Starbuck's: Delivering Customer Service

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Starbucks: Delivering Customer Service

Christine Day, Starbuck’s senior vice president of administration in North America, believes recent market research indicates customers are not satisfied with Starbuck’s customer service. To address this concern, she is proposing to invest $40 million to increase store hours in order to reduce customer wait times. Day believes there is a direct correlation between customer wait times and their overall satisfaction with service.

Starbucks has implemented a “secret shopper” program in order to spot check stores on their service, cleanliness, product quality and average wait times. The goal for average customer wait time is 3 minutes. The secret shopper scores for the past 5 quarters have shown a negative correlation between customer service and average wait time (exhibit 1). As average customer wait time decreases, the average secret shopper scores increase. In response, Day feels that adding an additional 20 hours to each of the 4500 North American Stores will reduce the customer’s wait time and in turn, increase their overall customer satisfaction scores.

Day’s plan will have the largest impact on the following three major stakeholders: shareholders, employees/partners and customers.
Starbuck’s shareholders are primarily interested in the plan’s impact on retained earnings and long term growth. Investing an additional $40 million dollars will reduce the shareholder’s short term earnings. Investors who were looking forward to larger dividend checks would be disappointed, but investors who were interested in the long term growth of their portfolio may support Day’s plan if she could show how this investment would positively impact customer’s loyalty and improve the company’s future profit potential.

Assuming the partners were looking for additional hours, this plan would be viewed favorably by store baristas and employees. During peak periods of business, they would have another employee to help share the workload and it could reduce the stress of “rush hour” on each individual partner. The popularity of this plan would be different depending on each store’s location, layout and manning. Stores with insufficient work flows could create or enlarge bottlenecks and the additional manpower may actually increase wait times. On the other hand, stores who have a hard time recruiting employees may not want to burden their existing overworked employees with an additional increase in hours.

In some stores, partners would prefer to reduce the quantity and complexity of available drinks instead of increasing available hours. Starbucks is known for innovative and seasonal drinks and over the years, the knowledge requirement for baristas has dramatically increased. Baristas are constantly challenged to learn more complex drinks and still perform to the 3 minute metric. Reducing the number of drinks offered may be an appropriate solution if there is evidence to show that there are a number of very unpopular drinks, but we do not have any current sales or market data to support those decisions. Additional research needs to be performed in order to assess this option.

Customers visit Starbucks for a variety of reasons and those who value short wait times may approve of the new manning plan if indeed it results in shorter wait times. Customers who visit Starbucks for the quality of their coffee or the inviting environment may not increase the frequency of their visits because of a shorter wait time. Customers who value the intimacy and personal attention their local Starbucks provides may actually disapprove of the plan to increase manning if it interrupts their established relationship with their trusty barista.

In 2002, Starbucks surveyed their customers to find out what store qualities they attribute to customer satisfaction. The top 6 of these responses referred to the actual store, relationship with the staff and product quality. Wait time was ranked 7th on the...
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