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A project on

Customer Relationship
Management (CRM) in
Starbucks

What is Customer Relationship Management (CRM)?
Customer Relationship Management refers to the methodologies and tools that
help businesses manage customer relationships in an organized way.
Customer relationship management is a broadly recognized, widelyimplemented strategy for managing a company’s interactions with customers,
clients and sales prospects. It involves using technology to organize, automate,
and synchronize business processes—principally sales activities, but also those
for marketing, customer service, and technical support.

Definition of CRM-

Customer relationship management (CRM) is a term that refers to practices,
strategies and technologies that companies use to manage and analyze customer
interactions and data throughout the customer lifecycle, with the goal of
improving business relationships with customers, assisting in customer retention
and driving sales growth. CRM systems are designed to compile information on
customers across different channels -- or points of contact between the customer
and the company -- which could include the company's website, telephone, live
chat, direct mail, marketing materials and social media. CRM systems can also
give customer-facing staff detailed information on customers' personal
information, purchase history, buying preferences and concerns.

PurposeThe idea of CRM is that it helps businesses use technology and human
resources to gain insight into the behavior of customers and the value of those
customers. With an effective CRM strategy, a business can increase revenues
by:
 providing services and products that are exactly what your customers
want
 offering better customer service
 cross selling products more effectively
 helping sales staff close deals faster
 retaining existing customers and discovering new ones
 make call centers more efficient
 simplify marketing and sales processes.
For small businesses, customer relationship management includes:
 CRM processes that help identify and target their best customers,
generate quality sales leads, and plan and implement marketing
campaigns with clear goals and objectives.
 CRM processes that help form individualized relationships with
customers (to improve customer satisfaction) and provide the highest
level of customer service to the most profitable customers.
 CRM processes that provide employees with the information they need to
know their customers' wants and needs, and build relationships between
the company and its customers.
 Customer relationship management tools include software and browserbased applications that collect and organize information about customers.
For instance, as part of their CRM strategy, a business might use a
database of customer information to help construct a customer
satisfaction survey, or decide which new product their customers might
be interested in.

Key Elements of CRMCRM can be broken down into a number of different components which many
software vendors have developed packages for. For the most part, there are three
areas which are core to successful customer relationship management :
1.
2.
3.
4.

Customer Service
Sales Force Automation
Campaign Management .
Customer Service

Customer serviceThe customer service function in your company represents the front office
functions that interact with your customers. These are the business processes
that allow your company to sell products and services to your customers,
communicate with your customers with regards marketing and dealing with the
after sales service requirements of your customers. Each interaction with the
customer is recorded and stored within the CRM software where it can be
retrieved by other employees if needed.

Sales Force AutomationYour company’s sales department is constantly looking for sales opportunities
with existing and new customers. The sales force automation functionality of
CRM software allows the sales teams to record each contact with customers, the
details of the contact and if follow up is required. This can provide a sales force
with greater efficiencies as there is little chance for duplication of effort. The
ability for employees outside of the sales team to have access to this data
ensures that they have the most recent contact information with customers. This
is important when customers contact employees outside of the sales team so that
customers are given the best level of customer service.

Campaign Management-

CRM manages business processes spanning sales. The approach taken by the sales team is often focused in a campaign. and marketing creating effective customer interactions. Given the purpose of CRM. customer responses and analysis performed as part of the campaign. where a group of specific customers are targeted based on a set of criteria. competitive business environment it's more important than ever to create and maintain long-lasting business relationships. and customer retention rather than constructing a new customer base which is costlier and also an uncertain chase from business perspective. The basic philosophy behind CRM is that a company's relationship with the customer would be the biggest asset in the long run. support. Today. For the up to date CRM to be world class it needs to be revolutionary in market incursion and evolutionary in technological up gradation.The sales team approach prospective customers in the hope of winning new business. CRM software is used to record the campaign details. Today the major business focus is towards endowing value addition to the sales cycle. the functionality is straightforward. In today's fast-paced. and the benefits of successful deployments clearly generate value and profitability for any company. Great CRM solutions need to encourage users to interact with the application as well as be in-tune with the business and IT cost-saving needs. Customer Relationship Management Before implementing any Customer Relationship Management solution in the organization there are many Question's which need a comprehensive explanation from the users' point of view What is the added value preposition of the CRM to the organization? . These customers will receive targeted marketing materials and often special pricing or terms are offered as an inducement.

 16.What would be the environment under which the implementation would be done? How would the synergies be reflecting in the processes of the company? These are mere stencils of the holistic scenario prevalent right now. Profile of Starbucks Largest coffeehouse company in the world.  Increasing sales and market share. and are to a great extent a factor which harms the opportunities of long term survival for any CRM vendor. Starbucks Company ProfileStarbucks Mission Statement Our mission: .635 stores in 49 countries.  Enviable customer loyalty.

