• Save
Startbucks delivering customer service
Upcoming SlideShare
Loading in...5
×
 

Startbucks delivering customer service

on

  • 827 views

 

Statistics

Views

Total Views
827
Slideshare-icon Views on SlideShare
826
Embed Views
1

Actions

Likes
1
Downloads
0
Comments
0

1 Embed 1

http://www.linkedin.com 1

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Startbucks delivering customer service Startbucks delivering customer service Presentation Transcript

    • Starbucks: Delivering Customer Service
    • Starbucks: Delivering Customer Service COMPANY BACKGROUND
    • II Giomale acquires Starbucks assets 2000 140 Stores in Northwest and Chicago & Went Public Changes name to Starbucks Corp. New CEO- Orin Smith  2002  1992 1984 Schultz joined Marketing Team 1987 1982 1971 Starbucks location in Seattle Schultz founded II Giomale offering brewed coffee & espresso beverages w/ Starbucks coffee beans Schultz remained -Chairman and Chief Global Strategist Established leading brand N. America CAGR 40% 20 million unique customer Over 5000 stores Opening average 3 stores a day T i m e l i n e - S t a r b u c k s
    • Starbucks: Delivering Customer Service VALUE PROPOSITION
    • “Live coffees” mantra - to keeping the national coffee culture alive.
    • Creating an “experience” around the consumption of coffee
    • Value proposition EXPERIENTIAL BRANDING STRATEGY
    • Coffee Itself offering the highest-quality coffee in the world, coffee standards by controlling the supply chain as possible and the distribution to retail stores
    • Customer Intimacy Senior VP Retail: Jim Alling Says Our Goal is to create an uplifting Customer experience every time you walk through our door
    • Atmosphere People come for coffee but the ambience is what make them stay
    • Value proposition DISTRIBUTION STRATEGY
    • To reach customers where they work, travel, shop, and dine Good Location: Company-operated stores located in high-traffic, high-visibility settings
    • Product mixed tended to vary depending on a store’s size and location Non-company-operated retail channels, foodservice accounts, domestic retail store licenses
    • Value proposition STARBUCKS PARTNERS
    • All Starbucks employees are called Partners
    • Generous policy of giving health insurance and stock options High partner satisfaction rate (80% to 90%), well above the industry norm.
    • Lowest employee turnover rates in the industry (just 70%, compared with fast-food industry averages as high as 300%) Lower managers turnover rates & encouraged promotion from within its own ranks
    • Starbucks: Delivering Customer Service DELIVERING ON SERVICE
    • Training: hard and soft skills “Just Say Yes” Policy empowered partners the best service possible
    • Delivering on service MEASURING SERVICE PERFORMANCE
    • Starbucks: Delivering Customer Service COMPETITION
    • Small scale Specialty coffee chains concentrated regionally 1000 of independent specialty coffee shops Donut and bagel chains (Dunkin donuts)
    • In the home, specialty coffee was estimated to be a $3.2 billion business, of which Starbucks was estimated to have a 4% share.
    • In the food-service channel, specialty coffee was estimated to be a $5 billion business, of which Starbucks was estimated to have a 5% share
    • In grocery stores, Starbucks was estimated to have a 7.3% share in the ground-coffee category and a 21.7% share in the whole- beans category.
    • It was estimated that over the next several years, the overall retail market would grow less than 1% per annum, but growth in the specialty-coffee category would be strong, with compound annual growth rate (CAGR) of 9% to 10%
    • Starbucks’ U.S. business was projected to grow at a CAGR of approximately 20% top-line revenue growth
    • 2002 Strategy Objective Most recognized and respected brand in the world Retail Expansion Product Innovation
    • Caffeinating the world RETAIL EXPANSION
    • Coffee consumption was on the rise in the United States Half of US population drank coffee everyday 1/3 of coffee consumption took place outside home
    • 8 states in the US without a 150 of the roughly 300 single company-operated metropolitan statistical areas in Starbucks. the nation
    • the company believed it was far from reaching saturation levels in many existing markets For example only one store for every 110,000 people only seven states had more than 100 Starbucks locations
