Monday, August 26, 2013

Protecting Revenue Streams

The 3 “Ps” of Queuing

By Michael Schweitzer - Director, Integrated Insight
and Joni Newkirk - CEO, Integrated Insight

Unless you are an Apple devotee, camped out and partying while you wait for the next technological gadget to be released at the stroke of dawn, it is unlikely that waiting in line is ever a pleasure.  Businesses know this and generally go to great lengths to reduce wait time or at least make them tolerable.  But some waits are more important than others and could inadvertently affect revenue more than you think.  Paying attention to the 3 “Ps” of queuing - don’t make people wait to park, pay, or pee – can positively affect your revenue.

Inability to find a place to park is the first opportunity to lose a customer completely.  Some will avoid your establishment entirely; others may have the mindset to “come back later” but never follow-through.  The more discretionary the product and the more substitutes available, the less likely a customer will feel the need to wait.  And while a potential customer may be willing to put up with difficult parking on the first visit, if the routine is repeated, they may never give you another chance.  Analyzing parking challenges is particularly important to businesses who share space.  If your parking lot is solely yours and the parking capacity matches the capacity of your establishment, not a problem.  But say for example, you operate a breakfast and lunch restaurant in a strip shopping center that also houses several other businesses, all with heavy traffic - your potential customers may find themselves circling the lot and eventually opting for another venue.

Similarly, big events such as sports, concerts, festivals, etc. often do not have dedicated parking sufficient for the event.  The cost of building a parking garage is often prohibitive, even considering the revenue stream from parking fees.  It then becomes a scramble for guests to find space in the surrounding area.  Some venues have successfully published “area parking” charts and many street smart entrepreneurs offer their lawns for rent.  But if a potential guest routinely finds parking a hassle, they may think twice about attending future events at the venue.

Eliminating or shortening lines for accepting payment can also improve revenue capture.   Much has been written about queuing theory and behaviors customers will exhibit when lines become too long.  Some will jockey to another line, others will renege and leave once they tire of waiting, and still others will balk immediately if the line is longer than they are willing to wait. Whether in-person or by phone, making a customer wait to pay is putting potential revenue at risk.  Holiday shopping is probably the best example.  Most customers are making discretionary purchases.  The longer the wait at check-out, the more opportunity a customer has to re-think a purchase they don’t really need.  Next time you are in a store with a long line, look around – it is likely you will see abandoned merchandise near the check out that people have decided is not worth standing in line for.  These are lost sales.  Grocery stores introduced Express Lanes to accommodate shoppers with just one or two items who are not willing to wait behind a shopper with a full cart.

Finally, long waits to use restroom facilities can be a detriment to purchase in a couple of ways.  Think about an event such as sports or a theater performance with a defined intermission.  If guests wait too long to use the restroom, they may not have time to grab a drink or a bite to eat as well.  Since restroom lines are notoriously longer for women than men, groups of women visiting together are particularly at risk.  Similarly, if guests are aware the wait is long for restroom facilities, they may consciously avoid drinking to ultimately avoid having to wait for the restroom.  Either way, the result is lost revenue.

By focusing on reducing wait times to Park, Pay and Pee, you will not only bring relief to your guests, but your revenue streams as well.

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