Unconditional service guarantees have been championed as a potentially powerful tool to improve service quality and build marketing muscles (Wirtz 1997). Yet, despite the potential benefits, there is a large majority of service providers who are unwilling to expose themselves to the perceived risk of running such a guarantee. Customer cheating or fraudulent invocation of guarantees is one of the reasons why firms hesitate to implement unconditional guarantees (Wirtz 1998). Anecdotal evidence from firms with successful guarantees seems to suggest that consumer cheating is not a severe problem. However, this may be due to self-selection biases of the firms which have guarantees, and as the literature on shop lifting demonstrates, by far not all customers are immune to the temptation of taking advantage of a firm. Hart (1993) reported an example based on Hampton Inn’s guarantee. A guest repeatedly invoked the guarantee and wrote on a comment card that he liked Hampton Inn because it is free. So far, no empirical research has examined what drives cheating behaviour on guarantees, and how such behaviour could be reduced or controlled for. This study examines potential drivers of cheating on service guarantees.
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- How to Reduce Consumer Cheating on Service Guarantees? Results from Two Experimental Studies
Irene C. L. Ng
Lee Khai Sheang