The benefits of providing service guarantees

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 benefits of providing service guarantees are:

• Forces companies to focus on customers' wants and expectations in every aspect of the service.
• Guarantees establish clear standards which create a composite image of what the company stands for in both customers' and employees' minds.
• Motivates employees and managers to focus on quality and customer service due to the costs involved in not doing so.
• Guarantees help customers to reduce risk in making purchase decisions and to reinforce their long-term loyalty.
• Increases the likelihood for customers to complain since they expect the front-line staff to be ready with resolutions and appropriate compensations.

Implementation process:

1. To be valid guarantees must be easy to understand and communicate so that customers can have a clear awareness of the benefits of the warranties.
2. The guarantee must be relevant to the customers and provide fair values to offset service quality.
3. The guarantee must be easy to take advantage of.
4. The guarantee must be unconditional, and there should be surprises for the customer. 
5. Guarantees must be credible and believable.