Star Bucks - Delivering Customer Service

Starbucks : Delivering Customer Service

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

        The major factor responsible for the extraordinary success of Starbucks in the early 1990s was the long-term vision of Howard Schultz, to bring the Italian coffee culture to America and give people a "third place" to spend their time, other than the two they already had - home and work. He envisioned it as a place for people to get away from their stressful lives and be carried away to another land where they can relax and be with themselves or people among whom they feel comfortable with. This new idea was welcomed by the American people and the prospect of being somewhere in an exotic land having premium coffee on their way back from work was a big attraction to them.

        Another factor was the company going public which gave Schultz access to a larger amount of capital to expand his network of coffee shops all across the nation.

        Finally the most important factor contributing to the success of Starbucks was its well devised value proposition which fulfilled the needs of the customer segment they were targeting. This consisted of three elements.

• Premium Coffee:

Starbucks took pride in, what they believed was, offering its customers the best coffee in the world. It went through great lengths to ensure that by controlling its supply chain as much as possible and sourcing coffee from all over the world. This was key as most of its revenue in the 1990s came from the sale of coffee beans.

• Service Philosophy:

Starbucks was very customer oriented when it came to its service philosophy. They called it "customer intimacy". These values were inculcated in the staff hired as well. They were trained in soft, as well as hard skills to interact with their customers and know their preferences.

• Physical Atmosphere:

Starbucks paid a lot of attention to details when it came to creating the right ambience for its customers in its stores. As was the long term vision of the company, they wanted their customers to walk into a different environment which made them want to stay and linger. For this they made sure that all the stores were company operated so that they can keep stronger controls over the ambience and customer-company relations.

As a result of this, Starbucks had created a unique brand image amongst the public. It had become a third place for the people of America, where they could come and relax in the ambience of an upscale Italian coffee shop and hang around with likeminded individuals, while being served the best coffee with an affordable price.                        

2)      Why  have  Starbucks’ customer satisfaction scores declined?    Has  the  company’s service declined, or is it simply measuring satisfaction the wrong way?