Writing this blog in the middle of the biggest financial catastrophe in living memory is a sobering experience. No one can predict with any certainty what is going to happen in the next week, let alone the next few months or even years. What seems certain is that political, business and economic life will never quite be the same as it was. This is not just a market correction, as was suggested early in September; this is more like a seismic shift in the economic system we once called capitalism. The economic pundits who abhorred debt-fuelled growth are having a field day, shouting “I told you so” at every opportunity.

If you ever have a great customer service experience, what thoughts go through your mind? Given the generally low standard of service these days it was probably “WOW!” The key question is ‘Was it a one-off or is this level of service consistent for the supplier?’ The former means you spoke to someone who overcame the normal customer service processes, policies and metrics or was someone with whom you had a natural rapport. This is known as ‘service by default’. However the latter means service quality has been institutionalized within that organization and this is known as ‘service by design’. This is what separates average companies from great ones. But how is it achieved?

In 1776, Adam Smith published his seminal work, The Wealth of Nations, in which he called "division of labor" a "brilliant, good idea" that fueled the Industrial Revolution and led to today's global economy. Smith was focused on one key outcome: productivity. Pin-making was the example Smith used. Such was the book's impact on the world that we celebrate its publication on the reverse of £20 notes here in the United Kingdom.

It's 232 years later and organizations still apply this thinking. We have functions called sales, marketing, customer service, finance and IT—and then all manner of specialized tasks within each function. The silos have silos, and the pace and fractured nature of organization design have led to gaps and inconsistencies appearing at a much lower level, often between groups in the same department.

This has always been bad news for customers. But now it's bad news for companies because we've moved from a supply economy to a demand economy where customers are in control. Customer churn is the anathema of customer life cycle or service-based organizations like telcoms and financial services. High customer attrition can devastate even the most robust profit and loss statement. Having to reacquire the equivalent of 30 percent of your customer base just to stand still doesn't make financial sense.

The blessing (or curse) of running a customer service operation is that you always seem to see things from a different perspective to the rest of the business. For example whilst marketing, sales, product development and even IT are spending small fortunes on increasing market share, launching new products and implementing new systems, customer service is constantly under the hammer to reduce operating costs.

Sometimes I feel like a broken record, saying the same thing over and over again. “Customer service is the customer experience. It’s where the rubber hits the road and either reinforces the marketing message, sales promise and product expectations, or it damages your reputation forever.” In my experience, very few companies have a clear customer strategy. Instead they have a set of functional strategies, driven by different objectives and measured in different ways. The result is inconsistent customer experiences, and internal conflicts as well as poor ROI.

So what has customer service got to do with creating a differentiated customer experience? Well, depending on what kind of company you are, the answer nothing or everything. For some companies still operating in the dark ages, customer service is the defense. They don’t really want to talk to customers at all, but if they can get through the layers of IVR menus, we need to get them off the phone as fast as possible. Even if the customer service is via email, we firstly direct them to FAQs and knowledge bases.

I recently purchased a MacBook Air for my teenage daughter. Of course, I spoil her; it’s what dads do! My excuse was that her MacBook was too heavy to carry around school all day as well as all her books. It’s an absolutely stunning piece of equipment, but the pack didn’t have Disc One for Mac OS.

Opinion on the role of customer service is polarized between two extremes. To some, customer service is a cost center where costs should be minimized by speaking to customers as little as possible or, even better, by moving the operation to a far off land where costs are lower. Never mind that their language is different, the customers will just have to figure it out!

To the more enlightened, customer service is an opportunity to live the brand values, establish real market differentiation and absolutely the best way to deliver the customer strategy. Why? Because when customers call customer service they a) have a need and b) they are engaged with you. You have their ear. And if you can help them, they can be your friends for life. So when they call, it is the best time to help the customer get more from your products and services by ‘adding value’ to their relationship with you.

Why do customers call customer service? Usually it’s because they have a problem, an issue or a question. In other words, they need help. Jan Carlson called these the ‘moments of truth’; when the promise made by the brand and advertising is compared with the customer’s own experience.

Every engagement with the customer is an opportunity to either develop or destroy a customer’s faith in the brand. These engagements directly impact loyalty and long term customer value. So who better to represent the company than its customer service people? Who else in the business deals in realities? The buying experience can often be, shall we say, sub-optimal.

Customers are, of course, never over-sold or told untruths but misconceptions and misunderstandings do seem to happen quite frequently. And who does the customer call? You got it, customer service. But when the customer calls you it means they are focused and engaged. So apologise for the error, be helpful and friendly, solve the customer’s problem and build rapport and re-establish trust. What better way to represent the company.

Western countries have now moved from a supply economy, where we made things and sold them to customers, to a demand economy, where the customer is increasingly in control. As a result, companies large and small are struggling to adjust to this radical shift in power. The exponential growth in cocreation of new products and services is just one clear example of the impact of this change.

But even in the so-called developing world, that change is taking place, fueled by global access and distribution and enabled by the Internet. It is truly a global village. I was recently working with a large company in Pakistan that had grown massively in just under four years. Amid all the recent political and military turmoil, I was conducting service-excellence training for 850 executives, managers and team leaders.

So here we are in 2008. All the well-intentioned plans made last year abandoned as we battle with new economic and political conditions.

One of the most interesting insights from 2007 was the fact that service and marketing are still separate functions, doomed to travel to the same destination but along different roads. One would have thought that the twin pressures of increasing revenue and reducing costs would have forced them to work together – but no. Perhaps they think a miracle will happen – that by sheer chance the two would look totally joined up to customers? One thing is sure, the pressures on costs will drive more and more companies to employ segmentation and use automation wherever possible.

The Internet is a wonderful invention but I fear it has deflected management attention away from solving the real issue of the integration and alignment of pre and post sale activities to create consistency. Nevertheless it does offer companies, particularly small and medium sized ones, access to the world market in a way never before possible. We instinctively think of the web for marketing but increasingly we are seeing the web used for service and not just for online access to manuals, support, FAQs and questions to the faceless support team.

There have been traumatic events here in UK over the last 7 days that will ultimately have a profound impact on all B2C companies. It concerned Northern Rock, a medium sized building society (savings and loan) that became a bank.

Northern Rock experienced a run, that is all its customers wanted to remove their savings at the same time. This has not happened in the UK for longer than anyone can remember. The cause was a market rumour in the wake of the sub-prime collapse in the US.

On Friday the press first sparked concern and then fanned the flames by filming long lines of concerned customers outside Northern Rock branches and publishing in national newspapers and broadcasting on prime time national news. Northern Rock, we were told by the FSA (regulator), is financially solid but is experiencing a minor 'short term liquidity' problem.

The Bank of England and the UK government stepped in but both fell short of guaranteeing the safety of customer savings. This only fuelled concern and the lines grew. The website had long since collapsed under the deluge of customers wanting to move their money. Their anger at not being able to get at their money online was reported on the news and the spiral was now out of control.