The premise of any business is to provide a service or a product that satisfies the needs of a client. In order to improve client engagement you have to invest in incentives, training and such things for the customer service staff to improve their engagement. So, good customer experience will cost a bit.
Think about the businesses you keep doing business with and what it is that keeps you coming back. A caring experience and consistency are typically on top. This does not mean utopian perfection, but just as important as smooth, positive transactions is how the glitches are handled. A customer whose business is earned at every interaction is a customer for life.
Good customer service is more the manifestation of an organization's culture, which must be consistently nurtured and celebrated by everyone within the organization. Every individual can embody a focus on superior customer service in their daily activities, communications and decisions, whatever their specific job title or level in the organization. If everyone from the receptionist to the sales staff to middle management to the CEO is customer-focused then the company truly has a sustainable business model, and it leads to not only above-average top line but also bottom line growth in the long term.
A business cannot provide great service that costs more than it will earn. So the million dollar question is how to decide what level of service is sustainable, and how one justifies that to the CFO or the CEO or the board. No one is going to allow you to spend money without first building a business case. The general answer is to provide an appropriate level of service to those customers you want to serve and to keep - it saves the cost of luring new customers and you should know what the existing customers can accept - and what they would reject.
The challenge is to strike a balance - find the appropriate level in alignment to the business strategy. If you want to have the very lowest costs then minimize or skip service (e.g. like Internet companies with no phone or live chat support); if you aspire for differentiation, then search for the appropriate service level by ROC (return on customer).
Perhaps the most important and lofty reason to provide excellent customer service: it's the right thing to do from a standpoint of purpose and integrity. So-called enlightened company cultures realize that not every policy makes sense from a purely financial perspective. However, employees, customers and vendors appreciate great service so much they reinforce positivity via communication, making the work place a very gratifying experience. These companies often don’t even attempt to measure the benefit this positive feeling brings - though it probably could be measured. The motivation is in the culture - they wouldn't do it any other way. It may yield lower profits, or it might not. The focus is to “do the right thing,” first, for the employees, customers, vendors - and lastly, shareholders.
