A service guarantee is a promise that a service or product will meet certain consumer expectations or standards. Many times it is provided to the consumer in writing. If the product fails to perform as promised, the vendor may offer replacement of the item, refund the purchase price, or offer other forms of reimbursement, like a store credit. The purpose of it is to instill consumer confidence.
The type of promise that a merchant makes may differ, depending on the product or service. It is not uncommon for a service guarantee to be predicated on the consumer meeting specific terms and conditions. This places some of the responsibility on the customer.
Stipulations to ...view middle of the document...
 By delivering service guarantees, companies entitle customers with one or more forms of compensation, namely easy-to-claim replacement, refund or credit, under the circumstances of service delivery failure. Conditions are often put on these compensations; however, some companies provide them unconditionally.
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|1 Benefits of service guarantee |
|2 Designing service guarantee |
|3 Types of service guarantee |
|4 Managerial implications |
|5 Considerations in the introduction of service guarantees |
|6 References |
Benefits of service guarantee
According to Christopher Hart, service guarantees provide the following powerful platforms for promoting and accomplish service quality:
• By delivering service guarantees, firms are forced to focus on customers’ want and expectation in every aspect of the service.
• Guarantees establish clear standards which create a common image of what the company stands for in both customers and employees’ mind. Managers are motivated to seriously concern service guarantees, because they emphasize the financial expenditure of quality failures.
• With service guarantees, firms are required to build effective systems to generate meaningful customer feedback and develop corresponding courses of action.
• Guarantees require service organizations to understand reasons of failure and motivate them to identify and manage potential fail points
• Guarantees help customers to reduce risk in making purchase decisions and to reinforce their long-term loyalty.
For customers, service guarantees play an important role in alleviating perceived risks of the purchase. The guarantees also facilitate more ease and more likelihood for customers to complain, since they expect the front-line staff to be ready with resolutions and appropriate compensations. From companies’ perspectives, according to the vice President of Hampton Inn, “Designing the guarantee made us understand what made guests satisfied, rather than what we thought made them satisfied.”
Designing service guarantee
While no conditions are imposed on some guarantees, others have apparently been drafted by lawyers and cover many restrictions. Christopher Hart states that the following criteria should be met in designing service guarantees:
• Unconditional: Promises of the guarantees must be unconditional and no elements of surprise should be made to customers
• Comprehensible: The guarantees must be easy to understand and...