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Analysis of Starbucks Delivering Customer Service
Analysis of Starbucks Delivering Customer Service
At the current moment, Senior VP of Administration Christine Day is contemplating how she
will pitch her plan to improve Starbucks’ customer satisfaction scores. On paper, the companies
self imposed “snap shot” program of mystery shoppers paints a picture that the stores are
operating effectively in the areas they feel drive customer satisfaction. However, recent surveys
have revealed that the company’s perception of what drives customer satisfaction varies from the
According to Starbucks’ 2010 Annual Report, customer satisfaction scores continue to increase,
and at several points within the report it is mentioned that the key drivers for customer
satisfaction are superior customer service/speed, along with partner friendliness and cleanliness.
It is worth noting that the two former factors were the top two responses for how Starbucks could
improve perceived value, while cleanliness was ranked as the most important attribute for
customer satisfaction. It can be perceived that an additional focus has been placed on these areas
since the article was written as CEO Howard Schultz mentioned them all in his letter to
investors.
In order to convince Smith and Schultz of the proposed $40 million plan to increase each stores
allotted sales, Day must tie customer satisfaction to customer loyalty, and place an emphasis on
how this will translate to an increase in sales. In the HBR article “Putting the Service-Profit
Chain to Work,” the authors lay a groundwork for what drives customer loyalty and the
substantial impact that a lifelong customer can have on the bottom line. They state that
improves customer satisfaction, and that ultimately increase loyalty and profitability. It was
mentioned that Starbucks partners have highly positive opinion surveys, but that increasingly
more difficult and time-consuming beverages are adding strain to their operations. With the
additional labor dollars, this could make the partners’ day to day tasks less stressful and improve
their ability to focus on the speed of service, their level of friendliness and also on the cleanliness
of the store. To make the argument stronger and to put it in financial terms, the $40 million
spread over 4500 stores would equate to $8888 per store per year, or $171 per week. Currently
the hourly employee labor poor is about $3240 for a store running about $15400 per week. This
results in a labor cost of 21.04%. In order to keep the labor % of net sales at the same level, the
store would have to run an additional $812 per week. With an average ticket hovering around
$4, this would mean the stores would need an additional 203 transactions per week, or about 800
per month. Exhibit 9 shows that guests that are extremely satisfied tend to nearly double their
visits from 4.4 to 8.3 per month, so if they were able to eventually “wow” 200 current, satisfied
customers and make them extremely satisfied, yielding them loyal to the company, they would
more than meet their investment. This calculation doesn’t include the almost certain increase in
visits from individuals who are currently unsatisfied, nor does it take into account the
exponentially more important customer life, both of which are worth noting.