A juicy service guarantee

Telecom services aren't like other products - you can't bite into a juicy service or drive a high-performance service down the highway to see how it handles. So anything that makes a service more "real" to a buyer is a positive thing. Increasingly, service providers are using service guarantees to differentiate their offerings and to attract more customers. Guarantees reduce risks for the buyer and make the service decision easier while making the service itself more "real.

There are five main categories of service guarantees offered today for data services: Performance guarantees typically are based on reliability and operational metrics such as availability, data delivery rate, frame transfer delay and throughput. These are often difficult for customers to understand, measure and prove.

Installation interval guarantees ensure that the service is installed within a specific time frame, typically provided in number of working days. This is easy to verify and is one of the first proof points to customers that a company will keep its promises.

Service satisfaction guarantees can be as simple as "if you're not happy with the service, you get something back." These types of guarantees are very strong and are popular with clients because they communicate confidence in a service.

Technology obsolescence sounds like a fancy name for a service migration guarantee, and it is. It simply tells the customer that there will be no contractual penalties for migrating between different technologies or services - from private lines to frame relay or from frame relay to ATM, for example.

Switchback guarantees require the service provider to switch customers back to their previous provider if customers are dissatisfied with the new service provider's performance.

Service guarantees can build credibility and a positive image. However, the guarantees need to be meaty to be effective, and this is one big weakness with many of today's offerings. The service provider's penalty for not meeting the guarantee isn't substantial enough to generate customer satisfaction. No customer ever wants to receive a credit due to non-performance. They want the service to work as advertised. But when it doesn't, the client would like more than $11.67 back after an hour-long frame relay network outage.

Another weakness is that customers sometimes require intricate formulas to determine whether performance guarantees are met.

The key to minimizing your risk and having a successful service guarantee is a thorough market segmentation analysis. First, you need to fully understand your target market's hot buttons, fears, sensitivities, knowledge and buying behaviors - and don't assume that these are the same across all services.

For example, the primary concern of most residential Internet access customers is getting busy signals. TDSNet has introduced a "no busy signal" guarantee. Residential customers who get busy signals two days in any week can call TDSNet and receive that week's service free. This is an excellent guarantee. It's simple. And it equates to about $5 off on a $20-per-month Internet service, which is reasonable for the residential market.

Simplifying the process of getting credits to the customer is also essential. If you can make the process automatic, it is even more powerful and fully represents the confidence you have in your service performance. If the customer has to take action to initiate the credit, then make the process painless.

Today, most Fortune 1000 customers negotiate their own special service level agreements as part of the contract. This process of negotiating and supporting customized agreements is very costly for service providers. If your standard guarantees are done well, you can reduce the number of these custom arrangements. If the standard guarantee isn't good enough for a big client, then it's probably not good enough. Redesign the guarantee and make it good enough or don't go to the trouble of releasing it.

Liza Henderson is a Broadband Consultant with TeleChoice, Verona, N.J. Her e-mail address is lhenderson@telechoice.com.