Service Recovery, Complaint Handling & Service Guarantees
Much has been written about service guarantees and their various proposed benefits. Following the literature, many writers regard a guarantee as a tool to jump-start quality improvements and/or see in them the ultimate way to gain a competitive edge. The objective of this paper is to consolidate our understanding of the working of guarantees. Based on a literature review and an exploratory study, a set of explicit propositions on the impacts of service guarantees was advanced. These propositions were then integrated into a single conceptual model. The model shows the impacts of well-designed guarantees on operations and service quality, consumer behavior, and finally on business performance.
Introduces a new guarantee type termed “combined guarantee”, which combines the wide scope of the full satisfaction guarantee with the specific performance standards of the attribute-specific guarantee. Should the consumer be dissatisfied with any element of the service, the full satisfaction coverage of the combined guarantee applies. Specific performance standards are added to communicate minimum performance levels covered by the guarantee, which reduce customer uncertainty about the intended scope of the guarantee. Proposes that such combined guarantees would be superior to the pure designs, as they combine the wide scope of full satisfaction guarantees with the low uncertainty of attribute-specific guarantees. Two experimental studies were conducted to examine consumers’ perceptions of the alternative guarantee designs. The findings show that the combined guarantee outperformed all other designs and, therefore, demonstrate that firms can design better guarantees than merely promising full satisfaction.
Studies reputation for service quality as a potential moderator of the relationship between a service guarantee and its impact on consumer perceptions of service quality, risk and purchase intent. A before-after experimental design, set in the hotel industry, was employed to explore the impacts of a service guarantee for an outstanding versus a good service provider. Contrary to what had been implied in the past, the introduction of an explicit guarantee had no negative effect for the outstanding service provider in our study. In fact, the provision of a guarantee marginally improved expected quality, reduced perceived risk, and had no effect on purchase intent. However, for the good quality provider, the impacts were all positive and strong, and apart from the impact on perceived risk, the effects were significantly stronger than those for the outstanding quality provider. Our findings thus support the hypothesized moderating role of service quality.