We always treat each other with respect and dignity. Sure. roasting them with great care and improving the lives of people who grow them. we embrace diversity to create a place where each of us can be ourselves. a place where you can meet with friends. Here are the principles of how we live that every day: Our Coffee It has always been. sometimes faster. laugh with and uplift the lives of our customers – even if just for a few moments. about quality. Our Customers When we are fully engaged. And we hold each other to that standard. Together.to inspire and nurture the human spirit – one person. but our work goes far beyond that. Always full of humanity. It’s about enjoyment at the speed of life – sometimes slow and savoured. and will always be. because it’s not just a job. it starts with the promise of a perfectly made beverage. it’s our passion. we connect with. We’re passionate about ethically sourcing the finest coffee beans. our stores become a haven. It’s really about human connection. Our Partners We’re called partners. our work is never done. . a break from the worries outside. Our Stores When our customers feel this sense of belonging. one cup and one neighbourhood at a time. We care deeply about all of this.

we enjoy the kind of success that rewards our shareholders. Our Shareholders We know that as we deliver in each of these areas. . customers and the community to contribute every day. sell and use environmentally friendly products. We fulfil this mission by a commitment to  Understanding of environmental issues and sharing information with our partners. We can be a force for positive action – bringing together our partners. Now we see that our responsibility – and our potential for good – is even larger.Our Neighbourhood Every store is part of a community. We will lead.  Recognising that financial responsibility is essential to our environmental future.  Striving to buy. Environmental Mission Statement Starbucks is committed to a role of environmental leadership in all facets of our business.  Instilling environmental responsibility as a corporate value. yet again. We are fully accountable to get each of these elements right so that Starbucks – and everyone it touches – can endure and thrive.  Developing innovative and flexible solutions to bring about change. We want to be invited in wherever we do business. and we take our responsibility to be good neighbours seriously. The world is looking to Starbucks to set the new standard.

. the firm satisfies the growth component of its vision statement. it is not yet clear if Starbucks effectively addresses the finest coffee in the world component of its vision statement. These principles include ethical conduct and a warm culture. Starbucks has already achieved the premier purveyance component of its vision statement because it is now the largest coffee and coffeehouse company in the world. a careful reading of the company’s website reveals that its vision statement is “to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow. Starbucks maintains these principles. especially after Howard Schultz resumed his role as CEO in 2008. Thus.500 locations around the world. the firm effectively addresses its vision statement. Measuring and monitoring our progress for each project. Starbucks Coffee’s Vision Statement- Starbucks Coffee does not readily present its vision statement. as manifested in the continuing global expansion of the business through new Starbucks cafés.  Encouraging all partners to share in our mission.” This vision statement has the following components relevant to Starbucks:     Premier purveyance Finest coffee in the world Uncompromising principles Growth Being a premier purveyor means that Starbucks Coffee wants to achieve leadership in providing its products. especially coffee of the best quality. However. Also. However. Analysts and critics point out that coffee from McDonald’s or Dunkin Donuts may be better than Starbucks coffee in some aspects. Nonetheless. Starbucks Coffee now has more than 22. Starbucks Coffee addresses the uncompromising principles component of its vision statement.

mugs and accessories. Tazo® 2. Spain.  Norway. Japan. Germany.Our Products Coffee: More than 30 blends and single‐origin premium arabica coffees. Coffee and Tea: Whole bean and ground (Starbucks and Seattle’s Best Coffee brands).  Consumer Products: Products in 13 countries (Austria. Denmark. UK and U. Canada. Mexico. Starbucks VIA® Ready Brew.  Vivanno™ smoothies andTazo® teas.) in three categories: 1. China. packaged goods. Korea. Ireland. Starbucks Doubleshot® espresso drinks. hot and iced espresso beverages. tea filterbags and tea latte concentrates. Starbucks Doubleshot® Energy+Coffee drinks. oatmeal. salads. coffee and non‐coffee blended beverages. . books and gift items.  Handcrafted Beverages: Fresh‐brewed coffee. sandwiches. music.  Merchandise: Coffee‐ and tea‐brewing equipment. • Starbucks® Ice Cream: Super‐premium coffee and coffee‐free flavors. Starbucks Discoveries® chilled cup coffees.  Fresh Food: Baked pastries. Tazo® bottled iced and juiced teas. yogurt parfaits and fruit cups. Seattle’s Best Coffee® Iced Lattes. • Ready‐to‐Drink (RTD): Starbucks® bottled Frappuccino® coffee drinks.S.

