by Ross Gardner

Created on: March 31, 2009

Customer service has always been important to highly successful companies regardless of current economic factors. Companies such as Nordstrum's, Nieman Marcus and the Ritz Carlton have risen to the top of their industries by providing legendary customer service. When companies like Wal-Mart and Target are creating strict return policies that limit the number of returns without a receipt, and others charge restocking fees regardless of whether returns have a receipt or not, Nordstrum's not only taking returns back without a receipt, but for products that they don't even carry in their store. Are these highly successful companies affected by a recessionary economy? Sure, but not to the degree that companies that have marginal or bad customer service practices.

During a recessionary economy, companies that can set themselves apart will have the staying power to not only to survive during the hard times but to increase their market share at the same time. Some companies will bill themselves as the low cost provider, while others will focus on providing top quality products to their customers. Although companies at either end of the spectrum are not in direct competition with each other they do have other competitors trying to provide products and services at the same price point, and they are all still fighting for the same limited dollars that consumers have to spend. When consumers have to choice to spend their hard earned dollars on products that they value the same, chances are that they will spend them with the companies that provide them better customer service.

Through competition, companies that provide higher levels of customer service will rise to the top. If you could stay in a Hilton hotel for the same price that you could a Motel 6, which would you choose? When it comes to the Battle of the Mart's discount superstores it seems that Wal-Mart has put the squeeze on K-Mart. Although many may argue that Wal-Mart doesn't provide great customer service, there customer service was certainly better than K-Marts. In order to turn itself around K-Mart had to differentiate themselves by partnering with designers like Martha Stewart, instead of just trying to provide the lowest price product like Wal-Mart does.

With the advent of the internet, companies are also facing a greater amount of competition now than they have ever in the past. Customers greatly benefit from this competition by being able to purchase products and services that have never been available before as well as at lower prices as well. Companies that do not have any brick and mortar locations, but just warehouses full of products just waiting to be delivered to customers have created lower prices due to reduced overhead. Netflix has forever changed the movie rental market, by delivering movies to their customer's homes and charging no late fees. In order to compete instead of becoming obsolete, Blockbuster not only had to eliminate their late fees, and start delivering videos by mail, but also now distinguishes itself by marketing their customer service advantage that their customers don't have wait for movies in the mail, but can also exchange their movies at a local video store.

During good times and bad most consumers will favor the companies that can and do provide better customer service for the value of their dollar. However it is during the bad times that companies with inferior customer service will feel the pinch the most and struggle the hardest for their very survival.

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