Service guarantee as a recovery strategy

Abstract

Purpose When a service fails, the guarantee policy of the firm can be employed as a recovery strategy. The terms of the guarantee determine the amount of payout and the ease of invoking the policy. The guarantee terms can, therefore, influence customer perceptions of recovery fairness and inferences about the firm’s intentions in providing fair recovery. The study examines the impact of guarantee terms on customer perceptions of justice, motive attributions and repatronage intentions. Design/methodology/approach A between-subjects experiment was conducted in parcel delivery services. Findings Customer perceptions of justice vary across guarantee payout levels. Payout in the form of a discount does not restore justice perceptions, and leads to inferences that the firm offered the guarantee to maximise its profits. Conversely, full refund restores justice. Full refund plus discount is perceived as undeserved, and does not enhance justice perceptions. A moderately easy-to-invoke guarantee is perceived as fair, when it includes full refund. Inferences of negative firm’s motives, however, diminish perceived fairness of easy-to-invoke guarantees. Research limitations/implications Future research could examine the interaction of guarantee scope with payout and ease of invocation, and how types of motives differentially impact justice perceptions. Practical implications Full refund can enhance justice perceptions, whereas discount is perceived as unfair. Firms should offer full refund as guarantee payout, but refrain from offering a discount. Flexibility should be embedded in guarantee invocation procedures. Originality/value This study demonstrates that service guarantees employed as recovery strategies signal justice and the firm’s motives.

Service fairness and customer satisfaction

“…Service fairness proposed by Adams (1963) originates from fairness theory in psychology and sociology. Fairness infers to a judgment of a person’s treatment, which is perceived to be fair or just when it corresponds to some standard or criterion of what is morally right (Crisafulli and Singh, 2016).…”

“…In the last 30 decades, service marketing scholars have increasingly recognized that fairness plays an important role in explaining the relationship between customers and service firms (e.g. Clemmer, 1988; Gohary et al , 2016; Crisafulli and Singh, 2016; Smith et al , 1999; Xie et al , 2007). Clemmer (1988) is the first to propose the construct of service fairness in marketing literature.…”

Managing online service recovery: procedures, justice and customer satisfaction

“…In this context, customers report perceptions of procedural justice when recovery procedures are flexible (e.g. Tax et al, 1998;Chebat and Slusarczyk, 2005;Karatepe, 2006;del Río-Lanza et al, 2009) and organisational policies are easy-to-invoke (Crisafulli and Singh, 2016). In fact, both flexible procedures and easy-to-invoke policies lead to timely resolution of the service failure.…”

Retrospective: the effect of guarantees on consumers’ evaluation of services

“…Other research has focused on the role of service guarantees in relation to aspects of service recovery such as how guarantee payout and/or ease of invoking a guarantee influence justice perceptions (Crisafulli and Singh, 2016;Myrden and Kelloway, 2014) and how satisfaction with recovery efforts affects intention to invoke a guarantee for different types of guarantees and for customers with different cultural orientations (e.g. collectivist vs individualistic customers, Van Vaerenbergh et al, 2014).…”