A couple weeks ago, I read a nice little piece that Stephen Dubner wrote on the Freakonomics blog about the principal-agent problem. A cheap, but guilt-ridden, reader wrote in to Freakonomics about an unfortunate transaction involving a cab ride in Las Vegas. The reader was charged $3 to use his credit card on a fare of $11.50, and decided to take it out on the cab driver, who was nonplussed and berate.
This is a familiar story to anyone in the food service industry, let alone anyone who works in customer service. Anyone who has had to deal with unruly customers who feel “cheated” by something, like a late delivery of their food, usually takes it out on the easiest target (pizza delivery guy, cashier, whomever) instead of those truly responsible for the wrong-doing (manager or store owner). In reality, the principal (the store owner) usually has the leverage (pizza delivery guys are usually just happy to be working) and would rather the customer take out their frustration on the messenger in most cases.
It has to do with misaligned incentives. Back in high school and during college term breaks, I worked at a pizza place that offered “fast free delivery.” My fellow drivers and I made most of our money (our wages were low – I left the place earning $7.50 an hour after starting at $5) through tips. The business benefitted from customers who were attracted to the “free” aspect of the delivery service. The rationale we were given as drivers was that the customers would tip us more than we would have received from a delivery fee. For the most part, this was true, and drivers benefitted from the “free delivery” protocol, but it didn’t shield us from dealing with disgruntled, and frequently rude, customers. Despite the root cause usually being out of the driver’s control (busy night, a mistake in the kitchen, etc.), customers usually exerted punishment on the drivers through reduced (or nonexistent) tips.
One approach I took was to grease the wheels a bit when I knew a fellow driver was going to take a hit for something like a delivery that left the store late (I’d usually wait a few minutes to give the driver some breathing room). While waiting for an order to take, I would call the customer and inform them that we’d been flooded with orders and the driver had just left. I can’t remember many times, save for perhaps a couple exceptions with some truly rude customers, when this didn’t benefit the driver. He’d arrive and be greeted by an understanding customer and the tip amount would usually be unaffected (sometimes it would be higher than expected!). My boss didn’t agree with this strategy because “it makes us look bad if we're slow,” but I continued the “honesty first” approach nonetheless because it didn't really affect the owner's bottom line since the food wasn't going to get there any faster if I called ahead or not.
Another approach, which got me in trouble a couple times, was only employed if I was the driver who arrived to a late order. If the customer complained and tipped poorly, I’d apologize and inform them of the following:
“Thank you for your business. I understand your concern, and would like to inform you that the free delivery service is not your only option in obtaining your order. Pick-up is always an option.”
One customer was visibly upset when I gave him such a disclaimer, and followed me back to the store to complain to the manager on duty. He approached the counter and loudly asked the girl behind the register to find the manager on duty. She looked over at me (the manager on duty) and said “Pat, this gentleman would like to speak to you.” I think the conversation lasted about a minute before he apologized for losing his head. I gave him a menu and told him to keep it handy if he felt like picking up a pizza from us again (words carefully chosen). It’s all about aligning incentives, folks.