• Aadil KHAN• Monia LADJIMI• Phillipe MAALEK• Yuka YOON• Sarah ZHAI• Haili ZHANG

STARBUCKS:Delivering customer service

Aadil KHANMonia LADJIMI

Phillipe MAALEKYuka YOONSarah ZHAIHaili ZHANG

STARBUCKS

Success factors in early 1990s

Products

Niche segment

Premium priced beverages

Accessories

Services

Successful World-Of-Mouth

Less competitors

Premium customers

Store expansions

Customer intimacy

Aadil KHANMonia LADJIMI

Phillipe MAALEKYuka YOONSarah ZHAIHaili ZHANG

STARBUCKS

Value proposition

“Live coffee”

Deliver highest quality in coffee

“Experience”

Customer intimacy and loyalty

“Feel good” factor

Atmosphere and sense of community

Aadil KHANMonia LADJIMI

Phillipe MAALEKYuka YOONSarah ZHAIHaili ZHANG

STARBUCKS

Brand image in 1992

Best in quality

Premium pricing

Sophisticated customized service

Customer Satisfaction Scores

Customer satisfaction scores declined due to: Service – gap between ideal and reality Focus – shift from customers to products Perception – primary focus on business performance Change in Target – expansion of segments Marketing data – no analysis Organizational structure - no marketing departmentCompetitive advantage – no differentiation from competitors

1992 vs. 2002Stores

Localization140 in the US

Product range by sales revenue50% beverages 50% coffee beans

Customers White-collared affluent & patronsAged 25-44 males

StoresGlobalization5,000 stores worldwide (open 3 per day)

Product range by sales revenue77% beverages 13% food 4% accessories 6% beans Increased product ranges

Customers YoungerLess educated & lower income

Services “Just Say Yes” services Personalized and intimate services

CompetitorsSmall-scaled competitorsCoffee chains

Distribution channels Company-operated retail stores

Services Simplified process, bottle neck eliminated Tech. Innovation, viz Automated coffee machine

CompetitorsBig brand and international competitors Food and beverage chains

Distribution channels International-licensed, online, mail-orderfood service accounts, retail stores, offices, joint ventures

Service innovation Store-value card (SVC)Wifi

Ideal Customers from Profitability Standpoint

Gender Female

Age 30 – 50

Income $70,000 – $90,000

Education College degree

Coffee/ week 20

SB visit /month 8

$ /visit $5.00

To ensure ideal customers

Starbucks has to maintain:

• Clean Store

• Convinient to approach

• Treat customer as a prime value

• Maintain a friendly staff

• Maintain quality coffee taste/flavour.

How valuable?

Highly satisfied customers Annual = $ 382Lifetime = $ 3170Satisfied customers Annual = $ 209.50Lifetime = $ 2514Unsatisfied customersAnnual = $ 181.6Lifetime = $ 199.8

$40 million program

Investment Goal

Increase labour capacity by 20 hours per week

Reduce serving time by 3 minutes per store

Increase customer throughput

Increase customer satisfaction

Increase long-term relationship

Increase process efficiency

Increase weekly sales revenue by $20,000 per store

Increase EPS by $0.07 per share

Starbucks should invest in labour through $40 million program

$40 million program

Possible to deliver customer intimacy? Customer intimacy is the initial core value of StarbucksIt is possible to put all the efforts to reach, control and regain its competitive advantage

232,029 customers need to be converted from Satisfied to Highly Satisfied

Realistic? 232,029 customers / 4,500 stores = 52 customers per store per year Realistic!!

THANK YOU