Mediocre customer service could be the final nail in the coffin for recession-hit companies, claims the Institute of Customer Service.

They could fail by losing sight of a basic business principle – keep the customer happy, according to new ICS chief executive Jo Causon.

She warns that organisations looking to cut costs by chopping staff training budgets could be making a fatal mistake.

“When the UK economy was booming and markets expanding the mediocre performers could get by,” she says.

“They can’t hope to do that now. Today organisations need to be at their best simply to stay alive, let alone grow.

“It is unrealistic in the current climate to expect organisations will not look to cut costs and that includes training and development budgets.

“But we would urge them to concentrate their training even more on key frontline customer-facing employees.”

ICS research shows companies with a reputation for service excellence and committed frontline staff have a 24% higher net profit margin than same-sector rivals who do not enjoy similar standing, and can achieve 71% more profit per employee.

It illustrates that those who aim for high standards will have a far better chance of survival – as well as helping lift the UK out of the recession earlier than would otherwise be the case, she adds.

“The UK’s economy is very much service-driven. At the ICS we intend to work even more closely with our members to help them not only live through the recession but emerge even stronger – which means the nation’s economy will be all the stronger too.”

Causon has joined the ICS as chief executive from the Chartered Management Institute where she was director of marketing and corporate affairs. She succeeds David Parsons who has retired.