CASE ANALYSIS: STARBUCKSDELIVERING CUSTOMER SERVICE

By: SectionA_Group-4 Jyotsna Gautam Saumarjit Konwar Tarun Kumar Manoj Kumar Meena Lysiane

FACTOR CONTRIBUTED TO THE EARLY SUCCESS

Maintained standards by controlling supply chain Raised $25 million through public offering and opened large no. of new stores Specific target customers- white collared, educated Large reach- retail outlets, hotels, airports, kraft foods, Pepsi cola and Dreyers etc. Selected high-traffic, visibility setting locations Word of mouth and zero expenditure on advertising Invested in R&D Lowest employee turnover rate Product mix

Sold whole bean coffee as well as beverages such as rich-brewed coffee, Italian style espresso, cold beverages, and premium tea Also offered food and other beverages (sodas, juices etc.) Coffee related accessories and equipments, music CDs, games and seasonal novelty items

CORE VALUE PROPOSITION

Live Coffee was the Starbucks mantra

Offer highest-quality coffee beans Created a unique experience and ambience in the coffee shop(upscale yet inviting environment) Increasing customer intimacy by recognizing the customer, engaging them in a friendly talk while they are waiting in a queue and offer customized drink

Just say yes policy

REASONS FOR THE DECLINE IN CUSTOMER SATISFACTION SCORES

Long waiting time Long service time Conflict between product quality and customer interaction due to less focus on customers satisfaction

CHANGES OVER THE YEARS

Customer base: In 70s niche market of coffee purists In 80s and 90s affluent educated white collared patrons 2000s young college going, less educated, lower income brackets Value propositions Convenient coffee joint to coffee on move Change in customer perception: from service oriented to profit oriented Product: Till 1992, 50% of revenues by coffee beans By 2002, 77% revenues by beverages Complex and customized products Service: Longer service time Less customer intimacy

AN IDEAL CUSTOMER FOR STARBUCKS

Loyal customer Visits store: 18+ times a month Spends $4.42 on average on every visit Average customer life 8.3 years Prefers ready-made products or easy to make beverages Value of an ideal customer= 18*4.42*8.3*12=$7924

WAYS TO SATISFY AN IDEAL CUSTOMER

Treat the customer as important and valuable Provide quick and improved services Offer customer incentive programs Improve the taste of coffee and make it more customized The store should be kept clean, aesthetics play an important role Make the service more customer-convenient Pleasant and upscale environment Knowledgeable , interactive and friendly staff

RECOMMENDATIONS

Yes, Starbucks should make an investment of $40 million/year

To improve service operations and make it faster & efficient To increase customer satisfaction level decline in service time and building long term relationships is important No. of stores: 4500; investment per store: $8888.890 To achieve the target of converting 52 customers to highly satisfied customers i.e. 12.08% of existing customers are to be converted into highly customers