53 per share. It is our goal that by 2015. Investor Information • Starbucks went public on June 26. 4. all of our coffee will be grown usingethical trading and responsible growing practices. Being a Responsible CompanyWe are committed to doing business responsibly and conducting ourselves in ways that earn the trust and respect of our customers. • Ethical Sourcing: We’ve developed strong. 1992 at a price of $17 per share (or $0. It's our goal that by 2015.50 per share. 1985. Washington.Brand PortfolioStarbucks Coffee. And we believe in the importance of caring for our planet and encouraging others to do the same. adjusted for subsequent stock splits) and closed trading that first day at $21. Tazo Tea. • Starbucks Corporation's common stock is listed on NASDAQ. • Starbucks was incorporated under the laws of the State of Washington. 100% of our cups will be . long‐term relationships with farmers all over the world that help ensure we are ableto buy the high‐quality coffee our customers expect from us. on Nov. in Olympia. and Torrefazione Italia Coffee. under the trading symbol SBUX. We call this Starbucks™ Shared Planet™ – our commitment to doing business responsibly. partners and neighbours. Seattle’s Best Coffee. • Environmental Stewardship: We share our customers' commitment to the environment.

recycling and green construction. We will also work to significantly reduce our environmental footprint through energy and water conservation.com Current CRM situation Starbucks Rewards Card  Mystarbucksidea. • Community Involvement: From the neighbourhoods where our stores are located to the ones where our coffee is grown – we believe in being involved in the communities we’re a part of.reusable or recyclable. Websitewww.starbucks. By 2015. Bringing people together.com is operated by Salesforce. inspiring change and making a difference in people’s lives – it’s all part of being a good neighbour.com  Consona  3rd party websites  2D mobile barcode system by Codilink  In store feedback form . we plan to contribute one million volunteer hours each year to our communities.

 1-800-23-LATTE .

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At Gold level you get:  A free tall drink in your birthday month  Two free beverage customizations  A free tall drink on purchase of 250g whole bean coffee  Free size upgrades on featured beverages during the first 2 weeks of its launch  A free tall drink reward every 10 Stars  A personalized Gold Card Special OffersOnce you're at the Gold level. Don't let that happen! If it does though. We won't give up on you. it takes another 25 Stars to maintain Gold level for another 12 months. If you don't qualify for the Gold level again by your anniversary date (i. you'll revert to the Green level and lose all your Stars.Starbucks reward cardKeep the Free Drinks Coming :- Collect 25 Stars within 12 months and you step up to the Gold level for one year. the date you qualified for the Gold level). you'll move from Green level right back to Gold level. . don't worry – if you earn a total of 25 Stars again within 12 months.e.

coffee delivered to their door! . tea. In addition. which is currently available for download from any iPhone™. hot. and track loyalty program points earned through the My Starbucks Rewards program. and Android™ devices. giving them more time to relax and enjoy their cups of joy. reload or top-up using any major credit card. customers are able to pay for purchases the fast and easy way without the hassle. Through the scan-and-go mobile pay system. Starbucks took a step further towards improving its services by introducing the Starbucks Mobile Card Payment System to its thousands of advocates across America. promote a more efficient ordering process whilst providing more advantages to customers. was designed to address Starbucks’ customer’s demand for mobility. this is also Starbucks’ way of promoting environmental awareness and contributing to the green movement. This application. The application is jam-packed with great. which is very important in today’s fast-paced and time-constrained environment. Nutrition information are also provided under each entry of whole bean coffee. iPad™. and other drinks. they can view the menu options available through the Starbucks app for iPhone where a comprehensive view and description of coffee and drinks are available for everyone’s convenience and reference.Mobile paymentA great way for small companies to jumpstart their businesses is by using cloudbased Customer Relationship Management (CRM) application which enables companies to stay in contact with each other and their clientele regardless of proximity and time zones. Since everything is electronic. And if customers are uncertain about what to order. it reduces the use of plastic gift cards. The Starbucks Card Mobile payment application was conceptualized and established to cut customer ordering and waiting time. Last year. intuitive features where users can check out their balances and transactions. What’s even better is that the mobile payment application works on any Starbucks drive-thru and retail counters which meant that anyone can now have fresh. iPod Touch™.

Launching this mobile application is a milestone for Starbucks and its 7.000 company-operated stores. including more than a thousand Target outlets and nearly a thousand Safeway branches. in its first year. the program was rolled out to select Starbucks stores way back September 2009 to test how the market would react. This mobile payment system helps facilitate brand identity to crossover with consumer-packaged goods (CPG). Starbucks’ Mobile Card Payment system is incredibly easy to use and is socially relevant too! Users can share their locations as well as their drinks of choice . Starbucks Chairman and CEO Howard Schultz. Thanks to to Starbucks Card Mobile application. the numbers continue to rise. they won’t soon be. The application is expected to ultimately connect consumer-packaged goods and retail. Schultz foresees that through the mobile payment system. this is not the first time Starbucks piloted such a venture. It was proven to be a worthy initiative because after extensive testing. mentioned that mobile payments is just one element of a much broader and larger social digital media strategy Starbucks has been hiding under its sleeves. and is equally popular in Twitter and Foursquare. Starbucks has captured the interest and loyalty of 3 million people in the US alone within that year.” says Vice President of Starbucks Brady Brewer. While retail and CPG were initially perceived to be rivals. The application proved to be a breakthrough for which Starbucks achieved tremendous growth – the best-performing financial quarter of its 40-year history – where 22% transactions are attributed to this application. In fact. incorporating both segments as one cohesive entity through the loyalty programs activated via the use of application. “Starbucks now offers the nation’s largest mobile payment network. Such success is evident as the Starbucks brand topped Facebook’s list with 29M fans. in his speech during last year’s Starbucks Annual Meeting of Shareholders at Marion Oliver McCaw Hall in Seattle. As proof of their crossover strategy success. But contrary to what many think. VIA. Starbucks generated $194M in sales upon launching its instant coffee.

