Introduction
This case primarily discusses about the customer issues that Starbucks is facing and how the customer satisfaction is declining. Christine Day, vice president of North America administration in Starbucks is planning to make a final recommendation to invest in additional $40M annually in the company stores which can add 20hrs of labor a week. Day believes that this addition of labor hours would technically improve the customer satisfaction by a faster service. To discuss about the issue we need to focus on the success stories of Starbucks, how that changed slowly and finally what led to these circumstances.
Success of Starbucks
Starbucks is well known for its brand coffee all over the world. It has dominated and exceeded the sales of all the local coffee brands from 1998-2002. The main success behind this growth is primarily the coffee itself. Starbucks controlled the entire supply chain from growing to roasting process and distribution to the retail stores around the world. Second factor is the Starbucks has spent nothing on advertising. It has saved the entire budget that goes into marketing (marketing budget of 3-6%). Schultz taking the company public resulted in naming Starbucks in NASDAQ and remained in stock options. This caught the eye of media, which served as an advertisement to the company. Third factor is the company focus on customer intimacy and experience. They create an “experience” around the consumption of the coffee. Customers felt Starbucks as “third place” between house and work where they can read, relax and meet friends while drinking the best coffee. Also the company considered all its employees as “partners”. Howard and his group have been giving insurance policies, stock options, and promotions to encourage and satisfy their partners. All these factors contributed to the success of Starbucks in early 1990’s.
Starbucks brand change from 1992-2002
Originally Starbucks started off with selling whole beans and coffee beverages primarily serving affluent well-educated, white-collar patrons between the ages of 25 and 44. By 1992 company has 140 stores in northwest and Chicago competing with other small coffee chains. Ten years later, in 2002, Starbucks had over 4500 stores scattered throughout the U.S, internationally and established itself as the dominant specialty coffee brand in NA. Sales shifted from whole bean coffees to beverages, which remained as 77% of sales (exhibit 4). Earlier when only beans were sold, baristas engaged in conversations with their customers. However by 2002, menu consisted of food items along with beverages and company focused on “product innovation” where they started introducing new customer beverages every holiday season. Customers attracted towards these custom beverages and this made the job of baristas more complex. Some of the items involved 10 different steps and all this resulted in slow service, as partners did not have any time to maintain the customer relationship.
Customer satisfaction data analysis
Lets focus on customer satisfaction evaluations that Day is talking in the case study. Based on the data provided it is very hard to understand whether customer satisfaction is declining or if Starbucks is not measuring the satisfaction in a right way. Customer snapshot is one of them where they are not measuring the customer satisfaction in a proper way. If more than one mystery shopper visits Starbucks, ratings he could have given might be different from the other one. Also, person who enters the shop as evaluator will try to examine for the entire things as he comes with a predisposition of evaluating the store. For some customers who just pick up the coffee, it’s all about taste and fast service. When the ‘mystery shopper’ rates the cleanliness, it might be different how the actual customers might look at it. One customer might think of the shop as tidy and smells good he can rate it as clean even though he finds empty cups on the tables where