting time perceptions and satisfaction.  We hypothesize that while customers’ perceptions of their waiting times may be independent across retailers, the levels of their waiting time satisfaction are, nevertheless, interdependent.  Therefore, the effect of a process improvement is not merely local to the retailer, but affects customer experiences with its competitors as well.  We test our hypotheses using data from two studies that focus on the total customer-based impact of a service process improvement.  The first study is a before-and-after field experiment designed around a major process change in front-end service operations at a large retail chain.  The second study is a controlled laboratory experiment involving a computer-based animation of queuing experiences. 

The results from the two studies demonstrate the differential impact of competition on customers’ waiting time perception and satisfaction.  We find that customers’ waiting time perceptions are independent across competing retailers, but the levels of their waiting time satisfaction are nevertheless interdependentacross these firms.  These results show that the impact of a service process improvement by a retailer does propagate to its competitors through the service experiences of their mutually shared customers.  This interdependence of satisfaction suggests that a retailer is potentially exposed to a twin, adverse effect if its competitor adopts a process improvement.  The improved service performance may not only enhance customer satisfaction with the competitor, it may simultaneously lower satisfaction with the focal retailer.  

From a managerial perspective, our findings highlight one of the limitations of the current methodology to assess the impact of a service process improvement by measuring changes in customer satisfaction with only the focal retailer.  Instead, we suggest that retailers that share a large proportion of their customer base with their competitors should focus on the satisfaction gap between themselves and their customer-specific referent competitors.  They should evaluate the total customer-based effect of a service process improvement by examining the changes in these satisfaction gaps rather than by merely tracking changes in customers’ satisfaction with themselves.  Further, it is important for retailers to not only benchmark against the best-in-class but to also manage the performance gap relative to referent inferior competitors.  And finally, retailers can improve customers waiting experiences without necessarily increasing throughput rates and focusing instead on a better management of customers’ co-production behavior, such as their lane selection process.