customer service

If retail growth slows as predicted in this New Year, the competitive battle, already fierce, can only intensify. The outcome will mainly hinge on an elusive management objective - excellence of customer service.

There's no mystery about the vital importance of service. Studies of customer retention demonstrate huge gulfs between the results of 'excellent' service and 'good' (thus, 'excellent' means a six times greater likelihood of buying from you again). The difficulty lies in setting the standards.

Fortunately, all retail managers have an utterly reliable source of information: the customers. Less fortunately, finding their preferences can be complex and costly: it cost British Airways £4.5 million to set up its 'customer analysis and retention system' (which spells the comforting acronym CARESS).

That expenditure was justifed by the silence of the vast majority of unhappy passengers who keep their misery to themselves. They may, however, very possibly choose another carrier. Excellence of service thus has two tricky elements. First, finding out what people truly want, and second, ensuring that their needs are truly met.

You won't achieve either end if, like one of Britain's supermarket giants, you establish customer service desks to handle complaints - but never provide staff with any feedback on the consequent satisfaction, if any. The satisfaction is crucial. Among the minority (only 10%) of BA's complaining passengers who actually made satisfactory contact with the airline, four-fifths became 'champions' who gave BA invaluable word-of-mouth publicity.

The old maxim still rings true: a customer whose complaint is redressed is paradoxically more loyal than one who has received perfect treatment all along. It follows that a known complaining customer is a triple asset - for retention, PR and information. One specialist tour company, Alternative Travel Group, has exploited the asset in a brochure publicising what, in customers' eyes, was right and wrong about service.

The wrongs markedly outnumber the rights, which is predictable, but beside the point. The moral lies in the changes which the company made to meet each of the objections. That's what today's prime piece of management jargon, 'customer focus', really means: looking at the business with the customers' eyes and, above all, acting on what you see.