    • the company believed it was far from reaching saturation levels in many existing markets For example only one store for every 110,000 people only seven states had more than 100 Starbucks locations
    •  Retail business was to open stores in new markets  Clustering stores  Resulted in Cannibalization  But Total incremental sales
    •  United Kingdom, Australia, and Thailand  Licenced Store: Asia, Europe, the Middle East, Africa, and Latin America  The company’s goal was to ultimately have 15,000 international stores
    • Caffeinating the world PRODUCT INNOVATION
    •  New product launched in every holiday season  Product development took 12-18 months  Ergonomic flow 1995  Coffee and non-coffee-based line of Frappuccino beverages  boosting traffic during nonpeak hours “We’ve learned that no matter how great a drink it is, if our partners aren’t excited about it, it won’t sell,” - Alling.
    • Starbucks: Delivering Customer Service SERVICE INNOVATION
    • Store Value Card -2001 “The most significant product introduction since Frappuccino  August 2002  gift recipients are being introduced to brand for the first time T-Mobile Hotspot wireless Internet service Can use to pay for transactions company-operated store in North America  cardholders tended to visit Starbucks twice  customer-transaction data
    • Starbucks: Delivering Customer Service STARBUCKS MARKET RESEARCH: TROUBLE BREWING?
    • 3 separate groups lacked a strategic marketing group had no chief marketing Officer  Market research  Category group  Marketing group market research contradicted fundamentals Were not looking at big picture “Marketing is everywhere at Starbucks—it just doesn’t necessarily show up in a line item called ‘marketing.’
    • Caffeinating the world STARBUCKS’ BRAND MEANING
    • Qualitative Brand Meaning: Independents vs. Starbucks
    • The Top Five Attributes Consumers Associate with the Starbucks Brand  Known for specialty/gourmet coffee (54% strongly agree)  Widely available (43% strongly agree)  Corporate (42% strongly agree)  Trendy (41% strongly agree)  Always feel welcome at Starbucks (39% strongly agree)
    • Caffeinating the world CHANGING CUSTOMER
    • Evolving customer base Newer customers tended to be younger, less well-educated, and in a lower income bracket than Starbucks’ more established customers.
    • Caffeinating the world CUSTOMER BEHAVIOR
    • No difference between rural and urban Customer Visit Frequency
    • Caffeinating the world MEASURING AND DRIVING CUSTOMER SATISFACTION
    • Starbucks was not meeting expectations in terms of customer satisfaction
    • 83% of Starbucks’ customers rate a clean store as being highly important (90+ on a 100-point scale) in creating customer satisfaction. Service gap between Starbucks scores on key attributes and customer expectations
    • Caffeinating the world REDISCOVERING THE STARBUCKS CUSTOMER
    • Relaxing the Labour-hour
    • Starbucks: Delivering Customer Service QUESTIONS
    • Questions 1 FACTORS ACCOUNTED FOR THE EXTRA-ORDINARY SUCCESS OF STARBUCKS IN THE EARLY 1990’S?
    • “Buying coffee as a drink, The experience of enjoying coffee”  Changed the coffee drinking experience in the U.S  Starbucks wanted to create a chain of coffeehouses that would become America’s ‘Third place’ Starbucks was a place where people can enjoy their social interactions, relax, or just spent some time by themselves. Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • First Mover Advantage  The concept was new  There was no competition Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Customer Service Customer Intimacy’ : “Our goal is to create an uplifting experience every time you walk through the door.” ‘Speed of Service : They served the customer within 3 minutes ‘Just Say Yes Policy’ : Provide the best service possible, even it required going beyond company rules  If a customer spills and asks for a re drink, they did provide Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Ambience Starbucks had seating areas to encourage lounging It had universal appeal Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Partner Satisfaction = Customer Satisfaction  Generous benefits even to most entry level partners  Partners were among the highest paid hourly workers  Lowest turnover in the industry Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Coffee Quality Starbucks offered highest quality coffee in the world, sourced from Africa, Central & South America etc Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore) It controlled its supply chain to ensure coffee standards
