Starbucks: Delivering Customer Service

Problem Statement Starbucks has achieved great success in the beverage industry. The companys overall objective was to establish Starbucks as the most recognized and respected brand in the world. The company is well organized to meet the customers needs. And it also developed a leading position in North America coffee beverage industry competing with thousands of small coffee shops. The company concerns not only the quality of coffee but also providing high standard customer service and creating relax and enjoyable environment for the customer which visit store for coffee. Customer service is always an important factor of Starbucks performance. Although Starbucks has already be well-known and wide acclaimed through its customer, a recent market research shows there are still some expectation the company didnt fulfill. Therefore, Christine Day, the senior vice president, needs to make some important decision on improving customer service. Strategy analysis Starbucks lacks of external consultant team. In order to meet customers needs, the company needs to create and implement different kind of strategy. Starbucks has several approaches in order to determine what customers real needs are. For example, Starbucks has the Customer Snapshot in order to see the real feedback from their customers. Another example would be their Research & Develop department on creating new products. These two approaches are very professional and useful from inside determination because of they are directly from customers. However, the company does not seem to seek for external consultant from third party for professional research result for identifying customer needs. The most important is to see what the real problems are. Monthly Customer Snapshot may be innovative, but the customers could provide false information, or the implementing could be misunderstood by the employees. The professional consultants are not only providing advices but also assisting implementation. Therefore, it can reach the goal of satisfying customer needs. Starbucks lacks of Blue Ocean strategy. Coffee has developed many years and it has already obtained by thousands of different coffee brands. Although Starbucks has captured a lot of market share, there is not too much it can develop in the coffee industry. The company has tried to compete within ice cream and donuts bagel chains which also have some strong competitors. To get more and more market share, the company needs to come up with an idea of exploring a whole new market which has few competitors. Since the new market cannot be found that easy in a short period, it at least needs to be encouraged and put it the company concept with the concept of creating new flavored coffee or other beverages. Starbucks does not have enough in-store approach to meet different customers needs in todays market. Starbucks provides good quality service and on-time products, and also allow customers customize their own coffee. However, it seems there is some gap that the company did not satisfy their customers. As the survey mentioned in the article, although Starbucks has used different ways to improve barista efficiency, some customers are still concerned about the speed of delivering service is being delayed. The strategy of 20 more labor at every store could maybe solve the problem. And it would possible also help serve more customers and bring up more profits and revenues. On the other hand the strategy also has some disadvantages. Since the working hours are going to be more than required, some of the employees could have quit their jobs. Starbucks lacks of promotion on advertisement. The company prefers more on set up promotion directly to its customers while selling products. In order to achieve the goal of $20,000 level in terms of weekly sales, the company needs to put up advertisement to its regular customers and potential new customers. And to follow the companys overall objective becoming international, this strategy will also develop international market. Exhibit 2 shows that there are 4,574 stores in North America and 1,312 stores internationally. This means Starbucks need to focus more on International market since the labor is cheaper compare to North America. The weakness would be advertisement means investment. To the large company like Starbucks, advertising to the whole world will increase the companys cost. Another weakness is that the strategy does not match with the companys basic principle. Starbucks tries to build the company to a high standard coffee shop face to the wealthy and well-educated customers. Putting a globe advertisement will probably low the image of Starbucks and make it pain folk.

Recommendations Starbucks could invest more on adding 20 more hours labor in order to increase the control of quality and speed. Taking the high cost of the labor and almost saturated market in North America, Starbucks needs invest more internationally than North American Market. Making advertisement for well educating and white collar customer is a way to promote and stay where the companys mission is. Or Starbucks could may social charity activities so that more and more people will know it and more important increase the reputation of Starbucks, which some of respondents who strongly agreed with the statement Starbucks cares primarily about making money. Meanwhile, the company needs to take develop new market segments into consideration in order to obtain more opportunities of increase profits with the advice from professional consultants.

