Starbucks Delivering Customer Service

Starbucks: Delivering Customer Service

Starbucks: Delivering Customer ServiceOleh :Jolinna Michelia Bitti148115187Leonardo Susanto Utomo148115190Company Background StarbucksThe Starbucks Value PropositionIn 2002, market research has shown that Starbucks has a gap in meeting its customers expectations in terms of customer satisfaction.

So she proposed to improve the service time such that each order is served within 3 minutes. However, this solution would cost Starbucks 20 additional labor hours per week thereby $40 million per year. Is 20 seconds increase in speed of service really worth $40 million per year?

Perkembangan Financial Starbucks setiap tahunnya berkembang dengan baik

Market share dari Starbucks cukup besar dan akan berkembang setiap tahunnya, dimana Retail Coffee market tiap tahunnya akan bergeser ke Speciality Coffee Shop

Overall opinion of starbucks sangat rendah 25% ( High Quality 34 %)7

Semakin Puas Customer maka akan meningkatkan penjualan8

Christine Day, Senior Vice President that the speed of service was the main reason for this decline in customer satisfaction

improve the service time such that each order is served within 3 minutes. This solution would cost Starbucks 20 additional labor hours per week thereby $40 million per yearAnalysisCustomers: The demographics of a typical Starbucks customer have changed drastically in the recent years. From Exhibit 8 in Starbucks case document newer customers of Starbucks are younger, less well-educated, low income, less frequent visited to the coffeehouse and had very different perceptions. The overall attitude of Starbucks is very low on 25% by new customers where as the regular customers stood in 44%.While many factors influenced customer satisfaction, overall service and speed of service were identified as the most influential; a quick glance at Starbucks's recent customer satisfaction (Exhibit 10 and Exhibit 11 in Starbucks case document) reveals that customers did in fact express dissatisfaction with the efficiency and speed of service. From Exhibit 9 in the Starbucks case document we can learn that greater customer satisfaction directly results in higher potential sales. Since there was a strong and positive relationship between customer satisfaction and future potential sales, achieving high customer satisfaction is a key factor to Starbuckss sales growth. In fact, it can be made known that by transforming unhappy customers to satisfied ones, or moving the satisfied and unhappy customer to a highly satisfied customer the Starbuckss revenues can be increased between 361% and 1478%, respectively. Competition: Starbucks is clearly ahead of its competitors in terms of size of operations and profitability. In the US, its main competitors are small-scale specialty coffee chains like Caribou Coffee, other independent specialty coffee shops and donut and bagel chains like Dunkin Donuts. From Exhibit 6 of Starbucks case document we can observe that despite of the fact that there are many specialty coffee shops on the raising, Starbucks still holds a leading edge.

Company: Starbucks pursued its overall objective to establish itself as the most recognizable and respected brand in the world by focusing on retail expansion and product innovation. Starbucks had 20 million customers and 5000 stores and still growing. From Exhibit 2 and 6 in Starbucks case document it is clear that Starbucks was constantly expanding and growing its market share in the specialty coffee market. The Starbucks market share in the specialty coffee market grew by 29.92% between 2000 and 2002 and its expected to grow by an additional 61.11% by 2005. Historically, Starbucks invested minimal on advertising. Starbucks was also an employee friendly organization. Starbucks have approximately 60000 partners/employee, of which most of them were hourly wage employees called baristas. Employees were highly valued and well taken care of by providing insurance coverage, stock options, and internal promotions.AnalysisContext: Starbucks was constantly investing in new product innovation to drive sales and growth .The financial numbers reflect this growth (Exhibit 1 from Starbucks case document). But recent market research showed that customer service, on which Starbucks prided itself, was perceived as unsatisfactory. Customers viewed Starbucks as a corporate giant focused on making money and growing in size. It showed that Starbuckss strategy of using customer snapshot scores to measure service performance was proving ineffective.

Analysis