Woodward & Lothrop Inc., following the lead of scores of retailers across the nation, is returning to basics.

Next week, the Washington retailer will reinstitute a commission pay system at four of its 16 stores as part of a campaign to improve service. The goal of the program is to provide enough financial incentive to attract a permanent, better-trained sales force that will provide customers better service. This in turn should produce higher sales at a time when Washington area department stores are faced with an explosion of competition from some of the biggest names in retailing.

Under the new pay system, all salespeople will receive a commission, in addition to their base pay, on every item they sell. Woodies officials predict some salespeople will be able to nearly double their earnings.

Sales clerks at the four stores also will be given self-help training courses, business cards and personalized stationery as part of a major effort to upgrade their jobs.

"We're just going back to the basic components of how to run a store," said Joseph Culver, Woodies' senior vice president for personnel and services. "What we are doing is nothing totally revolutionary." But, he said, "over the years we have spent a significant amount of time on training, but it was all merchandise related -- how to run a terminal, conduct a credit transaction, give correct change. We didn't spend time on human selling techniques such as approaching customers."

{A recent Washington Post poll of area shoppers showed that nearly half the people questioned considered service to be mediocre and getting worse. Details on page H9.}

Woodies is not alone in its efforts. After years of trimming payroll costs and special customer-service programs to be more price competitive with the growing number of discount and specialty stores, many other major department stores and national merchants such as Sears, Roebuck & Co. and J.C. Penney Co. are rushing to adopt costly programs to provide better service to customers.

One after another, major retailers here and nationwide are reimplementing commission pay schemes that many abandoned years ago because of high costs. Today, retailers are willing to incur the added expense, hoping the commissions will encourage employes to sell more.

With the change in their pay systems, many merchants are returning to permanent, full-time employes rather than relying on part-time workers as they do now. By using more full-time "sales associates" the merchants hope to provide customers with salespeople who will be more knowledgeable about store goods.

Training for sales clerks is also taking a new focus. Stores today are spending considerably less time teaching new employes how to use a cash register and are spending far more time teaching how to approach a customer -- and sell them merchandise they didn't necessarily plan to buy.

Not all customer complaints involve the image conveyed by sales clerks. In response to customer complaints, stores are doing things like installing infant changing tables in men's restrooms to accommodate today's fathers and are readjusting the home-delivery schedules to serve consumers on weekends and evenings.

And then there are the special touches to make stores unique: installing a travel agency near the luggage department or placing "call buttons" -- such as the ones found in airplanes -- in dressing rooms so customers do not have to wait endlessly for sales clerks to get different sizes or colors.

"Retailers -- especially department stores -- who are faced with increased competition are asking themselves how to go forward in the future," said Leonard L. Berry, director of the Center for Retailing Studies at Texas A&M University. "Their answer is to go back to their roots and provide better service," Berry added.

Without a doubt, "customer service is the hottest word in retailing today," said George Stasick, manager of services and customer relations for J.C. Penney.

The reason is obvious, Stasick explained. "Stores are getting to look a lot more alike and everybody is selling everybody else's label. It's a lot harder to distinguish yourself from others."

"The only differentiating factor for retailers is how they make the customers feel in the stores," said Berry. "Service is the best opportunity to create a sense of difference."

Or, as Harold F. Nelson, vice president and general manager of Washington's Neiman-Marcus store, simply explained: "You can find my gloves many places; the only reason you're coming to Neiman-Marcus is you like the people."

Thus it comes as no surprise that most stores have targeted customer service as the "single biggest problem they have," according to Paul Koenigsberg, vice president of the retail consulting firm Management Horizons, a division of the accounting firm Price Waterhouse. "Stores spend tens of billions in advertising, promotion, merchandising and store remodeling. So you have products that are good in environments that are good. But when a customer comes in, a retailer loses the sale because the level of service is inadequate."

Socio-economic change is a major reason why retailers are trying to improve customer service programs. "People are busier today," noted Paul LaBlanc, Saks Fifth Avenue's senior vice president for marketing. "With two-career families and people working more, people need an efficient and pleasant shopping experience."

Perhaps nowhere is customer service receiving more attention than in the Washington metropolitan area where local merchants are bracing for the entrance of two of the nation's leading retailers. In March 1988, the Seattle-based Nordstrom's Inc. will open the first of several stores planned for the local area in the Tysons Corner shopping center. Meanwhile, across the highway in the new Tysons II shopping center, R.H. Macy & Co. is building a store that is scheduled to open in July.

"The arrival of Macy's and Nordstrom's is causing local retailers to re-examine their policies and compensation issues," said Garry Curtis, head of the retail bureau of the Greater Washington Board of Trade.

Among retailers, Nordstrom's and Macy's are reknown for their large selection and preeminent customer-service programs. The result is immediately apparent in the bottom line, with both selling considerably more per square foot than other American retailers. "Nordstrom's in particular has a reputation for very attentive and knowledgeable salespeople," Koenigsberg said. "Whether you attribute that to their commission structure {which pays one of the highest salaries in the business}, their training or the socio-economic level of their employes, it's clear that their customers have demonstrated a willingness to pay a better price for that service," he added.