Starbucks: Delivering Customer Service

Appendix LOB Schematic

SECONDARY NEEDS

PRIMARY NEEDS

REQUIRED NEEDS

IGNORED NEEDS

High Innovation Concern

High Products Diversificati on

High Customer Satisfaction Focused

Most Unique Store Experience

Obtainable

Quality Assurance

Low Price Customers

Best Products Provided to Customers

Speediness of Delivering Best Products & Services

Unique Relax and Enjoyable Environment for Customer

Process of Creating New and Services

Professional Partners and Employees

Multiple Products and Distribution Channel Development Approach

Customer Snapshot

3-MIN Level

Customer Snapshot

12-18 Month Cycle

Hard & Soft Skills Training

Comparison with Other Competitors

1, 2, 5, 6, 7, 9, 10, 12, 15, 16, 17, 19, 23, 24, 25

2, 3, 4, 8, 10, 12, 14, 15, 16, 17, 19, 20, 22, 26, 28

3, 13, 13, 14, 15, 19, 20, 26, 27

9, 17, 20, 24, 25, 26, 27

3, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 28

5, 6, 7, 9, 10, 21, 22, 23, 24, 25

Starbucks Needs: Primary Needs: High Customer Satisfaction Focused and Most unique store experience are the two important company concepts in Starbucks. They are the two competitive advantages of Starbucks, which people cannot experience from other brand of coffee shop. Second Needs: Starbucks thinks innovation on products and service is very important. The new products and service will attract both new customers and returned customers. Diversification of products is also convenient for customers to select if they want some other food while drinking coffee. Required Needs: Obtainable means the coffee is easy to get, which means convenient store location and the speed of coffee delivering. Quality assurance is important that people will care about the quality of the coffee. For example, does it taste good? Can I customize my own favorite coffee? Ignored Needs: The target customers of Starbucks are set up as wealthy and well educated customers. It seems more and more young and low-income people are becoming Starbucks customers. However, the price seems will not drop in order to meet those group of customers needs.

Starbucks: Delivering Customer Service

Activities: 1. Purchase highest-quality coffee from Africa, Central and South America, and Asia-Pacific regions. 2. Control as much of the supply chains as possible. 3. Set seating areas to encourage lounging and design layout to provide an upscale yet inviting environment for those who wanted to linger. 4. Set company-operated stores located in high-traffic, high-visibility settings such as retail centers, office buildings and university campuses. 5. Sell whole-bean coffees and rich-brewed coffees, Italian-style espresso drinks, cold-blended beverages, and premium teas. 6. Most stores offered a variety of pastries, sodas and juices, along with coffee-related accessories and equipment, music CDs, and seasonal novelty items. 500 stores even carried a selection of sandwiches and salads. 7. Sell whole-bean and ground coffees to hotels, airlines, restaurants and also sell products through domestic retail store. 8. Sell products from international licensed stores, grocery stores and warehouse clubs, and online and mail-order sales. 9. Sell bottled Frappuccino beverages and ice creams. 10. Establish relationship with third parties that share Starbucks value and commitment to quality. 11. Hire 60,000 Partners and make them satisfied with giving health insurance and stock options and keep them to stay manager stability. 12. Hard skills training how to use cash register and how to mix drinks. 13. Soft skills training Connect with customers, which are enthusiastically welcome customers, establish eye contact, smile, and try to remember customers names and orders if theyre regulars. 14. Establish Just Say Yes policy. 15. Train baristas to balance between making quality standard coffee and customized coffee. 16. Increase Barista efficiency by removing all non-value-added tasks, simplifying the beverage production process, and tinkering with the facility design. 17. Installing automated espresso machines in its North American Cafes. 18. Measure performance internally by Monthly status reports and self-reported checklists. 19. Measure performance externally Customer Snapshot. 20. Create Legendary Service in order to get return customer and new customer. 21. Compete against a variety of small-scale specialty coffee chains, thousands of independent specialty coffee shops, donut and bagel chains. 22. Capture market share by open more stores. 23. Set a number of criteria for new retail store. 24. Launch new products on a regular basis: introduce at least one new how beverage every holiday season. 25. Develop new product in 12-18 month cycle by running focus groups, and conduct in-store experiments and market tests. 26. Launch Starbucks Store-Value Card which could be used to pay for transactions in any company-operated store in North America. 27. Offer T-Mobile Hot Spot wireless internet service. 28. Set coffee making process in 3-MIN level.