Improving the effectiveness of banks’ service guarantees: Impact of the wait-time guarantee on customer satisfaction

The findings reported above are based on direct questioning about the perceived value of the guarantee. As expected, they validate the assumption that most customers find value in the wait-time guarantee. But what is the real impact of offering a guarantee on customers who experience a problem? Can the guarantee reduce customer dissatisfaction with the bank? Does it make a difference? To explore this issue, customers who could recall a specific incident entailing a long wait for teller services were identified (361 respondents). These respondents were then asked about the specific negative experience. The questions examined the circumstances of the delay, perceived employee effort to resolve the problem, the use of the guarantee and respondents’ overall reactions to that incident. These data provided an opportunity to assess the impact of the service guarantee, as well as perceived employee effort, on those customers who have experienced a long delay. Note that ‘perceived employee effort to resolve the problem’ was included based on prior studies that have shown its importance in service recovery efforts.

To examine the impact of the wait-time guarantee and perceived employee effort on customer reaction to the delay, an analysis of variance (ANOVA) was conducted. Based on previous literature. The criterion variable was operationalised as ‘degree of anger’. Since overall satisfaction with the bank is affected by many other variables, it has been recommended that customers’ negative affective reactions to long waits be measured on an anger scale. A seven-point anger scale, ranging from 1 ‘not at all angry’ to 7 ‘very angry’ was used. The two independent variables were measured by direct questions about ‘did you ask for the guarantee?’; and ‘were branch personnel doing everything they could to serve customers quickly?’.

Table 2 Effects of guarantee and employee effort on customer anger (Mean anger ratings, n = 170)


Asked for
guarantee


No
%


Yes
%

Employee did

everything to serve

quickly

No 2.9%

3.3%

Yes 3.6%

5.3%

The results of the ANOVA indicate that the two main effects are statistically significant. The main effects measure the separate impact of each of the key factors. The first factor, asking for the service guarantee, did have an impact on customer reactions to the delay (F = 4.42, p<0.05). The mean anger score for those who asked for the wait-time guarantee was lower (3.1) than for those who did not ask for the guarantee (3.9). Clearly, those who invoked the guarantee exhibited significantly lower levels of anger. The second factor, perceived employee effort, had an even greater impact on customers’ reactions to the delay (F = 6.65, p<0.05). The mean anger score for those who perceived employees to be doing everything they could to serve customers quickly, was 3.3 versus 5.0 for those who did not believe the employees were doing their best. The two-way interaction was not significant, indicating that the ameliorating effect of the service guarantee is not dependent on the perceived employee effort. Each of these factors contributes independently to the reduction of customer anger.

The combined effect can be seen in Table 2. As expected, the worst condition is for customers to believe that employees are not doing their best and not invoking the guarantee (mean anger score of 5.3). The best scenario is when customers ask for the wait-time guarantee and believe employees are doing their utmost (mean anger score of 2.9).

Overall, the findings clearly demonstrate the potential value of service guarantees to alleviate some of the frustrations customers feel when encountering long delays. The findings from the direct questioning show that the vast majority of customers see potential value in a wait-time guarantee. The indirect questioning validates this conclusion. Those customers who encountered a delay and asked for the guarantee were less dissatisfied with that experience. Furthermore, when customers believed employees were doing their best to solve the problem and were using the guarantee, dissatisfaction scores were at their lowest level. Thus, it is quite clear that banks can contain the problems associated with service delays and reduce customer dissatisfaction by offering a wait- time guarantee and having employees make a sincere effort.

 

Representative APR 391%

Let's say you want to borrow $100 for two week. Lender can charge you $15 for borrowing $100 for two weeks. You will need to return $115 to the lender at the end of 2 weeks. The cost of the $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you decide to roll over the loan for another two weeks, lender can charge you another $15. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

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