Starbucks: Delivering Customer Service

Starbucks is a successIul premium coIIee retailer. It has hundreds oI product lines and the sales
oI beverage take the largest percent. Customer intimacy strategy Iuel them to be successIul, the
goal that has been set to be third place except home and work come out true. There are three
components oI the brand, live coIIee, service, and atmosphere.

Starbucks has an uncomplicated distribution strategy, and it tries to make customers get entrance
to Starbucks products easier and provide more convenience to customers. To ensure high
satisIaction oI the customer hired employee whom Starbuck called partner have to undergo two
types oI training named 'hard skills and 'soIt skills. They have Iacing competition Irom Iour
major competitors around the country.

To be most recognized and respected brand in the world, the company has taken two biggest
drivers, retail expansion and product innovation that accelerate company growth.
For product innovation, new products were launched on a regular basis. For service innovation,
Starbucks has launched Stored-Value Card (SVC) and T-Mobile Hotspots wireless Internet
service. In addition, the expanding strategy was to open stores in new markets while
geographically clustering stores in existing market.

Despite oI Starbucks` overwhelming presence and convenience, customers think there was just a
little oI image and product diIIerentiation between Starbucks and its competitors. Recent market
research indicates that the company is not meeting customer expectation in terms oI service
that`s why the company wants to invest $40 million dollar to increase its customer service by
Iastening its customer service to meet the customer expectation.




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" Should Starbucks make the $40 million investment in labor in the stores? Whats the goal
of this investment? Is it possible for a mega-brand to deliver customer intimacy?
It is a good idea to make customers Ieel like valued customers with Iaster service with more
labor. However, there are some problems in the $40 million plan as it is too large amount oI
money to spend Ior small Iactor and there is other way to satisIy customers. The plan have been
taken based on some puny assumption like speed oI service is the number one driver Ior
satisIaction and that the additional labor will provide the increase oI speed oI service, all stores
are equal in size, number oI people they serve, location and prices and that all the stores need this
additional investment, satisIaction is correlated with loyalty and that iI a satisIied customer
becomes highly satisIied then the number oI visits per month to the store will increase along with
his ticket size.
Based on company research, 10 oI the customer (Exhibit-11) Ieel like valued Ior Iaster and
eIIicient service. So even iI the $40 million investment is made and customers get a Iaster
service, there is a big risk in losing value in some oI the other proposition.

Having more partners in a speciIied work area might lead to the risk oI less Iriendlier, less
attentive staII and might also risk the loss oI the personal treatment. There are 19 oI customers
who responded that they would Ieel like valued customers when they could get Iree coIIee cup
aIter every x visits. Furthermore, Iriendlier staII can make 19 oI customer satisIaction, so
education oI staII can be a better idea.

As we can see Irom the rankings oI the key attributes by Starbucks customers, Iast service ranks
#7 in importance, less important than other issues like clean store, Iriendly staII, coIIee taste and
highest-quality coIIee.

Recommendation Ior Starbucks will be investing more in soIt skill means creating Friendly
staIIs, Iree drink service or giIt aIter X number oI visit, and Friendly environment or clean store
to deliver customer intimacy as a mega-brand.