Starbucks: Delivering Customer Service
In 2002, Starbucks is a dominant specialty-coffee company in the world with more than 4,500 stores in North America alone. The company is still on fast retail expansion but the customer satisfaction is declining due to long waiting time. We recommend that the company invest $40 million annually to hire more baristas and thus to improve speed of service. According to the result of break-even analysis, the company can make a profit from the investment if more than 11% of the customers can be turned to a higher level of satisfaction. As the survey shows that 10% of customers feel more like a valued customer if they get faster and more efficient ...view middle of the document...
Third, the products are much more diverse in 2002 than in 1992. Fourth, the customer base has also grown by a great extent from 1992 to 2002 and the customers in 2002 tend to be younger, less well-educated and in lower income bracket than those in 1992.
3&4. Reasons for Starbucks’ declining customer satisfaction scores and customer segments
As Starbucks introduces more and more new products, making the complexity of a barista’s job increase dramatically, the barista has less time to interact with the customer and keep the store clean and the waiting time is also longer than before. The fast retail expansion and customer base expansion has brought many inexperienced store managers, which also lead to a decline of customer satisfaction. Besides, the customers have changed over time and their expectation has also changed. It was believed that there was a service gap between Starbucks scores on key attributes and customer satisfaction.
The customers can be divided into two mutually exclusively segments: new customers and established customers. Starbucks should target both segments because new customers are more likely to be the majority of the customer base in the future while established customers are still expanding and they are more loyal and contribute more to the brand. When the company is making strategic decisions, it should take into account of the change in customer base and their expectations.
5. Ideal Starbucks customer from a profitability standpoint/ Ways to ensure that this customer is highly satisfied/ Value of a highly satisfied customer to Starbucks (Exhibit 1)
It is no surprise that lower prices are not one of Starbuck’s values that lead to its success. With Starbuck’s concentrating mainly on value, customer satisfaction, and atmosphere, there was little room for low prices. The customer is changing away from the established high-income business- woman. The typical Starbuck’s customer that has grown into existence, in the late 1990’s and early 2000’s, tends to be “younger, less well-educated, and in a lower income bracket”. The customer base also grew in that a larger number of Hispanic and Cuban- Americans became a customer of Starbucks.
The ideal Starbuck’s customer would be the customer that visits a Starbuck’s at least eight times a month. Conducted research shows though that customers in this bracket visit much more than eight times a month, with the number of visits per month averaging eighteen. These customers make up 62% of all Starbuck’s transactions. If the number of customers who visited this often increased, sales would increase tremendously. Overall, Starbucks should put focus on bringing in the current customer more often. When targeting consumers the geographical location, in terms or rural and urban areas, would not matter; both of these markets present the same customer patterns.
To ensure that the customer is highly satisfied with every element of the Starbucks experience, there are a few key...