Short Assignment – Starbucks: Delivering Customer service

What have been some of the consequences of Starbucks extraordinary

Growth?

Starbucks extraordinary growth was partly due to their wide vareity of distribution

channels in order to reach customers where they work, travel, shop and dine.

This caused starbucks to expand lot of retail stores and also establish

relationships with third parties that share same values and commitment to

quality. This caused them to reach wider first time audience including non-target

audience. Without increasing the baristas count, increasing the customer base

affected the service, cleanliness, product quality and speed of service. Major

consequence of extraordinary growth is the drop of customer satisfaction

ratings of its targeted audience.

Due to this growth, starbucks current customers include large number of

Hispanic and Cuban Americans in certain geographic locations who are beyond

the historic customer profile – the affluent, well-educated, white collar female

between the ages of 24 and 44. Due to its reach to wider audience, it is

difficult meet every ones expectations and also difficult to measure the

customer satisfaction levels.

By covering more geographical area due to their third party relationships,

customers are not getting the same experience as they were getting from an
exclusive starbucks retail store. It affected its branding. Due to its wider reach, it

has to compete with more and more specialty stores.

Should Starbucks make the $40 million labor investment in the stores?

Starbucks has increased its sales by serving first time customers who does not

fall into historic starbuck customer profile. More labor resources are needed to

serve the new non-loyal customers without affecting the service levels of

loyal customers. It does not warrant increasing the labor expenditure to serve

these temporary customers who are likely not part of their loyal customer base.

By adding more labor resources, it is possible to add more customer base

without affecting the customer satisfaction levels of loyal customers, but the

starbucks branding image will be diluted if the store has more non-targeted

audience. Much of the Starbucks marketing is done in the retail store and it

heavily relys on the atmosphere created with in the store. By increasing the

customer traffic into the existing stores, the loyal customers do not get the

expected service. Tuning the labor resources to meet the temporary growth

fluctuations is not a good way of maintaining the customer satisfaction

levels. The $40 million dollar can be invested in improving the operating

efficiencies of the baristas by simplifying the preparation methods and investing

in automating the operations. By decreasing the operating costs, it will improve

the operating margins on the revenues as well and safe guard the brand.