That fact has not escaped the notice of local retailers who are launching efforts to keep their customers from turning to Nordstrom's or Macy's. "We can't just wring our hands and say we're the Washington store so keep with us," said Woodies' Culver. "Customers are not that loyal."

Neither are employes, especially in the suburbs where retailers have encountered increasing labor shortages. That problem is expected to worsen when Macy's and Nordstrom's arrive. Nordstrom's, alone, is planning to hire more than 500 employes for its Tysons Corner store.

"If we want our associates to treat our customers well, we have to treat our employes well," Culver said.

To meet both goals, Woodies on Nov. 1 begins a compensation and customer-service program at its stores in Tysons, Fair Oaks mall, Montgomery Mall and Chevy Chase. "These are the most competitive malls in the labor market," Culver said.

The centerpiece of the program is the commission system that will permit sales clerks to earn an additional 1 to 2 percent commission on their base salary, which will increase for many employes.

The precise commission level will be determined by an employe's experience, with the more senior sales associate (who will earn as much as $8 an hour in some departments) receiving 2 percent of the goods he or she sells while a more junior associate (who will earn about $6.75 an hour) earning a 1 percent commission.

At the same time, Woodies plans to offer hundreds of its employes an expensive self-improvement program (paid for by Woodies) sponsored by the Seattle-based Pacific Institute, which has provided similar programs to Nordstrom's. Consisting of 10 two-hour sessions, the program is aimed at improving an individual's self-esteem and, as a result, his or her productivity.

A small group of employes from Woodies' downtown store has finished the Pacific Institute course and the results were encouraging. "People loved it and said it made them feel wanted. We also saw some improvement in productivity," Culver said.

The business cards and stationery are additional tools to encourage more client solicitation. Woodies officials said they were also considering a clothing allowance or some other method to make it easier for associates to buy clothes for work.

Taken together, the purpose of the new program is simple, Culver said. "We want to reapproach the profession of selling and encourage it as a profession. We, as an industry, have decreased the emphasis on the profession in the past, making it a part-time job instead of full-time, saying it is not important enough to be a full-time career."

It is no surprise then that Woodies also is trying to transform its work force, which is about two-thirds part-time to one that is primarily full-time. "With the high turnover in part-time employes, we hope to achieve that goal by the end of the year," Culver said.

Woodies is not the only chain revamping its pay system. Last May, Bloomingdale's also began giving "incentive-based bonuses" -- or a small percent of the value of the goods they sell -- to associates in its two Washington stores.

The only other Bloomingdale's to have the same pay system is in the newly opened store in Boca Raton, Fla. At other stores, sales associates are primarily receive a straight wage, although in some departments -- such as furniture and men's wear -- employes are paid a commission.

"Our philosophy was that employes should get rewarded for what they produce," said Barbara L. Hammer, vice president and general manager of the Tysons Corner Bloomingdale's. Hammer declined to give details about the of bonuses, saying only that the level depended on a sales clerk's experience and the department in which they worked.

"The results have been phenomenal," Hammer said, noting sharp increases in business in several key merchandise lines. ... There is no question that the store has incurred added expenses with the incentive-pay system, but you have to go back to go forward. It's like putting capital in a building. The return doesn't necessarily come 12 months later. It's more like 48 to 60 months."

Chainwide, Bloomingdale's has expanded its training program to give new employes extra days of lessons on how to deal with customers.

Additionally, customer-service training has been expanded to include employes not working on the sales floor but who customers encounter daily -- such as bill adjusters.

"There is now a formal six-hour program on telephone skills for anyone who deals with anyone over the telephone," said Frances Hurley, Bloomingdale's manager of staff training and development.

The Hecht Co. also is examining ways to improve its customer-service programs, Hecht's Chairman J. Warren Harris said. But the company will not be ready to discuss the programs until the first of the year, Harris said.

Harris did say Hecht's was not planning to initiate a storewide commission pay system. (Like other stores, Hecht's has commission-based salaries in the furniture, men's clothing, cosmetics and shoe departments.)

Hecht's examined the incentive-pay systems of other chains but found "that the incremental sales from these pay systems weren't justified by their increased costs," he said.

Meanwhile, Sears is conducting a very limited commission experiment in 12 of its 800 stores. One of those includes the Landmark store here.

Nationwide, Sears has "substantially increased the number of hours we put on selling," said Everett L. Buckardt, Sears vice president-operating. "We have added millions more hours to the selling floor than we had a year ago to provide more coverage."

The company's training program has been changed to give new employes more guidance from existing employes by setting up a buddy system. Previously, new employes were left on their own, getting help only when they needed it from their supervisor.

At the same time, Sears has improved its backroom systems. It is, for example, beginning to install telephones in delivery trucks so drivers can give customers more accurate delivery times.

Sears has also readjusted its schedules to make deliveries on evenings and weekends.

Despite the changes retailers are making, they are the first to admit that the results of improvements may be far from immediate -- both for them and for the consumers.

"We as retailers want instant feedback and gratification," said Culver. "But that would not happen here. It may take months and maybe years to make the cultural changes."

But, Culver added, "we've often told ourselves that the thing that sets us apart from our competition is our service level in our stores.

"In today's competitive market, that means you have to put your money where your mouth is."