Starbuck’s Case Study Notes
Why has Starbucks’ customer satisfaction scores declined?
Starbucks customer satisfaction scores began to decline despite the fact of Starbucks’ overwhelming presence and convenience. There was very little image or product differentiation between Starbucks and the smaller coffee chains. However, there was a significant differentiation between Starbucks and the independent specialty coffeehouses. The brand image of Starbucks also had some rough edges. More customers were beginning to agree with the fact the Starbucks cared primarily about making money and building more stores. Also, despite the high customer snapshot scores customer satisfaction scores were declining. It was believed that there was a …show more content…
Convenience is the next factor leading to customer satisfaction, with 77%. Starbuck’s has done an excellent job with saturating the market. Customers love having a Starbuck’s location on their normal traffic route, therefore not having to drive out of their way for a cup of coffee. Having the drive-thru service has also made a positive impact for the convenience factor. Other factors that ranked highly for customer satisfaction were being treated as a valuable customer (75%) and friendly staff (73%).
How valuable is a highly satisfied customer to Starbucks?
Creating customer loyalty has proved to be the reason behind the bulk of Starbuck’s transactions because the highly satisfied customer is the loyal customer. It is crucial that Starbuck’s maintain customer satisfaction to keep these loyal customers coming back. Without the 21% of customers, averaging eighteen visits a month, Starbuck’s would lose 62% of all its transactions. Starbuck’s has also found that highly satisfied customers have an average ticket price of $4.42, as opposed to a satisfied customer who only spends on average $4.06. Therefore, having a satisfied customer is very valuable to Starbuck’s and its sales. Should Starbucks make the $40 million investment in labor in the stores?
Whether or not Starbucks should invest $40 million into
In the competitive market where corporations vie for customers, customer satisfaction is an integral element of the organizational business strategy. Wal-Mart customers’ satisfaction ratings have powerful effects on the organization’s bottom line. If Wal-Mart’s customer satisfaction rate drops, this tells the organization that there are problems in areas of the organization that affects the customer satisfaction rating. Wal-Mart will have to correct these problems to ensure the organization customer satisfaction rate improves. A drop in satisfaction ratings for the organization affects sales and profit. Wal-Mart always ensures that their customer satisfaction rating is high enough to keep current customers and to attract new customers. Customer satisfaction is the key element of Wal-Mart to exist in this modern day world of business with such a diverse society.
The bookstore has always been one of my favorite places to spend my time. In my opinion there is nothing more relaxing than going into a nice, quiet bookstore where there are unlimited choices and varieties and the excitement of finally making your selection. What would always make my experience better would be to find a nice secluded spot in the café section of the bookstore and have a nice hot cup of coffee while I read my book. I noticed that whenever I would go to get a cup of coffee, the customer satisfaction I received would play a major role in my overall bookstore shopping experience. This made me realize the importance of customer satisfaction. In this non-participant observation, I will narrate my experiences as I monitored the status of customer satisfaction in a Barnes and Noble bookstore that has a Starbucks Coffee outlet
Starbucks is known for their Frappuccino’s; unfortunately they are on a downward spiral in sales due to competitors such as McDonalds. In 2008 Starbucks admits to its losses due to their competitors. “Company executives now freely admit that such thinking is largely to blame for the woes that led to Tuesday’s announcement that Starbucks will close 600 U.S. stores and eliminate thousands of jobs. The coffee giant’s missteps have come at a spectacularly bad time, hitting as the economic slump deepens and consumers are seeing their discretionary spending eaten up by rising gas prices and grocery bills (Linn).”
Additionally with its growth strategy Starbucks seemed to have lost the ability to communicate its values to its customers. Note that Starbucks research team discovered that between 2000 and 2001 there was an increase in customers who felt that Starbucks primarily cared about making money and building more stores. This is an indication that the company lost sight of the components making up its value proposition. Customer service was a major component of Starbucks value proposition but according to the research team by 2002 it discovered that Starbucks was not meeting expectations in terms of customer satisfaction. In fact the data collected by the research team indicated that 10% of customers would like to see improvements in service especially speed of service and 19% would like to have friendlier more attentive staff.
It was believed that there was a service gap between Starbucks scores on key attributes and customer satisfaction. Furthermore, according to a poll, the speed of service delivery was the biggest concerns of customers. Overall, customers are pleased with the cleanliness, atmosphere, and product quality. However, the main problem was that waiting time was steadily increasing. I believe this one of the factors that caused the decline in satisfaction.
