SM

1. 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
Dwayne D. Gremler, "Twenty Years of Service Guarantee Research,"
Journal of Service Research, 11, No. 4, 2009, 322–343.

2. • A GUARANTEE is a pledge of assurance that a product offered by a
firm will perform as promised and if not then some form of
reparation will be taken.

3. Service Guarantees
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."

4. • The guarantee should fully cover the service failure,
be easy to invoke and collect and should be such that
the customer will be fully satisfied from the outcome
of the guarantee.

5. Christopher Hart states that the following criteria should be met in designing service guarantees:
(Characteristics of 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
communicate so that customers can have clear awareness of the benefits
of the guarantees.
• Meaningful: Firms must make the guarantee important to the customers
and provide adequate values to offset service failure.
• Easy to invoke: The guarantee should be less dependent on the customer
and more on service provider.
• Easy to collect: Service providers should design an easy and problem-free
guarantees collection process for customers.
• Credible: Guarantees must be offered in a believable manner.

6. Types of Guarantees
• Single-attribute specific guarantee---"Any of three specified
popular pizzas is guaranteed to be served within 10 minutes of
ordering on working days between 12 A.M. and 2 P.M. If the pizza is
late, the customer's next order is free.
• Multi-attribute specific guarantee----- A MNC Hotel guarantee: "Our
quality commitment to you is to provide:A friendly, efficient check-in
A clean, comfortable room, where everything works
A friendly, efficient check-out
If we, in your opinion, do not deliver on this commitment, we will give
you $20 in cash. No question asked. It is your interpretation."

7. • Full-satisfaction guarantee------A Home Décor company guarantee: " If you
are not completely satisfied with any item you buy from us, at any time
during your use of it, return it and we will refund your full purchase price.
We mean every word of it. Whatever. Whenever. Always. But to make sure
this is perfectly clear, we've decided to simplify it further. GUARANTEED.
Period.“
• Combined guarantee------Datapro Information Services guarantees "to
deliver the report on time, to high quality standards, and to the contents
outlined in this proposal. Should we fail to deliver according to this
guarantee, or should you be dissatisfied with any aspect of our work, you
can deduct any amount from the final payment which is deemed as fair."

8. Service Guarantees
Contd.
• Offering unconditional service
guarantee ensures that
customers are fully satisfied with
what they receive from the
service provider.
Contd.
• Retail chains like Big Bazaar
guarantee that if the customer
finds the same product cheaper
elsewhere, they would return
the difference.
• Some educational institutes
guarantee jobs within 90 days of
completion of the course.

9. example
• Here is an example of another
form of service guarantee. One
customer purchased a T-shirt from
a store, took it to his residence,
removed the tag and disposed it
off along with all bills.
• The next day, he felt that the shirt
would be somewhat short in size
for his son, but he was reluctant to
ask for a return as he had
discarded all proof of purchase.
Contd.
• However, when he requested to
return the shirt for a bigger size,
the purchased t-shirt was promptly
taken back at the counter and the
customer was requested to get
another shirt of the right size.
Needless to say, the customer was
delighted with this service
encounter and went about
narrating the story to many others.

10. Contd.
• Many companies fear offering
unconditional service
guarantees, as they feel that
customers might take advantage
of the offer and cheat the
company. Moreover, there might
be several external conditions
not under the control of the
service provider.
Contd.
• For instance, Dominos offers to
deliver pizzas within 30 minutes,
otherwise the pizza is free.
However, they have to ensure
that the customer location is
such that traffic holdups do not
affect their delivery and their
delivery vehicles are in good
shape.

11. When Guarantee is not right strategy ?
• Service quality is truly
uncontrollable
• Potential risk exist of customers
abuse of guarantee
• Cost of guarantee outweigh the
benefits
• Customers perceive little risk in
services
• Existing service quality of the
company is poor----
• A Guarantees doesn't fit the
company images