companies can double or triple their chances at success. By keeping abreast of the latest mobile technology. the application simply points them to the nearest Starbucks store. These people help us identify usability issues and discover new solutions to further improve the accessibility of our site. Our website is monitored and tested periodically by internal and thirdparty accessibility consultants.S. 3rd party website Web AccessibilityStarbucks is committed to diversity. we are continuously taking steps to improve Starbucks. . which also allows them to search amenities offered on each one. which directly translates to a boost in business volume in the short and long term basis. Investing in such applications have been proven to be of great significance especially in terms of customer service and referrals. inclusion and accessibility in everything we do. Rehabilitation Act and the Web Content Accessibility Guidelines of the World Wide Web Consortium.com and ensure it complies with the best practices and standards defined by Section 508 of the U.through Facebook and Twitter. With this in mind. And if users have no clue where to go. These core values are fundamental to the way we do business and come through in the experiences we design for people – both in our coffeehouses and on the web.

 Association of forms with labels. and loyalty.Howard Schultz.  Association of all data cells in a data table with their headers. 2013 I think Howard says it all: .  Structural markup to indicate headings and lists to aid in page comprehension. That way you’ll know about the progress we’re making. alternative content is provided where necessary to ensure a usable experience. 2D barcode system“No single competency is enabling us to elevate the Starbucks SBUX +0. As we continue to improve our website.  Title attributes for additional information about links and indication of new browser windows.  JavaScript and style sheets to enhance the appearance and functionality of the site.”.00% brand more than our global leadership in mobile.Our Current Accessibility Features-  Alternative text detail for appropriate images and other non-text elements. digital. we will reflect any changes here within our accessibility statement. If these technologies are not available. Starbucks is a clear leader in mobile payments and we are encouraged by how consumers have embraced mobile apps as a way to pay. Further accessibility efforts are under way.

It was so successful it rapidly expanded the program nationwide by allowing consumers to pay by letting patrons display a barcode to be scanned at . Starbuck announced that now 11% of sales volume comes through its own mobile wallet [1]. Starbucks launched its mobile card app in 16 stores. and eight million consumers are using mobile apps to pay. about four million mobile payments per week.Mobile Payments Convenience Automatic Loyalty Rewards Over Four Million Mobile Wallet Payments Per Week While most of the world was getting ready for Halloween celebrations in late October 2013. This is just a staggering amount of transactions for a single retailer. Howard had some of the most strongest words I have heard supporting mobile payments by a retailer. The Courage To Innovate With Simple Technology On a nice spring day early in 2009.

By allowing the register to scan the 2D barcode rather then the user scan a 2D barcode. Recommended by Forbes MOST POPULAR Photos: 10 Smart Money Moves From Superstar Savers TRENDING ON LINKEDIN Five Reasons My Career Isn't Working ZurichVoice: How To Protect Your Business From Geopolitical Conflict Benjamin took the very simple 2D barcode and inverted the use case that most companies were using.the point of sale. Read on for some clues. PayPal Wallet or just about any other system. and still does not primarily use the services of an outside company and there is a huge lesson to be learned here. This was a maverick move at the time as most technologists were laughing at the 2D barcode and the way it was used. It is successful for so many reasons that would take a book to cover. Brilliantly Simple . Clinkle. Benjamin built this systems years before there was a Square wallet.91% and we will likely see the results of his 3+ years of work at Apple very soon. Benjamin now heads up retail payments for Apple AAPL -0. The company did not. This was the genius work of Benjamin Vigier and his team. It took great courage for Starbucks to take a trail blazing roll to innovate.

This is the start of the flawed thinking of why these programs fail. And this is the problem with most generic “punch card” loyalty systems and even advanced points based loyalty systems. This allowed for the technology of the Starbucks wallet to only need to faithfully display a custom 2D barcode. Said To Me By A Payment Startup Founder: “I have a punch card for a coffee place in my sock drawer at home” It has always been fascinating to me to observe some of the most brilliant payment startups construct a “loyalty program” based on just a guess of what retailers are looking for. I have worked with hundreds of startups over the last 8 years and 99% of the time the people building loyalty programs have either not used any program before or have an old punch card in the sock drawer at home. The point they thought they were making was how inefficient loyalty cards are. It is just very hard to get used to seeing fellow technologists build things based on completely flawed reasoning. . They are sold as a one size fits all program. There were countless empirical tests and studies that crafted the program. Benjamin made the new program fit existing POS found at every Starbucks. One Loyalty Size Fits All? Starbucks had one of the most successful retail loyalty programs in the US.Benjamin shifted the technology stack on the side of the POS system and a 2D barcode reader. Although it looks very simple the exact same system could not work at a vast majority of retailers. The company worked diligently for decades to perfect this program. At the time. and they do not. It was brilliantly simple and elegant. many startups wanted to reinvent the wheel and require all aspects of the technology a business is using to change. This did not take place overnight.

