Improving the effectiveness of banks' service guarantees: The role of implementation

The negative impact of frequent service delays on customer loyalty and retention is widely recognised. To address this issue, many banks have initiated some form of service improvement programme and attempted to communicate the change to their existing and prospective customers. Often, however, this rightfully sceptical audience continues to doubt the provider's ability to resolve the problem and may not notice service improvement even when it is achieved. Service guarantees are a powerful mechanism for firms to express their commitment to satisfaction as well as their willingness to compensate customers in the event of service failure. This paper presents the results of a multi-stage study of a major bank's effort to provide a wait-time guarantee. The potential value of the guarantee to customers, the impact of the guarantee on customer dissatisfaction following a negative service experience, and customers' willingness to invoke the guarantee are examined. The implications of the findings highlight the role of implementation in a successful guarantee programme. Recommendations for improving banks' service guarantees are provided.