Service Marketing Section B The Makers

STARBUCKS : DELIVERING CUSTOMER SERVICE

Amrit Visa (p39065)

Gopika KP (p39072)

Vishruti Joshi (p39075)

Parth Shah (p39087)

Rishi Modi (p39096)

Riya Delhiwala (p39098)

Situation Analysis:

The senior vice president of administration of Starbucks, in North America, Ms. Christine Day,
has to decide whether to recommend an investment of a large sum of money to increase the
speed of service. From the market research, it became clear that three minutes is the standard
time which people regard as an excellence in service being provided. When waiting time
increases, the customers tend to back off or get irritated and the customer satisfaction level
goes down. Day has to give a presentation with recommendations to improve customer
satisfaction by decreasing the waiting time to the CEO of Starbucks, Schultz and Orin Smith.
An investment of $40 million annually in the company’s 4500 stores to increase the speed of
service was the plan that Day and her associates had come up with.

Problem Statement:

In order to increase the customer satisfaction level, Day and her associates are planning to put
up the idea of investing $40 million dollar on labor to increase the speed of service. There are
chances of company declining this idea citing that $40 million is a huge amount and if not
invested into proper operational avenues then it might not create any impact on sales and
profitability. This investment could also directed towards product innovation, opening of new
stores or introducing special royalty programs for customers to increase footfalls.

Criteria for Decision Making:

Service Marketing Section B The Makers

1. The quality of the coffee/beverages cannot be compromised in order to reduce

customer waiting time, as Starbucks has gained the reputation of providing the finest
coffee/beverages in the industry.
2. Starbucks has always involved in training its staff to communicate more efficiently with
their customers and it forms an integral part of their services. Customer intimacy is an
important criterion for the company. This means satisfying the various needs of their
customers including, customizable beverages, faster service time, greeting the
customers and being friendly and polite to them.
3. Starbucks has always strived to provide an upscale ambience for their customers where
they can relax and experience joyous moments along with their favourite beverage
away from their home/office.

Alternatives and Analysis:

1. The company can invest the $40 million dollars on hiring more labor. As the customer
ratings state that there are various factors that can be achieved by hiring more work
force. Increased workforce can help in providing faster services and a special staff can
be appointed to handle the customer service points and the registers. They can be trained
to remember the regular and not regular customers’ names and greet them. Eighty three
percent of Starbucks customers rate clean store as being highly important. The added
labor can be dedicated to keeping the store and washrooms clean for customer
satisfaction.
2. 77 % of the Starbucks customers rate that convenience is an important factor for their
satisfaction. This means that the $40 million dollars can be used to open new stores at
convenient locations. This would allow customers to grab a quick brew on their way to
work. It is given that a new store averages $610,000 in the first year of sales. Therefore,
a new store would not only help the customer by being convenient to them, but it would
also reduce the stress on existing stores in that vicinity, as the customers would
segregate into the stores nearest to them.
3. The investment of $40 million can be done into further automation of machinery and
overall coffee/beverage making process. The consistency can be maintained and steps
of making an item will also decrease.
Service Marketing Section B The Makers

4. Rather than product combinations and more customizations, Starbucks can provide the
most wanted items and hence work more on quality and service time.
5. Regular customer can order the beverage they want through an online system while
they are leaving their home. And by the time they reach the store, their order would be
prepared. These customers who are in hurry can collect their pre-ordered beverage from
separate collection station or window, so that they do not have to enter inside the store,
thereby saving them more time.
6. This money can be invested in training the existing staff and increasing their benefits
as Friendly staff and Treated as valuable customers were given customer ratings of 73%
and 75%. The existing staff can be further trained to hone their hard and soft skills to
provide a further customer satisfaction.
7. Starbucks can provide attractions which can consume the waiting time of customers
and hence the perceived waiting time may change in the long run.

Recommended alternative:

The investment on labor and mechanization is a viable option to go with, as it is an acceptable

solution to counter the waiting time for customers. By investing only in labor may bring in
overstaff problem and pose an overcrowding condition in the outlet. High level of
mechanization will again add to difficulty as Starbucks is perceived as a place where customers
can get handcrafted rich beverages. A fine amalgamation of both the alternatives will bring
about a positive change in the current scenario. The added workforce will help in maintaining
the cleanliness of the outlet. Multiple counters can also be installed to manage the high traffic
of customers. This will make it convenient for the customers in getting their ordered items
quickly as well as it will also be convenient for the service providers to deliver the order in an
optimum way. Starbucks may also provide some attractions within the store like video display
about the procurement process of raw coffee, showcase variety of coffee beans with stories of
their origin etc., reading area and certain interesting recreational activities to calm the
customers if the service time exceeds the normal time. Attractions should be arranged in such
a way that the peaceful ambience within the shop is well-maintained and customers enjoy in a
relaxing mood. It is assumed that these recommendations will increase the customer
satisfaction. Due to this, people will tend to spend more time than they usually spend and hence
their ticket-size will also increase.
Service Marketing Section B The Makers