Good customer service: a lifeline to retain customers?

Is good customer service a lifeline to retain customers?

Many companies know how to deploy fully fledged customer service but will not because of economic imperatives. A two tier system is often created whereby customers are only offered a good level of service if they threaten to chose another supplier, a clear case of emergency . Customer service executives with the full range of skills are allocated to the retention effort ("we are going to lose this customer unless we do something...") and become the lifeline to retain valuable customers. Does this make sense? If the service was better in the first place, customer retention would not be an issue.