Starbucks: Delivering Customer Service

Q. What is the biggest problem that Starbucks is facing? Explain.

The biggest challenge facing Starbucks is the dwindling customer satisfaction. This is a
critical issue as satisfaction scores are directly linked to customer loyalty. According to
market research data, the company is failing to meet customer expectations, which directly
contradicts some of their fundamental assumptions with respect to brand and customer
perceptions.
Over the years, the company sought an aggressive growth strategy focused on retail
expansion and product innovation. However, amidst the rapid business expansion and
increased number of products and stores, the company failed to address customer concerns
that were reflected in the market data, i.e., the focus on customer service had decreased to
an all-time low. As Christine Day, Starbucks’ senior vice president of administration in North
America, put it “…we simply stopped talking about the customer. We’ve lost the connection
between satisfying our customers and growing the business.”
Metric Analysis
Metric Analysis Data Point

34% of the customers felt that service needs

to be improved, in particular, speed-of-
Customer Service Exhibit 11
service (10%) and staff attentiveness and
friendliness (19%)

High Customer Snapshot scores were in

Customer Snapshot Scores dissonance with Customer Satisfaction Exhibit 7
Scores

Positive customer behaviour such as

increased number of visits per month, high
Customer Satisfaction Scores average ticket size per visit and high average Exhibit 9
customer life were directly correlated to
increasing levels of satisfaction.

61% of the customers (up from 53%)

strongly agreed with the statement
“Starbucks cares primarily about making
Brand Image Perception Page 10
money” and 55% (up from 48%) strongly
agreed with “Starbucks cares primarily
about building more stores”.

31% of the customers felt that better prices

Pricing Exhibit 11
and incentive programs should be offered.

Decision
Starbucks is now at crossroads where it needs to decide whether investing 40 million dollars into
increasing labour hours is a feasible option. The objective of the decision is to improve overall
customer satisfaction, and the question remains whether this move would be successful in achieving
that objective or not.