Starbucks: Delivering Customer Service Case Solution

1. What factors accounted for the extraordinary success of Starbucks in the early 1990's? What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period?

Starbucks has been famous for its unique and innovative business strategy which converted a simple product of daily use into an important part of the culture. Consumers tend to value product for not only its quality, but also the way it was being presented. In the 1990’s, Starbucks promoted the coffee culture which was widely accepted and appreciated by the customers. Customers were compelled by the value proposition of Starbucks coffee as it offered a different perspective of having a cup of coffee. The company envisioned a place where the customers would feel comfortable after an all day’s job, have a cup of coffee with a doughnut and loosen up themselves.

The individuality of a product or a company makes it a brand. A brand is valued by the customers according to the satisfaction it provides. Starbucks developed the image of its brand by focusing on three different but interrelated areas of function. It offered premium quality coffee to customers on the first place, to attract the ones who prefer coffee over ambiance. The company worked hard in the area of customer service to have a competitive advantage over the other coffee bars. They provided a whole new environment which changed the meaning of ‘having a cup of coffee’ altogether.

2. Why have Starbucks 'customers’ satisfaction declined? Has the company’s service declined, or is it simply measuring satisfaction the wrong way?

Starbucks has been known for the way of its coffee presentation. It has offered a high level of customer service complimenting the required type of coffee by the customer. Customers have always been attracted towards Starbucks due to customer caring attitude of the staff. Starbucks uses the strategy of mystery shopping to measure the level of customer satisfaction in every outlet of the company. An inspector is sent to report on the cleanliness, order time, and staff attitude in every outlet of the Starbucks. He acts as a customer during all the observations; thus, staff treats him as a regular customer. This method can be biased in a sense that different people do not have the same sense of judgment. It can only be achieved through a rigorous training which is lacking in Starbucks.

It is not clear that whether the customer satisfaction is increasing or declining, but it can be observed that Starbucks is facing with new challenges and difficulties in the present situation. The company has been started to focus on the expansion and opening up a number of outlets, rather than concentrating and improvising the current outlets. Customers have started to expect more out the products; thus, the company should concentrate on improvisation rather than expansion.

3. How does the Starbucks of 2002 differ from the Starbucks of 1992?

Starbucks in multiple ways from 1992 to 2002 and these ten years have resulted in a fair success of the company, keeping all other factors constant. It has also faced some difficulties during this time. First of all, the major change is the growth of the company as it expanded from 144 stores in 1992, to 5886 stores in 2002. It has not only expanded domestically, but also internationally. It has formed multiple partnerships in order to increase its customer base. The company has relied on technological advancements for its successful operations and customer convenience. It has successfully started the customer card system for regular customers to earn their brand loyalty. Customers are provided with wireless internet facility in every store to attract internet users, resulting in a comfortable environment for them to work on their laptops or use social media conveniently.

Starbucks has increased its menu variety to a great extent so that customers may choose the exact mix they want. They have also added chocolate drinks and tea with a wide variety of coffee on a single menu. However, these ten years have increased competition in the market, which requires the company to work on improvisation on a daily basis.

4. Describe the ideal Starbucks customer from a profitability standpoint. What would it take to ensure that this customer is highly satisfied? How valuable is a highly satisfied customer to Starbucks?

A company is profitable when its revenue is greater than the cost of operating the business. Profitability is the financial gain earned through the business of a company. Starbucks have been putting a great emphasis on the profitability of the company due the future plans of expansion and the provision of quality products. For this purpose, it needs to focus on the right customers i.e. target market. An ideal customer of Starbucks would have three possible attributes. He would value coffee as a special part of his life and will be a regular customer of Starbucks. He would see Starbucks as a brand which offers more than just coffee, and brand loyalty would play its part. He would be satisfied with the customer service practices of the company and always leave with compliments.

Starbucks have to ensure that every customer is highly satisfied because it is the only way to stand up to its value proposition i.e. customer service. It has to concentrate on cleanliness, customer convenience, a friendly staff, a suitable pricing strategy, and order time and product quality in order to gain maximum customer satisfaction in the future.

5.Should Starbucks make the $40 million investment in labor in the stores? What’s the goal of this investment? Is it possible for a mega-brand to deliver customer intimacy?

Starbucks has been facing some difficulties in their stores due to an increased demand of a variety of products by the customers. It does not only offers simple coffee, but a wide variety of beverages ranging from coffee to chocolate and tea. The range of products is so high that the baristas find it difficult to keep the pace of orders and customers have to wait, resulting in decreased customer satisfaction.