    • Target Audience Targeted primarily towards the affluent, well ‐ educated, white ‐ collar people (Age group: 25 – 44) Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Questions 2 WHAT WAS SO COMPELLING ABOUT THE STARBUCKS VALUE PROPOSITION
    •  It places the customer and the service delivered to the customer above everything else.  It moved away from the tangible benefits that the coffee offers, such as taste to intangible benefits of experiencing a Starbucks coffee Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • The Brand Image  Starbucks was known for being widely available  Their specialty coffee, and being trendy.  Customers also though that the stores were clean and were satisfied with the Starbucks product. Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Questions 3 WHY HAS STARBUCKS’ CUSTOMER SATISFACTION SCORES DECLINED? OR IS IT MEASURING IT IN A WRONG WAY
    • Despite the overwhelming presence and convenience, the scores declined  There was very little image or product differentiation between Starbucks and the smaller coffee chains  The brand image of Starbucks also had some rough edges Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Market research data shows that customer satisfaction has declined The satisfaction level of customers varies with the type of customer. The demographics of its customers are changing Expectations could have increased  It set the standards very high for its customers  With the expansion and product innovation, it was not able to meet the standards  Customized drinks might have had harmful effect  Increasing lead time Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Starbucks is measuring much on how people view the company  More customers were beginning to agree with the fact the Starbucks cared primarily about making money and building more stores.  Generally customers are satisfied with the coffee. Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Questions 4 HOW HAS STARBUCKS CHANGED SINCE EARLY DAYS?
    • Retail Expansion The store had expanded rapidly, from 140 stores in 1992 to 4500 stores in 2002 Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Product Concentration  In 1992, about half of the company’s sales came from sales of whole ‐ bean coffees whereas in 2002 about 77% of the sales came from beverages.  Product Innovation Strategy  The company had added new products in menu and also sold equipment and accessories Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Customer base  “Customers going to the Starbucks”  “Starbucks going to the customers”  There was a change in the demographic profile of the customer base  Affluent, upper class professionals  Young and low income group Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Brand Image  The Starbucks image to the public started changing  1992 : ‘Third Place’: Get the best coffee and relax  2002: A convenient place to hangout and the coffee was just good Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Questions 5 DESCRIBE THE IDEAL STARBUCKS CUSTOMER FROM A PROFITABILITY STANDPOINT.
    • The ideal customer from a profitability standpoint is  The loyal customer who visits the store 18 times a month  Service time in all stores not exceed 3 mins  Improve customer throughput  Reach as close to $20000 level in terms of weekly sales Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Questions 6 WHAT WOULD IT TAKE TO ENSURE THAT THIS CUSTOMER IS HIGHLY SATISFIED? HOW VALUABLE IS A HIGHLY SATISFIED CUSTOMER TO STARBUCKS?
    •  Cater to their needs and match/exceed their expectations.  Ensure service is as fast as customer wants it to be  Add lounging areas and more comfortable chairs and tables so that customers feel relaxed when using hotspot also  Customer satisfaction -> loyalty-> increase in average ticket size-> higher profits Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Questions 7 SHOULD STARBUCKS MAKE THE $40 MILLION INVESTMENT IN LABOUR IN THE STORES?
    • Yes!!  Allocate the money based on size of store, number of customers, location and need for additional labour instead of apportioning the $40 million equally to all the stores  Apart from making the investment, Starbucks need to look more into their customer base and improve on their brand image and value proposition Courtesy: Ramya, Vighnesh, Venketraman, Sharath (Amrita School of Business, Coimbatore)
    • Starbucks: Delivering Customer Service THANK YOU