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Do Guarantees Help or Hinder your Customer’s Experience?

Lowest prices guaranteed! 100% satisfaction or we’ll make it right! Get it in an hour or it’s free! Make your best deal and we’ll beat it or pay you $500. Guaranteed. Period.
We’ve all seen, heard, or read these types of headlines. But do they impact our decision to buy? Do they make a difference when evaluating our experience with a company’s products or services? Do they increase our loyalty or future purchases with a company?

Most recently I encountered a best price guarantee on a hotel website. I searched a hotel booking site, found a rate, and then went to the hotel’s website only to find rooms priced higher than the booking site. And there emblazoned across their website were the words – Best price guaranteed. So, I clicked on the “more details” section to find this statement: If we approve your claim, we’ll match the comparison rate AND give you your choice of either an extra 25% discount on the room OR give you 5,000 Loyalty Points.

The operative word was “claim”. What followed were sections outlining participating brands, applicable rates, submission guidelines, verification processes, and other details. Each section contained a paragraph of what I needed to do to submit my claim. My time could be better spent on other activities, so I simply booked on the hotel booking site, where I got the best rate.

Even though I am loyal to this hotel brand, and I trusted they had the best price guarantee, the hassle in securing the better price didn’t gain me anything. It did, however, cause me to question my experience with the brand and will make me think twice before booking directly with them in the future.

I use a Harvard Business Review article in my undergraduate service management classes that provides an excellent summary of the key ingredients for effective guarantees entitled, The Power of Unconditional Service Guarantees, by Christopher Hart. In this article, Mr. Hart discusses good service guarantees should be:

  • Unconditional
  • Easy to understand and communicate
  • Meaningful
  • Easy (and painless) to invoke
  • Easy and quick to collect on
  • And for organizations, guarantees should:
  • Force you to focus on customers
  • Set clear standards for employees
  • Encourage feedback from customers
  • Promote an understanding of the service delivery system

Build customer loyaltyFor organizations with guarantees in place or considering adding a guarantee, it would be wise to evaluate them against Mr. Hart’s criteria as well. Mr. Hart suggests, “one great potential of a service guarantee is its ability to change an industry’s rules of the game by changing the service-delivery process as competitors conceive it”.

Another important factor to consider is ensuring that your customer service teams have the authority to grant the guarantee to your customers without seeking managerial approval or making them jump through hoops. It needs to be just as easy for a customer service agent to grant the guarantee request from a customer as it is for the customer to receive it on their own. A hassle-free utilization of the guarantee can give customers a renewed confidence in your organization’s ability to deliver on your commitments. It also gives your frontline representatives the opportunity to satisfy customers the first time, every time – which makes for a better working environment.

I know what some of you B2Ber’s are thinking – service guarantees don’t apply to us. In this case, I think they certainly can and might even deliver breakthrough service and a powerful competitive advantage. Transparent guarantees can help clients move away from “lowest-price” decision making criteria to a “price-value” decision, which in turn can improve customer retention in the long-term.

In this day of social media raves and rants, having a good guarantee might be the difference between a one-star and a five-star rating.