A quick scan of any business telephone directory or an Internet search would reveal an interesting trend occurring in the marketing of service businesses. It is the idea of service companies providing a written guarantee of their service performance. Product guarantees are nothing new, dating back to the 1850s in the USA. Today, most consumers would not even consider buying a new car, washing machine or mobile phone without checking the terms and conditions of the guarantee or warranty. 

Until recently, it had been considered too difficult and inherently risky to guarantee a service. As services are essentially about processes, they are fundamentally more difficult to deliver at a consistently high standard. For example, tradespeople do not always arrive at the time they say they will (sometimes not even on the day promised), insurance companies are sometimes elusive when clients make a claim and their policies are often riddled with fine-print written in legal jargon. Banks often have long queues at their branches, trains and planes often fail to run to schedule and retail staff can often be unfriendly and unhelpful. Each of these service failures may result in reduced customer satisfaction, possibly a com-plaint, negative word of mouth or lost loyalty.....

Case study review questions 

1. Based on the information in the case and from your own ideas, develop a model depicting the possible benefits of a service guarantee for customers and the service provider. 

2. Should a business school offer a service guarantee to its students? If so, what might it include? Are there any potential problems in implementing such a guarantee? 

3. In what industries or circumstances would it not be sensible to offer a service guarantee? 

4. Two potential benefits of offering a service guarantee are that it will increase the number of legitimate complaints and motivate employees to deliver better service. If you were the manager of a hotel that offered a 100 per cent unconditional service guarantee, how would you determine if your guarantee was working? 

5. Think of a service (not one covered in the case study) that could benefit from a conditional service guarantee. Try to identify what aspects of the service could be included in a service promise to its customers.