PC Magazine posted a list of 10 companies using Twitter in interesting, novel ways. One of the more common uses was as a customer service channel, such as what Palm and some folks from Sprint have been doing.
And it's fairly easy to do. With Twitter's search engine, it's relatively painless to stay abreast of any mention of your company or its branded services. Monitoring this constantly is essential to initiating timely contacts with customers who mention they are having problems.
But, before companies jump into offering customer service via a novel medium like Twitter, some caution should be taken; while the payoff of an innovative move like this can be significant to your customers, there are easy mistakes to be made. So, a quick list of some general lessons:
1) Twitter isn't the best option for most, or even many, of your customers
For part of my PhD dissertation, I worked with customer support of a major ISP researching how they interact with customers over various channels (at the time, it was phone, email, and IM). We found that different problem types and different customer needs were most effectively handled via different media (due to the characteristics of those media)...there was not one medium that did the best under all circumstances.
So what does this mean when using Twitter? Different customers are going to have different needs. Some are going to have very simple problems that can be addressed quickly and are going to be fairly matter-of-fact/rational about the issue. Twitter could be a terrific medium for those kinds of situations.
But, many customers are going to have complex problems, be upset about the problem, or both. In these cases, Twitter is unlikely to be the best choice. In these situations, the 140-character limitation of Twitter makes it really difficult to engage in complex conversations with completeness and clarity. And in cases where the customer is upset or angry, you need to convey empathy and concern. The terseness required in Twitter is just not adequate for mollifying emotional customers.
2) Use Twitter to route customers to better support channels in your firm
Instead of trying (and likely failing) to address customers' issues via interaction on Twitter, use that opportunity to direct customers to those other people/channels in your company who can best handle them. But don't just rely on a message like the following:

You clearly risk losing the customer. Instead, ensure the hand-off happens by getting the customer's contact information (obviously best if done via direct message) and then passing that onto the appropriate channel so a support rep can then join and continue the conversation that was started on Twitter through whatever medium is best suited for the problem at hand (phone, email, etc.).
3) Failures are public spectacles
It's important to remember that Twitter is a social medium. Any failure on your part to soothe an aggravated customer could easily turn into a public shouting match, even if the shouting is only one way. And to make matters worse, that conversation is persistent, there for the customer to reference for any and all friends to view. A happy customer might tell a friend, but an unhappy one will tell the world. And, since that unhappy customer is already sitting there in front of a potentially huge social network, that negative word-of-mouth can spread quickly. This makes it just that much more important to avoid long, public conversations with upset/angry customers on social networks like Twitter. If the customer wants to vent, let them rant over a medium that is isolated away from public scrutiny and where they are guaranteed to have the customer rep's undivided attention.
4) Do it well, or don't do it
As social media are still fairly new to many companies, it's tempting to let an employee or two who are particularly interested in the medium "try it out" informally, perhaps even during off-hours. This approach is unlikely to result in highly satisfied customers for a few reasons. First, the hand-offs mentioned in #1 above are unlikely to happen smoothly and quickly, thus risking further alienating a customer already having problems. Second, these employees who are interested may not be the best people in your company to do this; they may not even be customer support professionals with appropriate training and/or people skills. And third, a lack of formality means that key lessons may not be captured in order to help improve future efforts at using social media for customer service.
No, instead, set up a quick team with appropriate resources. This doesn't have to be, nor should it be, a several-month project to assemble the team and create policies and document processes. But, some level of formality can be helpful, even if it's simply a list of contacts within the company for handing off different types of problems/customers and a regular (e.g., daily) huddle to share insights and set expectations. This will likely be a very new way to engage the customer, so learning is inevitable. You're unlikely to get it perfect from day one, but getting there as quickly as possible is the key to creating an advantage over your competitors.


This story about the famous Korean Taco truck tells a great Twitter story: http://www.newsweek.com/id/187008