6 Million followers in Twitter. This aspect is overlooked by some of the most informed experts. This very large by still rather secret fact informed the logical development of a mobile wallet. perhaps for decades. This Secret Has To Be Told- Starbucks also was a very early user of gift cards. Having 3. Practical and Pragmatic research. This was not a technological dream but a progression from empirical. I credit this to one of the foundational reasons for the spectacular success. 34 Million Facebook users “like” the page.The builders of the Starbucks wallet used loyalty cards. but they also empirically studied these systems in live retail environments. As we’ve learned from . The original reason Starbucks deployed these cards was to allow consumers to purchase the gift cards as. 6. well gifts to friends. Thus the success of the Starbucks wallet can be expressed in this manner:  Existing successful loyalty program +  Existing success gift card program +  Simple 2D barcode on consumer device +  Sophisticated 2D barcode scanner on POS +  Perfect cloud merchant integration +  Simple to use consumer app + The success of Starbucks Social CRMStarbucks is one of the enterprises adapted social media to the company’s CRM strategy.6 Million Views on Youtube. It turned out that empirical research showed that within the first year 75% of the cards were being used by the original purchaser.

My Starbucks Idea. execution and integration across all media channel conversation and constant measurement system to keep testing. vote and discuss their own ideas. I think the success of Starbucks Social Media Strategy is the matter of map business objective and specific social activities designed to meet the objectives. Starbucks engages and communicates customers through twitter. mixes and combines multichannel functionalities and elements together. It takes inspired leaders who can explain to this well-selected staff that they have an opportunity to make a difference in people's lives. Starbucks doesn’t spent much money on “marketing”. Customers around the world could also upload their videos to Starbucks Youtube. which enables people to warm up water over a campfire and have quality coffee. how to make an expreso). Their contents and pictures are welcoming. I like the Facebook Starbucks most. They've understood that customers might want to enjoy their coffee while they're. What I am amazed most is Starbucks integrates. The company is also constantly thinking about where their customer is. for example.g. Overall. camping on a mountaintop. What can other companies learn from Starbuck? It doesn't cost a lot to select the right people and give them a vision of how they can do more than just sell a product. Youtube is the channel for commercials (regular or seasonal) and informational (e. where customers and partners could share. . consistent branding strategy. even if they're nowhere near a coffee house or even a coffee machine. promote products and answer questions. The Starbucks histories youtube videos made many customers feel intimate and related to the brand. and who he is. and these are the kinds of leaders Starbucks has. Words of mouth is the primary brand awareness and acceptances by the customers.marketing course. listening and improving company social behaviour. So they created VIA. warm and full of “coffee” experience even through the internet. Each channels has different focus but also unified managing conversation across all channels.

Instead of merely handing out free coffee in return for a set number of cups. the Starbucks Gold Card. To that end. then. Why. which features an “elite” level. like Starbucks Gold Card holders. and one neighborhood at a time. the people behind Starbucks. all without overlooking where the product comes from and how it is sourced. Their rewards program. does Starbucks continue to maintain one aspect of its rewards program that is sure to disappoint some of its customers? . they add an element of prestige and layer on extra benefits for their best customers. Starbucks: Loyalty Program MisfireStarbucks' success rests on a simple goal: to inspire and nurture the human spirit —one person. uplifting human connections while delivering a high-quality. and have tailored their store aroma for maximum benefit. a leader in mobile pay. which features targeted messaging for its loyalty members as well as various rewards programs for its most loyal customers. and have used this to not only make life easier for their patrons. They understand sensory branding. and then send targeted messages or offers. but to their own advantage as well. mobile. strive to make authentic. from coffee servers to CEO Howard Schultz. Starbucks is a firm with brilliant marketing… they have built an amazing global brand. They know their customers and how connected they are. and delicious product. one cup.How is Starbucks embracing social media. meaning they're able to track what people purchase. no doubt. and other new channels to reach its customers effectively? Starbucks is. They have a very robust app. innovative. Starbucks is also now allowing customers to use the app to pay for purchases with their phones. goes far beyond the typical coffee shop punch card.

” The body of the message. And. When this happens. starting off with a little “oops” message: You got your shiny My Starbucks Rewards™ Gold Card by earning 30 Stars in one year. one is no longer as attractive a customer.” So. How one does this is critical – ideally. though. since my friend had no idea that the deadline was approaching or that she hadn’t met the threshold for staying golden. if you must cut benefits. This produced a highly negative reaction. A brand with truly loyal customers doesn’t need to bribe them with mathematically predictable freebies. The text strikes a breezy tone. you want to encourage your customer to return to higher consumption levels. This is where Starbucks misfires. To stay Gold for another year you needed 30 more Stars. and your Star count has been reset. Looks like time flew before you got all 30… That’s a fairly gentle letdown. When one flies less. it may be necessary to curtail the benefits for individual customers. “Your My Starbucks Rewards™ level has changed. “So you’re back to Green for now. lets the recipient know that her elite status has been revoked with a big graphic. A Starbucks Gold Card member I know was surprised to get an email from Starbucks with the innocuous title. But. you have to start all over. Despite my many bad . that doesn’t mean programs that reward loyalty are ineffective.Like the airline loyalty programs it resembles. Real and Artificial- True loyalty is based on emotion. But the email continues with. since it’s so “easy” to get your status back. the Starbucks Gold Card program has to deal with customers whose consumption habits change. Even more galling: she had just reloaded her gold card from her credit card. and was so infuriated that was trying to figure out if she could unload it and get her money back. not only are you demoted. you’d like to do it in the most sensitive way possible. or drinks coffee less frequently. Loyalty.

