An Examination of the Impact of Service Guarantee Strength on Service Quality and Firm Performance

Many practitioners and academics have enthusiastically endorsed service guarantees as a means for service firms to transform themselves into quality focused, customer driven learning organizations. Large and small firms claim that their service guarantee programs have boosted their financial performance, strengthen defensive and offensive marketing, motivated workers, improved service quality, enhanced customer satisfaction, and increased customer loyalty. With the number of firms offering service guarantees growing rapidly (especially with the phenomenal growth of internet based services), rigorous, theory driven, empirical research is needed to disentangle the `hype` and the truth about service guarantees. Currently, we can only speculate about what constitutes a `strong` service guarantee, how service guarantees might affect service quality and financial performance, and how practitioners should design a service guarantee. Both academics and practitioners need a solid theory base for understanding these important service quality issues. A multidisciplinary research team will study 30 hotels of the Radisson Hotel Corporation that is in the process of implementing a service guarantee. This research starts with the premise that all firms have service guarantees (either implicitly or explicitly), and that the strength of these guarantees differs widely between firms in the same market. The researchers hypothesize that service guarantee strength (SOS) has a significant impact on service quality, customer satisfaction, and customer loyalty (SQL) and that SQL has a positive financial impact on the firm. They further hypothesize the existence of three intervening variables in the SOS/SQL relationship marketing communications impact (MCI), employee motivation/vision (EMV), and organizational service learning (OSL).