In 2007, Apple and Starbucks became partners in the venture of iTunes store. Over time, another entity entered the equation, AT&T. What does this mean to the customer, the dependability of each to provide superior services to their respective products and services? As it is seen within the IT infrastructure, each entity needs to present certain services to keep up the maintenance of the services on each level, to a point to where one, in an ideal world, for logistical reasons, communicate with each other in case of failure.
ticket size) X (4.4 customer life years)] $921.78. Calculating sales amount for the highly satisfied customer using the same method shows an amount of [(7.2 visits/mo) X (12 months) X ($4.42 avg. ticket size) X (8.3 customer life years)] $3,169.67. The sales figure for the highly satisfied customer is nearly three and a half times as much as the satisfied customer. This is why it is very important for Starbucks to figure out how to provide more customer satisfaction. The company needs to do research to find out if quality of service has actually declined. There is always the societal perception that a large mega brand is incapable of delivering customer intimacy. This perception is not necessarily a foregone conclusion. It’s just a matter of Starbucks collecting accurate information regarding both quality and quantity of its customer service. The company needs to take a look at itself and determine if its customer service strategy had changed from 1992 to 2002. This is an era indicative of the massive growth. Starbucks needs to answer the question, “Did we lose our focus on customer service quality by concentrating too much on opening more stores?”.
Customer satisfaction and service quality are the two important components that direct anyone’s attention in every concept related to marketing, services, etc. (Spreng and Mackoy, 2006). In today’s competitive era, the success lies in
What customers need is consistent quality services, which is discovered in the report by Chen and Hu (2010) that if customers feel confident that they can have a consistent quality consumption experience each time they come, they tend to choose the same coffee shop to enjoy their coffee. And such favorable attitude towards the service they have received could evolve into customer loyalty, since the essence of customer loyalty is, as Barnes (2001) depicts, “all about how you make them feel”, vice versa. Customer loyalty may result in consistent purchasing behavior of the brand over time. Therefore, it could be concluded that the all-round quality service performed by staff with high consistency could be the competitive advantage of Starbucks, which can make it special and achieve long run sustainability in Australian market.
The elusive goal of customer satisfaction has long provided companies with endless headaches and difficult decisions. In the end, associating specific customer satisfaction metrics to company profit and loss would provide the undeniable proof needed to make changes, and then invest the required capital to address any concerns. Starbucks, not unlike the rest of the business world, has found itself in the same situation. At a basic level, the argument that more investment in customer service creates higher customer satisfaction has already been fundamentally agreed upon. However, more specifically, Starbucks must decide if a reinvestment of $40M annually in
Starbucks faces a difficult and controversial management challenge. The company’s most recent market research has revealed unexpected findings implicating that Starbuck is not always meeting customer’s expectations in the area of customer satisfaction. The purpose of this memo is to analyze and provide recommendation on whether or not the company should go forth with a $40 million investment in additional labor in the stores. This $40 million investment is necessary in order to bring service time down to a three-minute interval and ultimately increase customer satisfaction. A marketing strategy and corresponding recommendation will be provided for your approval.
Starbucks has discovered that they are not always meeting their customers’ expectations in the area of customer satisfaction. Starbucks has to come up with an action plan to address this issue, considering its significant correlation and impact to sales and profitability.
Starbucks – one of the fastest growing companies in the US and in the world - had built its position on the market by connect with its customers, and create “third place” beside home and work, where people could relax and enjoy others or themselves. It was the motto of Starbucks’ owner Howard Schultz and mostly thanks to his philosophy; company has became the biggest coffee drink retailer in the world. However, within the new customer satisfaction report, there is shown some concerns, that company has lost the connection with customers and it must been taken some steps to help Starbucks to go back on the right path regarding customer satisfaction.
Their marketing research shed light on the fact that their focus had shifted from the consumer towards store growth and product expansion. The research also highlighted the fact that they were lacking in customer service. Through these studies, Starbucks was able to identify what their customers wanted in terms of satisfaction. Consumers wanted Starbucks to make improvements to their service and also start offering better prices and incentive programs.
Starbuck’s main decision needing to be made is to determine whether they should allocate $40 million to extra labor in order to better satisfy their customers. Starbuck’s believes that they have created a recession proof product; however, recent marketing research determined that is not the case. Customer satisfaction has been steadily declining and their customer’s perceptions on what determines excellent customer service has changed in recent years. This change in customer perceptions is due in part to the fact that their customer base has shifted to a younger, less educated clientele that hold different attitudes toward Starbucks than the previous