Instead of motivating them to get back in the fold. they communicate in a way that will anger many. the customer’s affection for the brand becomes more important than the rewards.experiences with United Airlines. I’m sure Starbucks does develop loyal customers this way. Ultimately. (Yes. The problem is how they deal with “demoted” members. I continue to use them to build my Premier status and take advantage of the benefits it confers. a rewards program can indeed foster true loyalty. I can be bribed into pseudo-loyalty. Lest you think it was only my friend who felt rejected.) Implemented properly. the rewards program can encourage use and build customer habits. If the product is consistently great and the service exceptional. here’s a sampling of tweets from unhappy exgold members: .

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give them their status. nor is it even printed on the receipt. Here are two thoughts on how Starbucks could defuse some of the benefit expiration time bombs: Warn customers well in advance that their benefits are in peril. This could be done by email and at the register. and setting them back to zero with a new target of 30 coffees will be a major demotivator. At best. Putting the Goal Gradient Hypothesis to Work- The closer we get to a goal. it should be done in a way that minimizes customer outrage. more importantly for Starbucks. An experiment with coffee punch cards that gave the holder a free coffee after ten punches showed . Even artificial progress toward a goal can be motivating. if a customer is close to “staying gold. Encourage mobile app use. simply use a rolling 12-month count… If a customer meets the goal in any 12-month period. This has been demonstrated by experiments with rats.” Clearly. At worst. there are times when a company has to curtail rewards benefits due to low usage. the customer won’t be surprised by an out-of-the-blue “you’ve been demoted” notice. these customers aren’t high-volume coffee consumers. Don’t drop all accumulated “stars. The Starbucks mobile app remedies this flaw.” coffee consumption will increase. But. the harder we work to achieve it. A major flaw in the physical Gold Card program is that progress toward a free item isn’t visible on the card. Perhaps the points earned in the last few months could be retained? Or. with coffee rewards cards (see Loyalty Programs: Of Rats and Men. and it’s called the goal gradient hypothesis. and would let laggards know their gold status might expire. but.A Friendlier Approach- Clearly. It could even be programmed to alert them of an upcoming status change.

the messages on the cups. adding a few “free” stars might be enough to bring them into the store again. the graphics. Starbucks would make it easy for all card holders. because attention to the small things sends a big message. but the illusion of progress kicked consumption up a notch. My local Starbucks in New York City even has a little tray at the register with the business cards of the manager and the assistant manager. Indeed. either. Sales would increase. And -. would someone care what music "we're listening to" -. for demoted members. Why else. its unique ecosystem.defined personality as an "unbroken string of successful gestures. Very clever. and there shouldn't be at your company. What we can Learn from Starbucks? Focus on the experience. it's all been studiously crafted. The brand has a distinct and recognizable voice. in heaven's name. it's what's behind the experience I talk about earlier. Think of your business in those terms. The choice of furniture and fixtures. Pay attention to your "brand consciousness. Ideally. their needs. there are no throwaways at Starbucks." F. Scott Fitzgerald -. their lifestyles.as they put it? Would you value the musical tastes of GM Of Hewlett-Packard? Or of Dunkin' Donuts. Makes them feel good. as well as a smart understanding of its customers--their values. even those in no danger of losing their gold status. that you credit them with the sensitivity to recognize the proliferation of quality and discipline.on the first page of The Great Gatsby -. In short. The cards were mathematically identical. for that matter? .faster consumption on a card with twelve spots and two pre-punched compared to an empty ten-spot card. And." Starbucks has got this down to a science. how they are progressing toward their next free item. and it lets customers know that someone is in charge and accountable no less -. Starbucks is masterful at wrapping its product in a deeply-textured gestalt.no matter how narrow the niche -creates one experience or another around its customer interaction. every business -. It says that you really value your customers.that you don't take them for granted.importantly -. and through that syntax it radiates a clear and alluring identity.an increasingly rare commodity in today's retail environment. the names of its drinks.

