Final answer:
In service-encounter design, giving discounts to employees is a form of compensation, and is distinct from customer-focused reassurances like guarantees and warranties. Compensation serves as an internal reward or recognition for employees.
Step-by-step explanation:
In the context of service-encounter design, giving discounts to employees is a form of compensation. This is not to be confused with guarantees, warranties, and service contracts, which are forms of explicit reassurance that sellers provide to their customers to ensure satisfaction with the product or service.
While guarantees often involve a promise to refund, replace, or repair a product or service that does not meet the customer’s expectations, compensation is a benefit given typically to employees as a reward or in recognition of their service to the organization.
For example, a restaurant may provide employees with a meal discount, which is considered a form of compensation. Unlike guarantees, which are provided to customers, compensation in the form of employee discounts is an internal practice aimed at recognizing and rewarding employees.