An executive from a company that uses service to its advantage told me it is a lot more fun being a customer service leader than a low cost leader.

In India also, all retailers focus on price cuts and customer service does not figure in their priority. Maybe Indians also need to learn a lot from Nordstrom.

You also should differentiate between the two types of bad customer service. The first is what usually happens in a big box store; you don’t really see an employee until you go to the register. Most people don’t really need assistance, and if they do, they go to the counter or whatever. The second is actively bad customer service, as described above.

Have you ever seen the Filene’s Basement Annual Bridal Sale? That is the epitome of what you are discussing. High-priced items at a significant discount with absolutely no customer service. And it’s mobbed. Women literally fight and trample each other to get into the store and buy a dress. Of course, it’s also an extreme exaggeration of your point.

As for the services market, if I get crappy service (or hostile), even if the service they actually provide is fantastic, I will not use them again.

Todd

however – there are two situations where price/quality creates more loyal customers than customer service.

1) when you offer a service.. If I had a nasty hair stylist who cut my hair perfectly everytime I went, I would most likely still go to her even if she is very rude.

2) when your product is money – when your product is money – ie.. you sell loans, credit cards, mortgage, etc.. the quality of the product becomes the cost. Therefore, customers are more inclined to obtain the finance at as cheap of cost as possible, without taking customer service in to account.

Obviously, in both of these situations though.. when the cost/quality of competitors are equal, then customer service steps up to the plate.. however there is almost always a difference in cost/quality between competitors.