1. Starbucks: Delivering
Customer Service
Services Marketing
By: Team No. 4
Pooja Gupta
Rohit Singh
Saurabh Singh
Varun Kumar Anand

2. 1990’s Success
• Created a 3rd place- recreational spot for Americans
• Maintained standards by controlling supply chain
• Raised $25million through public offering
– Opened Large no. of new stores
• Specific Target Audience -white collared, educated
– Able to attract affluent customer by providing superior service consistently
• Large reach – retail outlets, hotels, airports, Kraft foods, Pepsi Cola and Dreyer’s etc.
• Selected high-traffic, visibility setting locations
• Product mix
– Sold whole-bean coffees as well as beverages such as rich-brewed coffee, Italian-style
espresso, cold-beverages, and premium teas.
– Also offered food and other beverages (sodas, juices)
– Coffee related accessories and equipments, music CDs, games and seasonal novelty items
• Word of mouth and spent almost nothing on advertising
• Invested in R&D
• Lowest employee turn-over rate

3. Value Proposition
• “Live Coffee” mantra
– Highest-quality coffee beans
– Created experience-ambience in the coffee shop (upscale yet inviting
environment)
– “Customer Intimacy”- recognizing the customer, indulging in a
friendly talk, customized drink
• “Just say Yes” policy

4. Brand Image
• Present Everywhere-The Trend
– Large no. of stores/wide availability
• Good Coffee on the Run
– High-quality beans
– Specialty/gourmet and customized coffee
• Place to meet and move on
– Premium coffee shop
– Upscale/trendy environment
• Convenience oriented; in the way to work
– Quick service
• Accessible and Consistent
– Near offices and campuses
– Consistent Service quality; friendly staff

5. Decline in Customer Satisfaction
Score
• Customer dissatisfaction
– Long waiting and service time
– Tension among between product quality and customer interaction.
Less focus on customers

6. Errors in Customer Satisfaction
Measurement Survey
• Despite high Customer Snapshot scores, Starbucks were not meeting
customer’s expectations.
• Customer Snapshot scores lacks parameters which are affecting
customer satisfaction levels. Day’s survey had those factors.
• Like, Snapshot fails to measure the attention paid to each
customer, friendliness and interaction level of Baristas to customers , etc.

7. Starbucks: Changes Over Time
• Customer Base:
– In 70’s Niche market of coffee purists
– In 80’s and 90’s Affluent educated White Collared patrons
– 2000’s Young college going, less educated, lower income brackets
• Value Proposition
– Convenient coffee joint -> coffee on move
– Customer Perception changed : service oriented -> profit oriented
• Product:
– Whole Arabica coffee beans -> Coffee beans + Beverages -> Coffee Beans +
Beverages + Accessories, games + Other products (juices, sodas, pastries, etc.)
-> 100+ verities
– Till 1992, 50% revenues by coffee beans -> by 2002 77% revenues by beverages
– Complex and customized products
• Service:
– Longer service time
– Less customer intimacy

8. Highly Satisfied Starbuck Customer
• Established Customer (usually visits the store 8+ times); 62% of revenue
is generated from established customer.
• Typically in mid 30’s - 50’s. white collared, highly educated; income
levels:$70,000-$95,000/annum; loves to drink coffee
• Value of a highly satisfied customer:
7.2*4.42*8.3*12=$3169.67

9. Ideal Starbuck Customer
• Loyal customer
• Visits store : 18+ times a month;
• spends $4.42 on average on every visit
• Average customer life 8.3 years
• Prefers Ready-made products or easy to make beverages
• Value of an ideal customer:
18*4.42*8.3*12=$7924

10. To Satisfy Customer
• Treat the customer as a valuable customer
• Quick and improved services
• Offer incentive programs
• Improve coffee taste/flavor
• Clean Store
• Convenience
• Pleasant and upscale environment
• Knowledgeable and friendly staff

11. Investment in Labor
• Yes, Starbucks should make the $40million/year
– To make service operations more quick & efficient
– Increase customer satisfaction level by decreasing service time and
build long term relationships
– No. of store:4500; investment per store: $8888.890
– Difference in revenue between a satisfied and a highly satisfied
customer: $172.39/year
– Aim: to convert 52 customers to highly satisfied customers.
– Therefore, only 12.08% of existing customers are to be converted into
highly customers