through a shared sensibility. is out of Moby Dick. though. Pastiche is powerful. confidence that if treated well. Starbucks has earned it. for one.not to mention a $3 specialty drink. But we respect Starbucks' opinion because when it says "we. Industry experts (and consumer research) would have killed the idea before it started. where all of us are faced with driving down costs every day. it's easy to forget that markets -. Is that true of your business? What would it take to make it true? Imagine if you could become a valued partner outside the narrow niche you compete in.I don't think so. that the comfortable chairs and couches have turned out to be a counterintuitive economic asset.it would be busy calculating the pathetic ROI on this customer loitering. The concept is too sophisticated for Americans." it means something to us.if developed properly -have more upward elasticity than many give them credit for. They'll try it once and never come back. They drive business that might otherwise go elsewhere. and soon recommending that Starbucks charge by the hour. Are you too wrapped up in "monetizing" your customers. a . dividing it by the marginal cost of the coffee. commanding this higher price demands relentless attention to the brand delivery system I've been talking about. instead of creating a business environment where they don't feel like a spending gun is always being held to their heads? Remarkable things will happen when you demonstrate some patience and confidence. In today's hyper price-sensitive world. Of course. An MBA culture would never allow this -. Starbucks is a master at recombinant cultural marketing. They contribute to multiple customers gathering -. your customers will come back even if you're not the cheapest cup of coffee in town. That's marketing power. Don't try to squeeze every last cent out of a customer. because your judgment and taste and continued ability to surprise and please were trusted implicitly. The truth is. Imagine the radical illogic: you can sit for five hours with a single cup of coffee. analyzing the time value of the real estate.and spending. like a parking garage. They create loyalty. People are in too much of a hurry to stay and linger. There's a bit of America: The name.75 for a cup of coffee they can buy for 85 cents -. Don't accept conventional price ceilings. I can hear the objections now: No one would ever pay $1.

We're an increasingly diverse culture level: conceptually. even the way Starbucks markets the company as a progressive employer (health insurance for part-timers). from a personnel perspective. The other thing.is also an acknowledgement of our uniquely empowered (and opinionated) consumer.and endless customization potential -. New Age-y feel to the entire experience: the environmental sensibility. the focus on "fair trade. And that's contagious. The multiplicity of beverage choices -.or take a walk -. how relevant is this to you? Very. But if you're not in the coffee shop business. 40% of the new customers have tried Starbucks products prior to coming into the store the first time. leave your desk. and potential customers through their specialty sales to see the impact upon current or potential retail sales in stores. product-wise. is that Starbucks venerates its product. of course. the entire caf é gestalt. Research customers who do not frequent Starbucks. graphically. Of course. You could learn something. What is their perception of Starbucks? Do they drink coffee or specialty coffee? What would get them to try it for the first time? . Starbucks has lost track of the customer when their determination of what is served to the customer is determined by what makes the barista happy. Alternatives & Evaluations1. 2. Finally.to the nearest Starbucks.quintessentially American novel. So next time you're facing a business dilemma. Redefine their marketing strategies starting with a proper research and evaluation of what the customer wants. get in your car -." the conscious availability of soy milk. the faux Italian drink names. Analyze the customers. there's a savvy bit of Italy: the barista. there's a global. or who have never been inside a Starbucks store to determine why. How do we increase these sales? Is it because of the coffee purchased at the grocery stores? Did they find what they expected when they tried the Starbucks retail store? 3. Out of store sales is obviously helping drive Starbucks retail sales.

Use additional advertising for sales of coffee in grocery stores. Introduce more customer operated machines to reduce wait time. Extend the utility of the cards by embedding RFID tags to identify the customer and the orders to add to a database. There are many areas that Starbucks is not in. such as the customer just wanting coffee. although this should be allocated according to an established need per store. Create a centralized marketing department which can attempt to coordinate all marketing efforts. Concentrate new store openings in areas that would not cannibalize existing sales. For the short term this obviously should be addressed and fixed. Are these sales actually impeding the object of quick and pleasant sales without providing important income? Their marketing product mix may be inappropriate. and their customers are different than before. Separate serving customers with customized orders from those which will require less time. At some point. they should do more research and develop a real strategy prior to initiating any major advertising campaign. Their 4% of home specialty coffee sales appears very small. 5. They have developed over time. Why cannibalize? 7. the product mix should be addressed to help reduced wait time. 6. and friendly service are obviously important based on customer satisfaction surveys. Quick term fix to add more employee hours to reduce wait time. The quick. 12. Use the more experienced baristas to handle the more complicated orders.4. Why is Starbucks different? While Starbucks may think they know what distinguishes Starbucks from others. 11. 9. Advertise more to establish the branding of Starbucks. 10. There appears to be a lack of harmony between collecting data and the proper evaluation of the data. Nestle exited specialty coffee in . The layout of the new stores that are opened could more utilize this concept. convenient. Analyze the innovative sales to determine the effect on labor costs to determine if the sales support the costs and the potential decrease in the time available to quickly serve the customer. 8. The snapshot methodology they used may not reflect a universal measure of customer satisfaction. Case research indicates that innovative products are not as important to the customer as quick and pleasant sales.

