A characteristic of a good service guarantee is that
Benefits of reducing the risk the customer takes Show
A service guarantee is a marketing tool used to reduce consumer risk perceptions, signal quality, and differentiate a service offering. By delivering service guarantees companies entitle customers to an easy-to-claim replacement, refund or credit, when service delivery fails. The 18th century entrepreneur Josiah Wedgewood pioneered the satisfaction-or-money-back guarantee as a marketing strategy on the entire range of his pottery products. He took advantage of his guarantee offer to send his products to rich clientele across Europe unsolicited. The money-back guarantee was also a major tool of early U.S. mail order sales pioneers in the United States such as Richard Sears and Powel Crosley Jr. to win the confidence of consumers. The benefits of providing service guarantees are:
To be effective guarantees must be easy to understand and communicate so that customers can have clear awareness of the benefits of the guarantees. In addition, the guarantee must be important to the customers, provide adequate values to offset service failure, easy to take advantage of, and be credible. A service guarantee is a marketing tool service firms have increasingly been using to reduce consumer risk perceptions, signal quality, differentiate a service offering, and to institutionalize and professionalize their internal management of customer complaint and service recovery.[1] 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.[2] Benefits[edit]According to Christopher Hart,[3] service guarantees provide the following powerful platforms for promoting and accomplish service quality:
For customers, service guarantees play an important role in alleviating perceived risks of the purchase.[4] 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."[5] Design[edit]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:[6]
Types[edit]
Managerial implications[edit]According to study by Wirtz (1998),[9] a guarantee can be introduced for
many different operations/quality and marketing objectives. A company with poor quality may want to focus primarily on causes of existing quality gaps, whereas a firm with high quality standards but limited market presence and quality reputation may want to focus mainly on transforming potential customers into loyal
ones. Considerations in the introduction of service guarantees[edit]Companies should conduct careful analysis about their strengths and weaknesses in the decision of introducing service
guarantees.[11] For service providers whose reputations have been strongly established, guarantees may not be necessary since they might be incongruent with their image and might create confusion in the market.[12] On the contrary, firms which are experiencing
poor service delivery must improve their quality to the level where customers invoke guarantees on a more regular basis. See also[edit]
References[edit]
What is an example of a service guarantee?A service guarantee is a promise by a company that it will perform at a certain level. If that level is not met, the company promises to compensate the customer in some way. For example, Radisson Hotels Worldwide offers the following guarantee: Our goal at Radisson is 100 percent guest satisfaction.
What are the types of service guarantees?7 types of satisfaction guarantees for eCommerce. The money-back guarantee. ... . The best price guarantee. ... . The lifetime guarantee. ... . The free trial guarantee. ... . The 'try before you buy' guarantee. ... . The free samples guarantee. ... . The first-purchase guarantee.. What are the benefits of service guarantee?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.
What is specific service guarantee?A service guarantee is a marketing tool used to reduce consumer risk perceptions, signal quality, and differentiate a service offering. By delivering service guarantees companies entitle customers to an easy-to-claim replacement, refund or credit, when service delivery fails.
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