Starbucks: delivering Customer Service

Starbucks , the dominant specialty-coffee brand in North America is pondering over the findings of a recent market research. The research findings indicate that it is not meeting the customer expectations in terms of service. Now it is considering whether it will be a wise and sufficient step to increase the labour in store (costing $ 40 million annually) to rediscover the customer. From its inception way back in 1971 it has seen a tremendous amount of success. The value proposition offered by it can be expressed in a single word live coffee. It creates an experience around the consumption of coffee. Its value proposition includes the quality of coffee, service and atmosphere and ambience provided. Its unique value proposition combined with controlled and efficiently managed inward and outward logistics regarding supply chain and efficient self monitoring leads to its phenomenal success in early years of operations. Going by the research findings it is clear that there is a direct link between customer satisfaction and loyalty. If we consider few major attributes constituting customer satisfaction, clean store (83%), convenient (77%), friendly staff (73%); these are directly linked to the number and behavioral aspects of Baristas. Some other major attributes are taste/flavor (72%), quality (67%) and fast service (65%). Now most of the customers (more than 50%) preferred a customized solution for their coffee need which creates a tradeoff between speed and quality of the service. Also as the customer expects a delivery within specified 3 minutes it becomes pretty hard for Baristas to prepare a quality coffee with same taste as earlier experienced. It may yield to not meeting the customer expectation which they generally derive from past experiences which ultimately lead to decreased satisfaction. At the same time attentiveness and faster service also constitute a major part in customer realization as valuable. Other factors of satisfaction are mainly related to raw product quality, environment, price etc. which are not related to labours. Another point of concern is its positioning in the customer mind. There is very little image or product differentiation between star bucks and the smaller coffee chains. As marketing is decentralized it may sound good in terms of conceptualization but in operational terms it is not working efficiently because they are not able to use market data to drive decision making. In addition to these factors one more important issue is the changing customer base. Its customer base is shifting from affluent, well educated, white-collar patrons to younger, less well educated and lower income group customers. These will have certainly different need and aspirations than the earlier ones. Star buck may act accordingly. Based upon these information investing $ 40 million in labours may prove fruitful in improving certain attributes like fast service, quality and consistent taste, friendliness etc. which will help in improving customer satisfaction certainly. But at the same time some additional steps may also

prove helpful. A more robust marketing strategy is needed keeping in mind a new mixture of customer base comprising earlier customers and new younger ones. Also it should take steps towards increasing the efficiency of Baristas and use of some equipment mainly for standardized products.

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