Markdowns weren't the only thing retailers stepped up during the holiday season - they were also improving customer service.

Department stores, discounters and specialty retailers were more attentive to shoppers that showed up for what turned out to be the worst holiday spending season on record, a new survey found.

Nordstrom Inc. (JWN) and Kohl's Corp. (KSS) ranked highest in the department store group while Costco Wholesale Corp. (COST) and Barnes & Noble Inc. (BKS) did best among specialty retailers, based largely on the service and products they offered.

Wal-Mart Stores Inc. (WMT) showed the biggest improvement among discounters, based primarily on the low prices the retailer offered.

The showings are part of the University of Michigan's annual American Customer Satisfaction Index, in which about 15,000 consumers were polled during the fourth quarter.

Department and discount stores saw their index score rise 1.4% to 74, recapturing their 2006 level after a one point drop in 2007.

Specialty retailers' score rose 1.3% to 76, their highest level since the University of Michigan began tracking the group in 2001.

While it is questionable if better customer satisfaction tempered the industry's precipitous sales decline, attentive employees did engender goodwill that could compel customers to return and spend more when conditions do improve, said David VanAmburg, managing director of the University of Michigan's index. "For all of these companies the goal is to play defense, hang on to what you have and make sure customers are satisfied."

Customer satisfaction is something that can be somewhat controlled in an environment that is still rife with uncertainty, and some retailers say they are very attuned to serving shoppers well.

Myron Ullman, chief executive of J.C. Penney Co. (JCP), said the retailer is focused on training and confidence-building, with the engagement between employer and staff "key to delivering customer service."

Ullman spoke last week during a conference call J.C. Penney held to discuss its January same-store sales, which fell 16.4%.

While the drop was among the biggest by the 35 retailers Thomson Reuters tracks, J.C. Penney has avoided the kinds of large layoffs that are peppering the retail industry.

The job cuts are largely at retailers' corporate offices, but can still hamper their ability to retain, or even improve, customer satisfaction scores because of low morale at stores as employees worry about their own jobs, VanAmburg said. "Layoffs are coming much more deeply now."

Still, the effort is worth it, VanAmburg said. "You are talking about quality of experience and that is important in good times and in bad."

-By Karen Talley, Dow Jones Newswires; 201-938-5106; karen.talley@dowjones.com