Starbucks Case Report

Week 3 Starbucks Case

1. How did Starbucks measure their service performance?

Starbucks uses several metrics to measure their service performance including monthly status reports and self-reported checklists.

Their most prominent service performance measurement tool is the usage of mystery shoppers three times a quarter, under the program “Customer Snapshot”. An anonymous mystery shopper will visit and rate the store on four “Basic Service” criteria – Service, Cleanliness, Product Quality and Speed of Service and also “Legendary Service”. Starbucks aim to serve the customer within three minutes, from back-of-the-line to drink-in-hand, in line with their findings from their market research, stating that the three-minute standard is the key component in which customers define “excellent service”.

Going beyond “Basic Service”, stores are also rated on “Legendary Service” which is service that was excellent and memorable enough for the customer to become a returning customer and bringing his/her friends along. It is based on service attributes such as partners initiating conversations with customers, remembering the customers’ order or name and being responsive to service problems.

1. Based on your opinion, what are the key differences between their established customers and new customers? Would these two types evaluate the same service experience similarly or differently?

In my opinion, the key differences are the new customers having lower income levels on average than Starbucks’ more established customers. They visit the stores less frequently and have very different perceptions of the Starbucks brand.  It is possible to deduce that their lower financial affluence is correlated to their view of Starbucks as a brand that isn’t for them and less worth more for.

Having a lower income level will lead to a greater need to ‘stretch the dollar’ and make their monies worth. With the ubiquity of retail coffee in the US, the new customers who place price higher in consideration will be more ready to jump-ship and not be loyal to Starbucks and their coffee.

From the data at Exhibit 8, the data shown shows that the newer customers have a more overall unfavourable opinion of Starbucks compared to established customers in all aspects. This serves to reinforce the fact that the new customers will evaluate their service experience more stringently compared to the established customers, given the larger propensity to consume cheaper retail coffee over specialty coffee just by price alone.