Assume the company doesn't need their business desperately, and that the customer has just said/done something that would normally make Gandhi slap them in the face, and that the employee will not be fired or reprimanded no matter what they say. And that there is no manager to call and no other employees.
Here's my take: in this situation (which is not hypothetical), it is in fact better overall to say "Shut up, you know you're being an ad for contraception" when this results in a calmed-down customer, an employee who won't someday go postal because of all the frustration from being a doormat (or "the bigger person" whichever way you want to look at it), and more business for the store since the customer ends up buying something and coming back.
Or, the customer will leave on their own but know it was because of their actions, or because they can't abide taking 1/10 of what they give out. Me, I wouldn't want this customer in the store unless they calm down, and if polite warnings don't work then a rude one is the next step BEFORE kicking them out. Even if the customer is just offended and leaves, that's better than saying, "Yes, sir, sorry sir, it won't happen again sir" to someone who just insulted your intelligence, ancestry, legitimacy of birth, etc. etc.
I was ashamed for being rude to a customer, but now I think there's just something very, very wrong with the idea that one should never talk back. And with the idea that everyone deserves good service, even if they don't bother to make any sense, take a bath, or treat you with as much respect as their car.
Yes, being in customer service means not talking back. The customer is always right, corporate knows best, and always smile. I just think these ideas are wrong and harmful to society.
Oh, and I won't see responses for about 3 days. I thought it'd be interesting to X-post it in customers_suck and my own journal. I really do want to know what the general opinion on this is, I'm not just trying to aggravate people.