If an applicant is unable to answer this question but has demonstrated previous industry experience, they may be proving that they are unsuitable for the industry. If, however, they have no previous experience, it might be better to outline this and cite an example of when they believe that they have received good customer service.
The company asking the question is using it to whittle down application forms into those that are more relevant and those who they don't think would be a good fit for the position. This means that they won't waste their time interviewing people who will not give good customer service, and will misrepresent their store or brand.
A good answer will reference an extreme case of past customer service, not an ordinary event, but when a customer was particularly difficult to handle, and demonstrate how the server both pacified them, and won around their way of thinking so that they left with a changed attitude, and a positive view of the store. If you have more than one story to demonstrate your experience, try and use the one that is most relevant to the company that you have applied for, e.g. Dealing with a customer on the phone for a call-centre, or in a shop for a shop. Also, try to avoid being negative about the customer, as this is usually a sign of a bad employee; even if you think they were in the wrong, it is your job to remain calm.