Characteristics of a Good Service Guarantee and Its Benefits

In: Business and Management

Submitted By sinroth
Words 2326
Pages 10
Question 2

Most organizations today are offering service guarantee in their service offer. Discuss the characteristics of a good service guarantee and its benefits. Evaluate the following service guarantee offered by a restaurant for its home delivery services: “30 minutes guarantee. 10% discount on delayed delivery orders”.

A service guarantee is a marketing tool that service firms have increasingly been using to reduce consumer risk perceptions, signal quality, differentiate a service offering, as well as to institutionalize and professionalize their internal management of customer complaint and service recovery [Gremler, 2009]. For products, a service guarantee usually comes in the form of a warranty that allows customers to reclaim money or compensate their product during a specific time period as stated in the warranty if the product proves to be defective during this time period.

However, unlike products, services are often not guaranteed because the same service cannot be returned to the customer as compensation as well as the experience of the service is intangible. Therefore, the main problem that most service firms face is how they can provide a service guarantee for their services to entitle customers a form of compensation under the circumstances of a service delivery failure.

According to Bateson & Hoffman, there are three types of service guarantees. The first is an unconditional guarantee that promises complete customer satisfaction either at a minimum, a full refund or a complete-no-cost problem resolution for customers. The second type of guarantee is the specific result guarantee that applies only to specific steps or outputs in the service delivery process and is considered milder than an explicit unconditional guarantee because the conditions for triggering the guarantee are narrower and well defined and the payouts are less…...