What's the story with good customer care?

It costs approximately five times more to win a new customer than it does to keep an existing one happy, which makes some companies' shoddy treatment of those they have fought so hard to get completely baffling.

While many continue to treat their customers with disdain, some at least are starting to recognise the foolishness of such policies. Almost half the speakers at a mortgage conference in Dublin earlier this month talked about the importance of service.

The conference heard over and over again that the current international credit squeeze and interest rate hikes had made it difficult for providers to compete on price, which put customer service centre stage as the single most important differentiator between the various institutions.

This won't have come as much of a surprise to Tony Brennan, the Irish director of the Institute of Customer Service (ICS). He tells Pricewatch that organisations who viewed the provision of an adequate customer service as purely a cost are the ones who do it badly. "Companies who treat customer service as an important differential are the ones who deliver excellent customer service and consequently generate more profit per employee. They have higher staff morale, a lower turnover - which significantly reduces training costs - and they have a greater number of customers acting as advocates on their behalf."

Brennan believes the truism that people who have had a bad customer service experience tell 10 people while those who have had an excellent experience will tell just a single person has changed significantly in recent times and more people are now likely to pass on news of good customer service experiences "because it is so unique".

He says that within many Irish companies - even those who attract a significant level of negative publicity - there are "pockets of brilliance" but the challenge is to deliver that brilliance consistently. "This can take serious investment in an infrastructure and in staff. You need to have staff who believe they can act on their own initiative to help people."

Sometimes empowering customer service staff to act on their own initiative costs buttons but delivers excellent results, such as on the occasion when a British woman rang her car insurance company in a flap because she had just discovered a certificate she urgently needed to present to the police had been coloured in and effectively destroyed by her toddler.

The customer service operator at the end of the line had been allocated a small budget of £25 for the resolution of problems. The woman not only received a new cert by return of post, but the call centre operative also used some of her discretionary budget to buy a few colouring pencils for the daughter. It put a smile on the harassed mother's face and generated acres of positive press coverage for the company in question, something that no amount of money could have bought.

THERE ARE RETAILERSin Ireland who do attract praise. On the boards.ie website there is currently a thread asking people to rant or rave about the customer service they have received. Unsurprisingly, there are pages and pages of messages about people's negative experiences and only the occasional good news story. Marks & Spencer, HMV and cdwow.com all get the thumbs-up for being friendly, helpful and offering a no-fuss returns policy.

Another shop which attracts significant goodwill is Smyth's toys. It has a commendably relaxed policy when it comes to returns. The store, with 19 outlets in the Republic and six in the North, will take back most items if there is a problem and the customer appears to be genuine, even in the absence of a receipt. The chain has taken a business decision to design its returns policy for the benefit of the 98 per cent of people who are honest instead of designing it to catch the tiny percentage who will try to take advantage of it.

"We give a lot of discretion to our managers and if they feel somebody has a genuine grievance then they are empowered to resolve that problem at a store level," says Garret O'Bierne, the marketing manager with Smyth's. "Managers have the common sense to know if someone is coming back again and again and taking advantage of the returns policy. Good customer service is essential to what our brand is about and if people have a positive impression of what we do then they will come back every Christmas to do their shopping."

ANOTHER THING CONSUMERShate is being ignored by the businesses they are trying to contact. "Some companies seem to regard e-mails as one-way communication only," wrote one Pricewatch reader last week. "I am currently waiting for a reply to two e-mails from two different travel companies, one a query, the other a complaint. What is with them? Do they not read e-mails? This is a very large company. They were very willing to send me two requests for payment within a few days of each other, but sent neither acknowledgement nor tickets."

According to Tony Brennan, this is one of the most common mistakes businesses make. They promise consumers multi-channel points of contact and fail to deliver. The ICS recently sent e-mails to 300 companies using the e-mail addresses provided on their websites or given over the phone. Some 48 per cent of the mails went unanswered. "Companies need to deliver on the expectations they themselves set," he says. "If a company says they will ring you back in two days and they don't, then they are creating a real problem for themselves."

THE CORE ISSUEin customer service provision is cost, and the simple fact is that many companies need more bodies to answer the phones in their call centres and more reps on the road, Brennan says. "Accountants look at the cost associated with this and say it can't be justified." This is, he says a short-term and wrong-headed decision. "Ultimately, costs rocket if you don't have good customer service. Businesses should look at improved customer service as a revenue or profit enhancement opportunity."