The purpose of this paper is to explore companies' experiences in designing and implementing service guarantees.
The methodology relied on 22 in‐depth personal interviews across a sample of ten Australian service firms.
The effectiveness of a service guarantee depends on how well a firm designs and implements it. It was found that service guarantees were generally not well conceived, implemented, or monitored after launch. Through a comparison of theory and practice, this study identifies a number of common mistakes, including inadequate or non‐existent pre‐launch market research; ambiguous definition of the role of the guarantee; inadequate market testing of alternative guarantee promises; a lack of consultation with key functional managers during development; a lack of CEO commitment; ambiguous assignment of responsibility for ongoing management of the guarantee; and an absence of performance evaluation.
The study employs qualitative research techniques and considers only Australian firms.
While the common mistakes offer cautions for managers when planning a service guarantee, some outstanding examples of successfully implemented service guarantees also emerged. A notable example is the customer charter, a more comprehensive conditional guarantee that avoids many of the pitfalls associated with traditional service guarantees.
Previous studies do not address the experiences of a broad sample of companies that have designed and implemented a service guarantee. The findings in this paper extend the understanding of how service guarantees could become more effective and identify directions for future research.
