Why customer service is the #1 priority and why it's so difficult to do it right

I found it very interesting that in IDC's CEO priority list, Customer care/service appears as #1. And it's the second year in a row that this is the case.

I've been discussing this with some senior executives lately and here's why I believe this is the case. I find it normal that customer care is seen as a priority, but the most interesting question for me is why it's so difficult to achieve.

Why customer care/service is the key priority? The answer is because bigger competition, means, bigger risk of loosing customers. As simple as that. Consequently, you better not give them reasons to leave. As we have all experienced in most cities around the globe, customer service in restaurants has been deteriorating for some time. Would you change your place for lunch if someone offered a better customer service? I would. Which means that, treating your customers well when there is competition and they do it better, is critical. Take the example to your interactions with your bank, telecoms operator,...And just see how the industries where there is no competition, are the ones where customer service is just poor.

But let's move into the second question. Why is it so difficult to excel on it, or why most companies fail at it? I have come to the conclusion that there are some crucial elements that help explain it:
1- Today, most industries are applying multi-channel strategies, i.e., you are interacting with your bank via web, phone or branch. What does this mean? That the bank has a big nightmare simply keeping track of all your interactions and reacting accordingly. Have you had a conversation explaining to the person in the call center that you already explained her colleague one week ago what you did over the web and the problem has not yet been solved? You get the point.
2- Customers today can know more about your products and those of the competition than your own employees. Again, do you invest time comparing competitive product offerings in the web before deciding for a mortgage or an investment fund? What exactly is the value you get from the bank employee?

What does this mean. That companies are much slower at adopting best practices to manage customer information wisely than their customers are at adopting the most convenient channel. And also, that employees' knowledge evolves slower than customer knowledge because obviously the second has a vested interest.