Starbucks Delivery of Customer Service Notes

Starbucks Customer Service Overview

  • Background Information

    • Founded by Gerald Baldwin, Gordon Bowker, and Ziev Siegl in 1971 in Seattle.
    • Howard Schultz joined in 1982, inspired by the Italian espresso culture.
    • Schultz revolutionized Starbucks by expanding it from a whole-bean coffee retailer to a coffeehouse chain that became the "third place" for customers.

  • Company Performance

    • In late 2002, Starbucks was experiencing its 11th consecutive year of 5% or higher comparable store sales growth.
    • CEO Howard Schultz claimed that Starbucks had a recession-proof product.
    • However, recent customer satisfaction research indicated a shortfall in meeting customer expectations.

  • Investment Plan

    • To counter declining satisfaction, a proposal of an additional $40 million annual investment was made to increase service staff by 20 hours per store weekly, aimed at improving speed of service and customer satisfaction.
    • This investment had implications for earnings per share (EPS) as it would decrease by almost seven cents per share.

  • Starbucks Value Proposition

    • Live Coffee mantra emphasizes the importance of a quality coffee experience.
    • Three Components of Brand Experience:
    1. Coffee Quality: Sourced globally from various regions; strict quality control enforced.
    2. Customer Service: Focus on creating experiences, recognition of regular customers, and customization options.
    3. Atmosphere: Designed to be inviting with comfortable seating to encourage customers to stay longer.

  • Employee Engagement

    • Employees referred to as "partners", with a high focus on partner satisfaction to drive customer satisfaction.
    • Offers health insurance and stock options, leading to high partner satisfaction rates (80-90%).
    • Focus on promoting from within, with a significant percentage of management being ex-baristas.

  • Training and Service Delivery

    • Partners receive extensive training on both hard (technical) and soft (customer interaction) skills.
    • "Just Say Yes" policy empowers partners to exceed customer service expectations, even at the expense of strict company policies.

  • Service Measurement

    • Various metrics including a Customer Snapshot using mystery shoppers to evaluate service, cleanliness, product quality, and speed of service.
    • Speed of service benchmark set at three minutes from queue to drink in hand.

  • Competitive Landscape

    • Competes against small specialty coffee chains, independent coffee shops, and larger competitors like Dunkin Donuts.
    • Key differentiators include ambiance, personalization, and product quality.

  • Market Research Findings

    • Customers perceive limited differentiation between Starbucks and smaller competitors despite its prevalence.
    • A shift in the customer base towards younger, less well-educated, and lower-income individuals was reported.
    • The research highlighted a customer satisfaction gap, directly linking it to loyalty and emphasizing the need for improved service performance.

  • Conclusion and Strategic Focus

    • Starbucks aims to reposition its service strategy, viewing staffing as an investment in customer experience.
    • Plans to enhance customer engagement by addressing service gaps and re-establishing customer relationships as core to business growth.