16. The Impact of a Well-Designed Service Guarantee
A Well-designed Service Guarantee
Required Features:
• easy to invoke • provides adequate compensation
• easy to understand and • easy to collect on
communicate • credible
• meaningful to customers • declaration of trust
Amplifiers
• perceived risk
• uniqueness of guarantee
Operations & Service Quality Consumer Behavior
Service Design Potential Customers
• focuses firm on customer needs • reduces perceived risk
• prompts firm to understand/improve processes • signals quality
Service Failure & Recovery Mgmt Current Customers
• increases brand loyalty
• forces firm to understand and reduce fail points • encourages positive word-of-mouth
• encourages firm to seek customer feedback • allows price premium
• encourages firm to formalize service recovery
Dissatisfied Customers
Personnel Management • encourages feedback when dissatisfied
• encourages firm to hire/train against • lowers dissatisfaction at service failure
guaranteed standards • reduces negative word-of-mouth
• sets clear standards for employees
Business Performance
Increase in Costs < Increase in Sales & Market Share = Increase in Profits
• design and implementation
Reinforces
Commitment • operations and quality improvements
• payout costs