On the surface of it, "Wow'ing the customer" seems to have no downside, except for any costs incurred. That's actually not so.
The Problem of Habituation With WOW
Habituation is a fancy psychological term that means "people get used to things". It's a pretty basic concept but you need to understand it as you contend with the WOW factor.
First, let's consider a single company -- one like Zappos, the online shoe vendor that really sells service as much as shoes. They create raving fans. The problem is that as people habituate or get used to this high level of treatment, their expectations and wants increase also. So long as Zappos maintains that superlative, almost singular customer service quality, it's all good. People will still be WOW'ed because the competitors in the niche serve up rather poor service in comparison.
The principle of habituation does suggest however, that Zappos will have more and more difficulty creating the "positive surprises" that fuel WOW. Over time the surprise and WOW factors will reduce somewhat.
Higher Expectations Make It Easier To Disappoint
The second issue is that as people habituate to the high level of service, and their expectations and wants rise to meet the level of service, any variation from the high standard will be immediately obvious, and surprising. To put it simply, if both Zappos and the neighbourhood shoe store "have a bad day", in similar ways, it will be far more obvious for Zappos customer than will be the case for the local shoe store. The moral is that if you try to WOW the customer, and then you don't, it shoes, and people will call you on it.
In The Event Competitors Raise Their Service Game...
Now it gets interesting. Imagine that a number of shoe stores raise their customer service game so they rival that of Zappos. (That's actually not possible in this particular case, because Zappos is a singularity). Now what happens is that in an attempt to WOW the customer, the industry as a whole, raises customer expectations and wants, and similarly, as customers get used to these higher standards, it becomes harder and harder to WOW them. The new high standard becomes the norm, and hitting it no longer creates the WOW, or the customer delight.
This may be more of a theoretical concern than a practical one, since we really aren't seeing competitors in any niche invest in customer service so broadly that the entire industry pulls itself up by it's bootstraps.
Still it's a good thing go contemplate.
If every business in a niche WOW's the customer, the habituation principle teaches us that NO business will create WOW.
So, Finally, Is WOW Bad?
No. But that's the wrong question. Treating customer service as a strategic tool means that we must evaluate any approach to customer service by looking at whether it contributes to the goals of the organization (usually profit, but not always). WOW is "good" if it does that. It's bad if it doesn't. There is no way to make a general statement about good or bad because it depends on niche, clientele, competition and a raft of factors.
What's important is that you don't embrace the power of WOW as a given. It may work for you. It may not.