Starbucks-Delivering Customer Service

CASE STUDY ANALYSIS

STARBUCKS: DELIVERING CUSTOMER SERVICE

SUMMARY:

Starbucks is experiencing its 11th consecutive year of 5% or higher comparable store sales growth, despite the post-9/11 recessional economic environment. The company prides itself on its excellent customer service, but recent market research shows that the company is not meeting customers’ expectations when it comes to customer satisfaction with its service.

Christine Day, the senior vice president of administration in North America, and her associates have come up with a plan to invest $40 million annually by adding 20 hours of labor per week per store. Their goal with this investment is to improve the speed-of-service and, in turn, improve customer satisfaction. Day questions if they should believe what their customers define as “excellent” customer service, and if they spend $40 million annually to increase speed-of-service, what effect will it have on the company’s bottom line?

This paper reviews Starbucks’ current situation, analyzes the main issues that could be contributing to its lower customer satisfaction scores, offers alternative solutions, and answers the question of whether the company should make this investment.

CURRENT SITUATION:

A Focus on Store Expansion

Starbucks has been enormously successful in taking a commodity and transforming it into an upscale coffee experience epitomized by the company’s “live coffee” brand strategy.

When Howard Shultz purchased Starbucks from its three founders, he immediately began opening stores. By 1992, the company had 140 stores, and Shultz took the company public so that the company could expand and open more stores. Today (2002), the company has 3,496 company-operated stores in North America. Schultz believes that it is not unreasonable to one day have 10,000 Starbucks stores in North America.

Value Proposition--A Coffee Drinking Experience

Starbucks’ value proposition is to not just sell a cup of coffee, but to...