Starbucks: Delivering Customer Service

Starbucks: Delivering Customer Service

Main Issue

In 2002 Starbucks realized that they were not meeting their customers’ expectations and were seen as inferior to local specialty coffeehouses. The original customer base was composed of “affluent, well-educated, white-collar patrons.” The customer demographic could afford a premium price over typical coffee outlets. This customer based evolved to include ethnically diverse, “younger, less educated and lower income” individuals who had a different perception of the Starbucks brand. These new customers routinely cited speed of service as a concern, which contributed to a service gap between Starbucks’ attributes and customer expectations. In addition to the higher service speed, customers also demanded a large variety of drinks and the ability to have them personalized.

Starbucks’ value proposition was providing excellent coffee by controlling the supply chain, superior service through “customer intimacy,” and an atmosphere that fulfills people’s need to “come together.” Starbucks had a focus on coffee, customers and ambience all of which was influenced by employees called “partners.”

Starbucks in 2002, compared to 1992 was drastically different. The company grew from 140 stores to nearly 3,500 in North America during the decade. Naturally to justify the opening of new stores, Starbucks customer base grew during the same time period. The company went to primarily selling coffee beans to selling beverages, which accounted for 77% of sales in stores (Page 3). The baristas in 1992 could prepare the entire drink menu in one day, by 2002 16 days were required to make all the drinks. In addition, many customers required their drinks to be personalized, which slowed the process even more. These two factors increased the time that employees dedicated to craft drinks, which in turn slowed down the delivery time and decreased the time they had to interact with customers. Starbucks had evidence than there was a correlation between satisfaction level and customer loyalty.

The company was “operating with the assumption that {they} did customer service well”, but the reality was that they had lost sight of the consumer. Starbucks had focused on growth and on the introduction of new products which jeopardized their brand image; customers viewed Starbucks as a company solely focused on opening stores and “making money.”

In 2002 Starbucks had to decide if they should