The level of customer service in America sucks. How often does the individual you interact with at most establishments, look you in the eye, smile, and talk to you in a friendly tone of voice. Maybe I'm too young to remember the days before Nordstrom, generous return policies, and frequent flyer miles. Perhaps my generation has higher expectations, ever since the customer became king.
But do people really care about service? Nordstrom, known for its superior service has seen it's stock increase 500% since 2003. Starbucks, whose servers are consistently nicer than any store I visit, is continuing to grow at a scary rate. On the other hand people tend not to care about service when they can not afford it, take Wal-Mart for instance.
Seth Godin writes in Small is the New Big that "Customer service we see time and time again is a profit center; it is the cheapest form of marketing."
It is human nature to want to experience positive interactions with people, even if we will likely never talk to them ever again. Everyone probably remembers times when an act of inhumanity has permanently tarnished your perception of a brand. For me it is why I have been trying to switch from Wells Fargo, though the direct deposit has proven to be quite a switching cost.
My point is that customer service can be a point of differentiation that gives you an advantage over your competition. You even take a low cost strategy and still provide excellent service, e.g. Southwest Airlines. All it takes is a positive attitude.