Guarantee (Customer) Cost

In the customer life-cycle cost of a product, used to develop product and service innovations, the cost an Intermediary Customer incurs to keep the product in working order for the Final Customer, including the cost to assess the problem, correct it, and credit the final customer for the returned product.
(See also Obtain Cost, Sell Cost, and Return Cost)

Example 1:

The new GM warranty covers virtually all repairs for the first 3 years or 50,000 miles.
(Year 1988-SIC 3711)

Explanation: The warranty allows the customer to assess his problem at no cost to him.

Example 2:

Skyjack's scissors platforms were an instant hit, largely because their design made mechanical parts easy to reach. All the parts were attached to trays that swung out at ground level. This innovation cut out hours of downtime for distributors who rented equipment.
(Year 1996- SIC 3500)

Explanation: This innovation reduced the time to correct the end-user's problem.

Example 3:

Perrigo's retail customers are very pleased with its service: "I can pick up the phone and talk to the people at Perrigo and say: 'I have a problem and need action.' Things are on my desk immediately."
(Year1993 – SIC 2834)

Explanation: This service innovation insures that Perrigo's customer will either obtain satisfaction or that Perrigo will gladly accept product returns.