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.
- 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.
- The guarantee must be relevant to the customers and provide fair values to offset service quality.
- The guarantee must be easy to take advantage of.
- The guarantee must be unconditional, and there should be surprises for the customer.
- Guarantees must be credible and believable.