So far, you don't seem to have much that is quantifiable. All the things you've listed, slow, insubordinate, etc... are just generalities and don't have much meaning to your boss. You don't have specifics, so it sounds like you are whining. What objectives is she not achieving versus her coworkers? You need to start documenting her behavior, keeping a daily, running log of the things she does and does not do right. For instance, how many customers does she serve versus other employees? What does she say and how does she act, specifically, when she is being insubordinate? You should also track other employee's performance this way and be fair and neutral about it, and then you will have something to compare hers to. You may come to find out that she is really not as bad as you think, or maybe she is worse. Once you put the damage she is doing in quantifiable terms, she won't appear so golden to your boss. The key is to have solid data to back up your accusations.
Look at it for your bosses perspective. It may not be that he is so much her friend as that he is seeing only one side of the coin. All he is seeing are the customer satisfaction surveys, not the problems she is causing. Therefore, when employees complain about her, he is thinking that they are jealous and lazy, not her. He is thinking, "why aren't they getting the satisfaction rates she is? Why are you, her supervisor, complaining about the person who is getting such good results? Are you lazy and letting these others slide?" You need to show him, with some good data, why she isn't as good as he thinks she is.
Unfortunately often there is the tendency to consider work as a reality TV show. People constantly lobby to fire someone. After that person has gone, the group turns against another member of the very same group to eliminate the one who was perceived having the least amount of hate for the previous target.
That is what I would call being a bully. It did work in high-school, and it unfortunately still does at work. Except that the results asides from being only emotional, are also financial and impact on one's ability to feed himself/herself.
The question I would try to answer if I were you, would be, "who's gonna be up to elimination next? Any chances that I am the next one?". There will come a day when, if that is the game you play, that you will be up for elimination.
Complaining. That is a very risky game. Unless you have a private contract, or work in Montana, you are at-will.
According to at-will,an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Likewise, an employee is free to leave a job at any time for any or no reason with no adverse legal consequences. The at-will presumption is a default rule that can be modified by contract. For example, a contract may provide for a specific term of employment or allow termination for cause only. Typically, U.S. companies negotiate individual employment agreements only with high-level employees. Collective bargaining agreements usually provide that represented employees may only be terminated for cause
This means that you can be terminated for complaining about a colleague, and no discrimination would have occurred.
From my experience, there is a level of selfishness at work that is comparable to the level an elementary school may display. I find it shameful and humiliating to see what happens in these circumstances. It is revolting that people throw tantrums in order to demand that someone gets fired, all along brandishing PRODUCTIVITY as a pretext to mask personal propaganda.
That said, I would not condone voluntary sloppiness on the employees side.
Good Luck.
The only way you can get a good reaction from your boss is to bring up to him/her using the angle that all of the other employees are having a problem with her, not you personally. You can ask him if he wants you to take action on it now, or do nothing. If he leaves the decision up to you, make sure he agrees with you that you are allowed to discipline her. Since she is his friend after all.
Communicate the issue to the single employee who is upsetting the apple cart
Learn local laws and regulations on labor/employees where you live as they vary f greatly.
that's tough when the big boss like her - when you are supervising her, and she acts up - you have to tell her to knock it off or she'll be written up and that might wind up having you to deal with your boss, but if it does, tell him her attitude is affecting everyone else negatively
be careful. you really don;t know how buddy-buddy she is with your boss. Complain and it could blow up in your face. I have seen this happen
Learn to tolerate it or search for another job.
Tell them to form a union.