The Effects of Service Guarantees on Service Evaluations During a Voiced Complaint and Service Recovery

Abstract

Service guarantees are widely used in business and industry. They have been proposed as a device to help reduce perceived risk, to encourage dissatisfied customers to complain, and to improve service evaluations and loyalty after a service recovery. This article reports the findings of an empirical investigation into the effects of service guarantees after a voiced complaint and service recovery. Using a 3 x 2 x 3 factorial, between-subjects experimental design, the study compares two types of guarantee (unconditional and conditional), plus no guarantee in a positive and a negative service recovery across three different services for their effects on likelihood to complain, customer satisfaction, perceived service quality and customer loyalty. The MANOVA-based findings indicate that service guarantees have no significant effects on encouraging dissatisfied customers to complain after a negative service encounter. After the recovery, a conditional service guarantee is found to improve perceptions of service quality for some services. An unconditional service guarantee has no positive effects on service evaluations, the same result as not offering any guarantee at all. Service guarantees used in isolation would appear to have limited benefits as a customer service tool and may need to be used in conjunction with additional tactics to demonstrate an organization's commitment to service recovery.