Starbucks Coffee Case Study

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Starbucks: Delivering Customer Service
What factors accounted for Starbucks extraordinary success in the early 1990’s? What was so compelling about Starbucks value proposition? What brand image did Starbucks develop during this period? Starbucks captured a tremendous amount of success in the early 90’s by opening European-style coffee houses targeted toward affluent, well-educated clientele. Howard Schultz, the CEO that bought the company from the original owners, envisioned creating a ‘third place’ for people to meet. Rather than just treating the home and office as the primary places people spend their time, the company introduced Starbucks as a ‘third place’; customers were encouraged to linger and socialize at their locations. The company did not rely on a formal marketing strategy, but rather used the atmosphere of their stores to create a ‘coffee experience’ for customers. The company’s value proposition was used as the focal point of their brand strategy. Their goal was to make coffee consumption a part of everyday life. The proposition had three components: Coffee quality: the company had direct involvement in every aspect of coffee production, from working directly with the farmers growing the beans to the roasting process. This approach emphasized a strong commitment to product quality. Customer intimacy: the company aimed for employees, or “partners”, to provide a high level of personal service. Partners were trained that customer requests are to be encouraged and are to be met with a smile. Partners were encouraged to get to know repeat clients and reach out to new customers to make outstanding service a part of the purchase. Atmosphere: unlike most retail stores selling food and beverages, Starbucks created an atmosphere where customers could linger. They understood that human nature draws people to each other, so the company provided a casual environment for customers to meet up. As a result of their value proposition, Starbucks’ brand image was associated with high quality coffees (not your average .50 cent convenience store coffee) served with a high level of customized service (e.g.: a smiling partner serving a tall half-skinny half-1 percent extra hot latte no whip) in an inviting atmosphere (plenty of chairs and relaxing music).

Why have Starbucks’ customer satisfaction scores declined? Has the company’s service declined or is it simply measuring satisfaction the wrong way? Starbucks primarily gathered customer feedback in two ways. One approach was thru the use of secret shoppers that assessed each store’s performance over a variety of areas three time a quarter; the results of were aggregated into Customer Snapshot scores. The other method was thru direct customer surveys. It is difficult to determine how much (or if) customer satisfaction scores really declined. In order to analyze such trends, survey results should be provided for more than one snapshot in time.

From the reading, it appeared the company previously relied heavily on Customer Snapshot scores rather than customer surveys to determine customer satisfaction and store performance. They seemed taken aback that their high Customer Snapshot scores were not in line with the results of the customer survey. But secret shoppers judged individual stores and did not capture the opinions customers had on a store or on the company’s overall image. It is interesting to note the company remains focused on current customers; it would be helpful to expand the survey to non-customers or former customers. As noted in the article, the company made assumptions regarding its client base and the demands/tastes of their customers. They failed to recognize changes in the demographics of their client base that occurred as they rapidly expanded thru opening stores globally. Although their loyal, long-term client base (e.g.: affluent, highly educated) was still present, a large amount of customers now were younger, less educated, from a lower income bracket...
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