Starbucks: Delivering Customer Service
Starbucks: Delivering Customer Service
The elusive goal of customer satisfaction has long provided companies with endless headaches and difficult decisions. In the end, associating specific customer satisfaction metrics to company profit and loss would provide the undeniable proof needed to make changes, and then invest the required capital to address any concerns. Starbucks, not unlike the rest of the business world, has found itself in the same situation. At a basic level, the argument that more investment in customer service creates higher customer satisfaction has already been fundamentally agreed upon. However, more specifically, Starbucks must decide if a reinvestment of $40M annually in labor will translate into equivalent or greater net income over the long run.
Confronted with strong evidence indicating the greater value of satisfied customers over unsatisfied customers, Starbucks must not only take into account the short term implications of such a decision, but also the long term consequences. At what point do the unsatisfied customers deteriorate brand equity and thus diminish future profitability? Finding the company at a major fork in the road, Starbucks must face a problem that eventually faces every company – invest in the future by spending now, or forego the expenditures in hopes that the negative effects will not outweigh the cost savings. Recommendations
The goal of Starbucks is to offer excellent customer service. The company must change their current focus on growth, and enhance the customer experience that has enabled their growth to date. Implementing the increase in store hours will increase customer satisfaction by decreasing wait times. The costs involved with additional hours will be easily offset by increased customer satisfaction and more return visits per month. Additionally, the long term effects of a decrease in customer satisfaction will ultimately result in loss of business on a much larger scale if the company continues to focus primarily on expansion.
Another recommendation for increasing customer satisfaction for long term growth can come from implementation of online surveys for customers. This will allow Starbucks the opportunity to gather customer specific responses in regards to what they can do in the future to increase customer satisfaction as the core customer base evolves. Implementation of this process would consist of adding a link on the bottom of the customers receipt along with the offer of a coupon for a free cup of coffee upon completion of the survey. Gathering the information from these customer satisfaction surveys will show a personal account of what customers feel about their overall Starbucks experience versus the opinion of a mystery shopper. Marketing Principles Involved
Starbucks has done an excellent job in effectively positioning itself as a leader in gourmet coffee sales, without having an actual strategic marketing group. Although their second component to their value propositioning is service or as they call it, “customer intimacy,” the survey scores show otherwise. Currently, the marketing theme at Starbucks is Integrated Marketing, which focuses on creating, communicating, and delivering value for its customers (Kotler, 2009, pg. 13). However, based on the results of the Factors Driving “Valued Customer” Perceptions, 34 percent of the customers would like to see an improvement in Service, which is the highest score in the three categories of survey responses. The chart below gives a breakdown of the areas customers would like to see in service improvements (Moon, 2006, pg. 20).
Based on this data, Starbucks needs to shift its marketing theme to relationship marketing and focus more on building longer-term relationships with its new and existing customers. First-time customers are a constant at 27 percent having visited Starbucks in the past year (see chart below). As a new customer, you want...
References: Kotler, P., & Keller, K. L. (2009). A framework for marketing management. Upper Saddle River,
N.J: Pearson Prentice Hall. pg. 13, 185.
Moon, Y., Quelch, J. (July 10, 2006). Starbucks: Delivering Customer Service. Harvard Business School.
Please join StudyMode to read the full document