Service Guarantee
“A service guarantee is an explicit commitment to the customer concerning all or part of the service process, generally including compensation for the customer if the commitment is not honored.” (Design and Implementation of a Service Guarantee).
The marketing impact of a well-designed service guarantee
Today’s marketplace is competitive. Getting quality service is the one factor that every customer wants to double-check when they buy a product or service. Apparently, providing quality service is what every supplier of a product/service strives to achieve. Because the service is great, the product sells by itself. By word-of-mouth, by repeat purchases and by reviews. The question is how a company will convince a customer that their service is 100% foolproof.
The answer lies in the offering of a “service guarantee” to the potential customers. A service guarantee is nothing but a statement issued by a company that if their service fails to satisfy a customer, they will financially compensate the customer by offering an amount of money as damages. The guarantee will be perceived as the sign of the company’s total commitment to quality because it becomes clear to the customer that if the service is poor, the supplier stands to incur considerable losses.
So customers can understand that the supplier has made the service delivery 100% fail-proof. Such an approach will increase the value of the sales proposition by such a degree that it becomes irresistible to the customers and without doubt will go a long way in making new inroads into the markets. It can be said that a well-designed service guarantee will guarantee that the product/service will get easily accepted by the market and it will affect the marketing so positively as to boost sales among the existing and new customers. A well-designed service guarantee will act as a powerful marketing tool.
Evaluate the design of Accellion’s guarantee shown in Exhibit 1 of the case (p. 591):
How effective will it be in communicating service excellence to potential and current customers? Are any changes required to its design or implementation?
The design of Accellion’s Service Guarantee
There are several aspects that govern the design of service guarantee.
The simplicity of the guarantee statement
The service guarantee should be easily worded avoiding any sort of ambiguities. It should be easily understood by the customer. Accellion scores are high in this aspect. They have mentioned the yardstick for the performance of their service. Both the performance and delivery availability are guaranteed which is quite aggressive and should make the customer sit back and relax while choosing Accellion over its competitors.
The compensation offered in case the guarantee is invoked by a customer
The compensation offered in the guarantee should be high enough for the customer to take notice. It should be more or less equal to the cost of the service offered so that customer’s risk of purchase is minimized. Accellion has offered the cost of their monthly fee as the compensation which seems to be apt. However, it does not mention what happens if the service fails more than once in the same month. Would they compensate each time? It’s a little bit unclear there.
The scope of the guarantee
If the guarantee statement has to get the result it sets out to achieve, all the attributes of the service need to be included in the guarantee. The company must not leave any grey areas which could be molded to their advantage in case of a claim. It happens so, the guarantee will have reverse effect on the final result in the long run. Also, it should be mentioned if the customer can invoke the guarantee on feeling dissatisfied with or without an explicit reason. This is called a “no-questions-asked-guarantee.” This is the maximum that a company can offer and will get the maximum positive response from the market. Accellion has made a fairly aggressive promise and it covers the most important aspects of the service. The performance and the availability are both easily perceivable by a customer.
The invoking process
This is the process a customer has to go through to invoke the guarantee. From the company’s side, in order to eliminate fake claims they tend to make it as difficult as they can. But ideally this should be made very simple and easy so that customers do not feel harassed or frustrated. It is important to achieve a balance here. Accellion has laid down the condition that a written communication has to take place from the customer’s end within 5 days from the failure of service. Which is reasonable for both the parties.
Effectiveness of Accellion Guarantee in communicating service excellence to potential and current customers:
A service guarantee goes a long way in increasing the confidence of the customer in the service. Especially in industries where the performance yardsticks vary greatly and there are simply too many variables involved in carrying out the delivery of the service such as the one provided by Accellion.
By making an explicit guarantee statement like this Accellion succeeds in several counts.
Externally the following effects take place in the market:
- It announces to the world the differentiation of its services from that of its competitors. It makes the customers sit up and notice resulting in a “this-company must-be-doing-something-unique” kind of response.
- It catapults a lesser-known brand to the forefront at par with the well-known brands.
- Creates doubts in the mind of the customer about well-known brands that do not offer such a guarantee.
- Develops word-of-mouth publicity which is the best form of publicity there is.
Internally it has the following effects inside the company’s service organization:
- The fact that company stands lose revenue if service fails, will make the service staff overtime to make sure that it seldom fails.
- The overall culture of the company will move towards customer-orientation
- In the case of Accellion, the motivation levels of technical personnel will sky-rocket.
- Finally, the fear of revenue loss would make the company learn from its mistakes and continuously improve its processes and systems so that further loss is prevented.
The changes recommended to its design or implementation:
There are a couple of changes that could be recommended.
- The document fails to mention what would happen if the Accellion service fails more than once in a month. Would they pay more than once for the same month?
- In Order to claim the guarantee, the customer has to send a written letter citing the details of the failure within 5 days. Now, it is not mentioned if an email or fax or couriered letter is required.
Conclusion
Accellion QoS Document is well designed and will prove to be a major competitive edge for the company in its marketing efforts. It would be a challenge for Accellion to keep delivering the rather high standards it has set for itself. The Guarantee combines the best of service attributes and so will be well received.
Bibliography
Design and Implementation of a Service Guarantee. EmeraldManagementFirst. Web.
The Accellion Service Guarantee. (2003). Web.