Starbucks: Delivering Customer Service

Session 3- 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?

Like the Italians espresso bar, Shultz could brand Starbucks as an icon in American Coffee culture with their high quality coffee mainly focusing on affluent, well educated, white collar upper middle class customers.

The primary components contributing to their value propositions was their “live coffee” mantra to keep up their national coffee culture alive. The three other components were

• The highest quality coffee – They could serve highest premium coffee to their customers through imported quality bean from different parts of the world, custom roasting techniques, dedicated supply chain management and controlled distribution network to retail stores around the world.
• The customer intimacy – The employees were trained to create a unique experience to each and every customer starting from welcoming, identifying the customer, their taste and customising their blend.
• The ambience they created inside the coffee shop to inspire people to come together and stay there for long. This is considered as a third place in American’s life other that home and office to relax and enjoy with others.

The unexploited market by competitors, highly satisfied partners and the location of stores are also the reasons for Starbucks early success.

Starbucks could develop an overwhelming presence and convenience, an “Everywhere - The Trend” to customers. There was a unique product differentiation and considered as a good coffee on the run. Starbucks was a place to meet and move on, accessible and consistent.

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

Customer intimacy was one of their major value proposition and they trained their partners to develop hard and soft skills which include how to entertain the customers, how to custom blend the coffee and to make the Starbucks as a place to relax and stay longer.

But the complexity of barista’s job has increased over time as the product range has increased and almost half of the customers customised their drinks. Also the customer base and behaviour noticeably changed. Accordingly it created a tension between product quality and customer focus.

Since the stores are located mostly in urban area the company couldn’t afford the increased wages of employees and thus they didn’t want to increase the number of barista. On the other hand they just tried to increase the efficiency of barista by different affordable means.