starbucks final ppt
TRANSCRIPT
Starbucks : Delivering Customer Service
Group 7
Divnay Bhutra S 14020841036 Apoorva Namjoshi 14020841124
Yashika Atre 14020841172 Amit Chaturvedi 14020841004
Zaid Shaikh 14020841114 N.Supreeth 14020841146
Summary of Case• Starbucks, a leading specialty-coffee brand and
coffee store chain based in the US was founded in 1971 by Gerald Baldwin, Gordon Bowker, and Ziev Siegl.
• In 2002, Starbucks had achieved a CAGR of 40% since its IPO and owned approx 5000 stores
• Its competitors range from small-scale specialty coffee chains to independent specialty coffee shops, and donut and bagel chains.
• Further growth in untapped national and international markets and unreached saturation levels.
Continued…• Starbucks used company-operated stores in areas
with high traffic and high visibility.
• Additionally, Starbucks sold coffee products through retail channels.
• Joint-venture partnerships to distribute certain products, e.g. bottled Frappuccino through Pepsi-Cola.
• Starbucks was able to reach customers “where they work, travel, shop, and dine”.
Continued…• When a partner was hired, he/she had to undergo two types of
training i.e. hard skills and soft skills.
• They tracked service performance using mystery shopper program called the “customer snapshot”.
• They followed aggressive growth strategy and in 2002 the two biggest drivers of company growth were retail expansion and product innovation.
• In 2002, company had gathered evidence that customer satisfaction is on the decline, its brand image is showing some rough edges and its customer base has also significantly changed.
What factors accounted for the extraordinary success of Starbucks
in early 1990s? What was so compelling about the Starbucks value proposition? What brand
image did Starbucks develop during this period?
Why Starbucks succeeded in early years
• 3 components of experimental branding– High quality coffee: it monitored process of roasting to
distribution around the world.– Service: practicing customer intimacy regularly and providing
lively experience each time.– Atmosphere: lounge experience with universal appeal.
• Other factors contributing to early success of Starbucks– Attractive market: unexploited by competitors– Partner satisfaction: low turnover rate and high satisfaction
rate (80%-90%)– Store location: high customer traffic and high visibility areas.
Core Value Proposition• Focus on intangibles associated with coffee drinking.• Focus on overall experience of coffee at a Starbucks
store rather than only taste and quality.
Customer intimacy
AmbienceCoffee
Known for speciality/gourmet coffee
Widely available Corporate Trendy Always feel welcome at starbucks
0%
10%
20%
30%
40%
50%
60%
54%
43% 42% 41%39%
Top five attributes consumers associate with Starbucks Brand
Starbucks changing brand image
• OLD Image
– The best quality coffee available
– A third place
– A sanctuary from the world
• NEW Image
– Good coffee on the run
– Place to meet and move on
– Convenient, accessible and consistent
Why have Starbucks customer satisfaction score declined? Has the company service declined or is it simply measuring satisfaction the wrong way?
Fall in Customer Satisfaction
Customer Snapshot: The imperfect tool•Mystery shopper program: 3 times in a quarter. •Criteria for ratings: service quality, product quality, cleanliness & speed of service. •Legendary services: that behaviour which made the experience memorable for customer.
Outcomes based on research•Primarily making money and building more stores created a rough brand image. •Less differentiation perceived between Starbucks and other. •Comparatively less trendy. •Unsatisfactory service of partners. •Due to drink customisation, speed of service was reduced.
High quality brand
Brand I trust
For someone lik
e me
worth payin
g more fo
r
known for s
peciality
coffee
known as the co
ffee expert
best-tasti
ng coffee
highest-qualtiy c
offee
Overall O
pinion of starbucks
0%
10%
20%
30%
40%
50%
60%
34%
30%
15%
8%
44%
31%
20%
26% 25%
51% 50%
40%
32%
60%
45%
31%
41%44%
Attitude Towards Starbucks
New customers (first visited in past year) Established customers(first visited 5+ years ago)
Starbucks Service DeteriorationToo little
experienced labor
Baristas have no time to chat
Grumpy employees
Grumpy Customers
Employee turnover
Lots of new customer acquisitions
Desire for customization
Long lines
Baristas have no time to chat
Leave before ordering
Don’t come back (as often)
Less of a ‘third place’ attachment
Order simple than complex (lower
ticket value)
Complex Orders
How does the Starbucks of 2002 differ from the Starbucks of 1992?
