You Might Want to Wait on That Waitlist
Researchers from the John Hopkins Carey Business School have determined that people don't like waiting in line.
That's an oversimplification, of course. What they actually found was that referral priority waiting lists should only be used under limited circumstances.
Some businesses take advantage of this technique as they prepare to launch products or services, by offering an enhanced type of online waiting list to potential customers who want to be initial users.
Known as a "referral priority program," the approach lets early registrants move toward the front of the queue after they have gotten other people to sign up.
The practice is quickly gaining acceptance as a relatively simple and straightforward approach for acquiring customers and boosting reputation.
"It's a clever, useful way for businesses to leverage customers' own dislike of delays in order to attract more customers. Those already on the waiting list become, in effect, sales agents for the company. It can save money for firms, compared to using monetary incentives to bring in customers, which is a more common kind of referral program," says Assistant Professor Luyi Yang of the Johns Hopkins Carey Business School, lead author of the study.
However, Yang adds, firms have to be careful about using referral priority: "We found in our study that when the size of a waiting list is very small, people on the list don't see much point in trying to move up the queue by getting other people to enroll. And if the list is very big, the people being referred may hesitate to sign up because of the congestion."
The sweet spot for a referral priority program, according to Yang, is when the product or service is sincerely valued by potential customers and the existing waiting list is "intermediately small" - large enough to make it worthwhile for people on the list to get others to sign up, but not so large that it discourages would-be registrants.
Examples of businesses that have used waiting lists that offer referral priority are content-sharing platform LBRY and investment app Robinhood.
