The climate of the recession-ridden early 1980s, when customers blithely traded away high-quality service in exchange for price reductions or convenience is no more. Instead, customers are demanding service again. And companies of all sizes are realizing that their strongest selling point can sometimes boil down to treating customers as they would like to be treated -- or better. "Consumers are beginning to feel that their needs haven't been met," explains Bonnie Jansen of the U.S. Office of Consumer Affairs. "They're sick of getting poor service all the time."

And the message is getting through. According to John Goodman, president of the Technical Assistance Research Programs Institute (TARP):"In the past few years, companies began to realize that service was really competitive factor, and began to view it as an integral part of their product."

The growing significance of meeting -- or exceeding -- customer demands for quality service has special implications for small business. For it is in this arena that small companies can, in the least expensive way, set themselves apart from the competition.

In fact, a recent three-year study by the National Federation of Independent Business (NFIB) in Washington, D.C., showed that small businesses which put heavy emphasis on customer service were more likely to survive and succeed than competitors who emphasized such advantages as lower prices or type of product.

"A strong customer ethic must guide your business from the inception," writes author and business owner Paul Hawken in his book, Growing a Business. "No matter whether you manufacture, grow, produce, distribute or sell, you are 'in service.' "

Quality customer service begins with your employees. An owner of a successful chain of hair salons advises that the first step is to set standards. Then make sure everyone in the company understands them. Finally, he says, reward employees for achieving your service goals. And be sure to seek out and solve any annoyances they might have that could lead to poor morale. An employee with a complaint cannot be completely effective in dealing with customers. "If you take care of your employees, they will take care of your customers."

On the other hand, Hawken warns, if your employees are not customer-oriented, no standards or goals will change that. "We concentrate on hiring people who embody the quality of service for which we strive. It is difficult to teach someone to be helpful and serve others if he or she is misanthropic to begin with."

Hiring the best people means trusting them. Your employees should be able to do what is necessary to make the customer happy without fear of reprisal.

Says Hawken, "Policies and procedures are helpful only as guides toward an end result. When employees run out of possibilities to make the customer happy, they must have the latitude to improvise to make it right. Most employees operate in a state of fear that their own generosity with a customer will be viewed as foolishness by their boss. This situation will stifle flexible customer service."

In the smartest companies, asking questions and listening carefully to the answers is an important part of customer service. These firms train their employees to focus on what the customer is saying, and then tailor products or services to meet customer needs. Says one corporate executive and his words hold true for smaller firms as well, "Knowing what's on the customer's mind is the smartest thing we can do."

It is also cheaper than attracting new customers. According to the Customer Service Institute, 65% of a company's business comes from existing customers, and it costs five times as much to attract a new customer than to keep an existing one satisfied.

Losing a customer is even more expensive. According to studies by the Technical Assistance Research Programs Institute, 91% of unhappy customers will never buy again from a company that has displeased them and will also voice their dissatisfaction to at least seven other people.

This responsibility to be receptive does not lie solely with your employees, however. If you want your business to be successful, you must listen to and talk with customers as well. There is no substitute for getting out "where the action is" to learn from the customers themselves how you might serve them better. The best business owners are not only committed to staying close to their clientele, but also identify with them. They give their customers the level of service they themselves would expect to receive. Moreover, a good relationship with customers necessitates paying attention to every link in the distribution chain. That means listening to everyone who helps get your products to market and asking them for suggestions on improving your service. Be sure to take advantage of feedback from employees, especially those whose everyday job is dealing with customers. They can serve as tremendous reservoirs of information.

"Our goal as a company is to create customer service that is not just the best, but legendary," Paul Hawken asserts. “‘Legendary’ gives everyone who deals with customers a rich sense of the possibilities."

Many owners search for a special touch that will make them stand out from the crowd. Discount coupons, longer hours, home delivery or free coffee, for example, all show customers you want to take that extra step to please them.

Some of the most effective "extras" are really very basic adages of conducting good business, although customers are often surprised when they take place. These include answering the phone by the third ring; treating customers respectfully and courteously at all times; greeting them by name; promptly answering their questions and, if you can't, getting back to them with an answer as quickly as possible; and manufacturing high-quality goods that work the first time and keep working.

To succeed, you must give your customers what they want, not what you think they want. And as you never know who might eventually become a customer, that means providing courteous, friendly service to your suppliers and others with whom you come in contact, as well as current customers. If you want to keep customers coming back for more, practicing the Golden Rule has never made better business sense.

Critical to keeping customers happy is understanding them and the way they think. For example, customers do business on the basis of emotional desire: they want what they want -- when they want it. Customers also tend to gravitate toward a company or group of people they like. Plus, most customers have a strong tendency to stick with businesses with which they are familiar, and are slow to change buying habits unless given a very good reason.

However, when they are displeased, even by a small disappointment or discourteous word, various surveys have revealed that customers tell from seven to 11 people about their dissatisfaction.

An important key to serving customers well is this: don't try to change them. Here are five specific steps to help you take full advantage of the critical element of customer care:

1. Conduct your own survey. Profit from the ideas, suggestions and complaints of your present and former customers. Talk and meet with your customers. Ask questions. Learn their attitudes, what they want and what they dislike.

2. Check employees' telephone manners periodically. This link is particularly important for small businesses, as bad telephone handling can undermine other constructive efforts to build a profitable enterprise.

3. Rules such as prompt answering and a cheerful attitude of helpfulness are of critical importance. Have someone whose voice is unfamiliar play the role of a customer or prospective customer, preferably a difficult one.

4. Make customer service a team effort. Use group meetings, memos, posters and in-house publications to build customer consciousness throughout the organization. Continually drive home the crucial rule that getting and holding customers requires team play, and invite employee ideas.

5. Extend your efforts after hours. It's the friendly feelings people have that draw them to you and your business. Take advantage of the relaxed atmosphere of social occasions or a neighborly chat over the back fence to turn friends into customers, or to reinforce the loyalty of existing ones.