Premium coffee
Physical EnvironmentService Philosophy
Consumption PatternTendency to linger,
Ritualistic consumption,Looking to self-indulge
Target CustomerSophisticated, affluent coffee lover, embracing the ‘live coffee’ lifestyle
Brand PerceptionBest coffee,
classy, upscale, a “third place”
Starbucks in 1992
Premium coffee
Physical EnvironmentService Philosophy
Different Consumption
Patterns
Different Brand
Perception
Established CustomersSophisticated, affluent coffee lover, embracing the ‘live coffee’ lifestyle
New AcquisitionsLess sophisticated,
In a hurry, more pragmatic
Starbucks in 2002
Starbucks over the years : Comparison1992 2002
Sales 50% sales from sale of whole bean coffees
77% sales from beverages
Menu Whole bean coffee Addition of new items-Food and new beverages
Ambience Lounge with an Italian coffee culture
Smaller coffee store without lounging
Target audience Mid to upper class Professionals
Younger and lower income demographic profile
Drink Combinations Fewer beverages Too many beveragesReason: Addition of a new beverage every holiday seasonProcess Simple ComplexDelivery time Faster service Slower serviceCompany norm Customers going to the
StarbucksStarbucks going to the customers
Company Image Best quality coffee where one can relax
Just good coffee, meeting people and move on
Describe an ideal Starbucks customer from a profitability standpoint. What
would it take to ensure that this customer is highly satisfied? How
valuable is highly satisfied customer to Starbucks?
• The most ideal customer of Starbucks will be the one who will visit the store most frequently on an average 18 visits a month.
• Also the ideal customer will be the one who will be highly satisfied. Thus, he/she will spend $4.42 per visit.
• The ideal customer will have an average customer life of 8.3 years.
THE MOST IDEAL CUSTOMER
Differences in revenue of a highly satisfied customer with a satisfied customer
Unsatisfied Customers
Satisfied customers
Highly Satisfied
Customer
Ideal Custome
rsNumber of Starbucks
Visits/Month 3.9 4.3 7.2 18
Average Ticket Size/Visit
$
3.88
$
4.06
$
4.42
$ 4.42
Average Customer life(years) 1.1 4.4 8.3 8.3
Revenue generated per month
$ 15.13
$ 17.46
$
31.82
$
79.56
Revenue generated per year
$ 181.58
$
209.50
$
381.89
$
954.72
Revenue generated over avg customer life
$ 199.74
$
921.78
$ 3,169.67
$
7,924.18
The total lifetime value of a highly satisfied customer is around $ 3170 while that of satisfied customer is around $ 922 and unsatisfied customer is around $ 200
Thus, the difference of lifetime value between highly satisfied and satisfied customer is: $(3170-922)= $ 2248
Also, the difference of lifetime value of highly satisfied and unsatisfied customer is: $ (3170-200)= $ 2970
Thus, it is of utmost importance for Starbucks to raise its customer satisfaction scores.
Factors affecting “Valued Customers” Perceptions
34%
31%
21%
28%Improvement to Service
Offer Better Prices/ Incentive Program
Other
Already Satisfied
Improvement to service
Offer Better Prices/ Incentive Program
Better quality/variety of products
Improve atmosphere
Community outreach/Charity
More stores/More convenient loactions
0% 2% 4% 6% 8% 10%
9%
8%
2%
2%
Series1
Others
Free cup after x number of visits
Reduce Prices
Offer Promotions, specials
19%
11%
3%
Friendlier,more attentive staff
Faster.more efficient service
Personal treatment
More knowledge staff
Better Service
19%
10%
4%
4%
2%
To make customer highly satisfy:
• Speed up the service
• Focus on friendlier and more attentive staff
• Improving efficiency on services by investing in new machines
• Focus on better incentives for customers after a particular number of visits
• Improve efficiency in cleanliness
Thank you