Investment of $40 million annually to increase speed of service (impact = 2. Effort to identify and demonstrate in very concrete terms on how to determine Market Research Data . Starbucks’ Options1. and charge a higher per unit sale price than Starbucks. Peets does not see innovative sales as a big option. Cleanliness. There was a large void of specialty coffee in grocery stores. Service Innovation Starbucks store Value Card 7. Speed of Service 4.grocery stores during this time frame. Retail Expansion New stores in new markets Geographically cluster stores in existing markets 5. Process of Measuring Service performance Categories: Service. They see no difference between grocery store sales and their retail store sales per an interview with Patrick O’Dea. Alter the product mix Determine change depending on store size and location 3. Product innovation Priority of Mgmt given that the prices were stable in recent years 6. They have achieved considerable brand loyalty for a limited number of coffee lines. A concentrated effort in this type of distribution could have established more sales and some brand loyalty for coffee. Product Quality. Peets is a competitor chain in the California area.

500 stores to increase service efficiency (impacting customer satisfaction. Starbucks’ Forte  11th consecutive year of consistent sales of 5% or greater  Company spent close to nothing to achieve this goal  Sales climbed at an annual compound growth rate of 40% and net earnings to 50% since Starbucks went public  Good strategic alliances with Pepsi-Cola and Kraft foods to distribute some of their products  Lowest employee turnover rates in the industry  (just 70% as compared to 300% the average of the fast food industry)  Implemented good policies to insure competitive advantage  “Just say Yes” policy  Measuring service performance  Expect business projections to rise and be steady and consistent.SolutionsStarbucks should pursue all of these alternatives Starbucks appears to consider competition as minimal. and that they are somewhat insulated. Goal ~ customer retention in the competitive coffee house market) . Plan of ActionPlan based Starbucks’ strengths relative to the presented issues : 1. Probably. entertaining either idea is a strategic mistake. Proceed with investing the $40 million annually in the 4.

specialized work stations) 3. Corporate (42% strongly agree) 4. Trendy (41. Known for specialty/gourmet coffee (54% strongly agree) 2. Marketing Research showing that existing markets are far from saturation i. Sample data results would narrow the customization and train baristas with those special concoctions 5. data analysis ii.5% strongly agree) . Validate Market Research metrics and methods of sampling. and alter product differentiation strategies. analyze. Does the data translate in to measurable metrics that can impact sales and profitability? Top 5 Attributes of Starbucks: 1. research efforts to increase efficiency through set-up and equipment (e.2. automated espresso machine. Analyze this particular area with specific concrete terms targeting a particular objective 6. Use secondary market research data to identify. proactively conduct an environmental scan to launch new products 7. Continue with Product and Service innovation. Widely available (43% strongly agree) 3. Sample to find out what customers mainly look for ii. with respect to smaller chains and Starbucks obliquities 4. Alter the product mix depending on the store size and location of the outlet (demographics) i.g. While the investment enables additional labor hours. Service Performance categories iii.

Always feel welcome at Starbucks (39% strongly agree) Recent Findings of people’s experiences:  Starbucks cares primarily about making money  Up from 54% to 61% .5.

Starbucks cares about building more stores  Up from 48% to 55% Key Issues Rewards Card is not free  Mystarbuckidea. acquisition  Total Revenue & Growth . Cross-sell  Number of customer complaints  Revenue per store/ per region  Profit per customer  Customer retention.com is not connected to Consona  In Store feedback forms are weak  Long waiting times at 1-800-23-LATTE  Starbucks Shared Planet and Community Involvement programs  Baristas and the Community Is STARBUCKS really growing with CRM? Critical measurements-  Online and store surveys to measure customer satisfaction  Employee satisfaction survey  Number of Starbucks Cardholders: Customer reactivation.

Recommendations Improve feedback: key in pads. direct communication. 24x7 customer service. better in store feedback  Rewards Card program: free card. gettogethers  Product offerings: customize some products to suit the demographics of the area  Better BI and Data warehousing tools  Employee feedback opportunity  Improve barista-customer relations  Consolidate the current customer relation systems to one platform . easy use of coupons  Empower the store manager and the regional office to take key decisions : Community Involvement: Increase local events like “go green”.

The mission statement A corporate reporting tool with a past.starbucks.com/Articles/ColumnsDepartments/Insight/Starbucks-Building-an-Inspiring-Brand91935.my.iscom.aspx  http://waveagency. 34(5). S. J.com http://www. Mission Statement – Starbucks Coffee Company. J. S.destinationcrm..org/2015/04/01/the-customerrelationship-management-the-example-of-starbucks/      Rion-Gaboury. 45(2). M. 14.com http://www. L. (2008). (1995). 6(2).  Starbucks Coffee Company (2015).forbes. Journal of Business Communication. present.  Swales. Discourse and the projection of corporate culture: The mission statement. Company Information – Starbucks Coffee Company. (2005).  Starbucks Coffee Company (2015). 94-119 . Discourse & Society. & Rogers.  Williams. 223-242. From Words to Action: A Vision Statement Can Do More than Light a Path. Leadership. and future. P.BiblographyManan prakash Marketing strategies & plans www.