Satisfaction…or Your $$$ Back…
By Bonnie Knutson Professor, The School of Hospitality Business/MSU | June 09, 2013
It all began with L.L. Bean. When the clothing retailer created it, the guarantee of 100 percent satisfaction was unique in business, especially in consumer markets. Other retailers soon followed suit – Lands' End, Nordstrom, Sears, and Wal-Mart to name a few – building solid marketing strategies around this guarantee policy. Soon, the idea of the unconditional guarantee spread throughout a variety of industries, including hotels. We've all seen that great TV commercial where a "little ole' lady" tosses a tire through the plate glass window and the voice in the background says, "Thank you. If you're not satisfied for any reason…"
The movement toward the 100 percent guarantee appears to be driven primarily by three marketing forces. One is a consumer that is continually becoming more sophisticated, more experienced, and more demanding of a high price value. A second is an increasing importance that all businesses are placing on quality service, consumer satisfaction, and customer loyalty. More recently, a third has come to the forefront: the proliferation of information available on the Internet – social media, hotel websites, third party booking agents, and, of course, rating sites such as Yelp, Kayak, or Trip Advisor.
Smart hoteliers know it always costs less to keep a guest than it does to find a new one. As Bill Marriott supposedly quipped, It takes $10 in promotion to get a guest in the front door, but only $1 in service quality to bring him back. So smart hoteliers know to look at their guests in terms of their long term REVPAR potential if they keep coming back again and again, not just what they spend on one stay at the property. While there are a lot of variables that go into the formula, one luxury hotel operator puts the life time sales value of a loyal guest at well over $100,000. It is no wonder, then, that they are so adamant about keeping their guests happy that any staff member can spend up to $2,000 on the spot, no questions asked, to resolve a guest problem.(1)
A service or satisfaction guarantee is simply a policy, advertised or unadvertised, that unconditionally commits your operation to making your guests happy. It states that if the guest is not completely satisfied with anything, the hotel will make it right, or it will not take the guest's money.
It is clear that a 100 percent satisfaction guarantee is a powerful management tool. First, it has great marketing appeal. Used in promotional campaigns, the guarantee can be a strong draw for guests, particularly first timers who may be concerned about staying at a new or a different hotel. If you guarantee their complete satisfaction, then what do they have to lose? Perhaps some time. Or maybe a little convenience. But certainly not money. This brings up another point for consideration. Should a guest give your hotel a chance to make "it" (whatever "it" is) right before the guarantee policy kicks in? Christopher Hart, author of Extraordinary Guarantees, thinks not. If a hotel promotes itself as having a 100 percent guarantee, and something happens, it has to pay up as well as fix the problem. "If something happens that exposes a pothole in your product, make the payout and fix the hold," he says.
Second, a guarantee policy forces hotel management to make a real commitment to guest service and not just pay lip service to the policy. It mandates that every decision and every employee focus on the guest. It compels managers to really understand guest expectations as well as get guest feedback… and to listen to it. According to the vice President of Hampton Inn, "Designing the guarantee made us understand what made guests satisfied, rather than what we thought made them satisfied."(2) However, this is often easier said than done. A property with slipshod operations cannot consider an unconditional guarantee without incurring the expense of guest payouts along with the expense of upgrading its operations. Both can be a tremendous cost to the hotel. But guest dissatisfaction also has costs associated with it: the cost of lost business and bad word-of-mouth, or make that word-of-finger in this interconnected world. When a hotel adopts a 100 percent guarantee: