Alip, Lujohn AernellConde, CharinaVerallo, Maria Aleni B.

Starbucks: Delivering Customer Service

Statement of the Problem:

1. Why is Starbucks not meeting customer expectations in terms of service?

2. Should Starbucks make the 40 million dollar investment in labor in the stores?

Areas for Consideration:

Strengths:

Howard Schultz created a company that customer centered. He successfully made use of his human resources by providing benefits that would push those resources to create value in the process of the coffee drinking experience.

a. Atmosphere: Schultz created an ambience where people want to stay. Starbucks had seating areas, lounging and its layouts were designed to provide an upscale yet inviting environment for those who wanted to stay longer.

b. Coffee Quality: Starbucks opened only company owned stores. By doing so they were able to control the quality of its products and services. Along with this, they were able to maintain the quality of its coffee by working with farmers and growers and enforcing coffee standards.

c. Service: Partners undergo two types on training: hard skills and soft skills training. The hard skills focused on learning how to use the cash register and mixing drinks. The soft skills focused on connecting with the customers by smiling, establishing eye contact and remembering their names and orders if they are regular.

Starbucks Just Say Yes policy empowered partners provide the best service possible even if it required going beyond company rules.

Both strategies made the experience satisfying and created a friendly environment.

d. Employee satisfaction: Schultzs belief that partner/employee satisfaction leads to customer satisfaction created a policy where even entry level partners were able to acquire. This policy includes providing the partners health insurance as well as stocks options. Also partners were among the highest paid hourly workers. This lead Starbucks have the lowest turnover rate in the industry and have a consistent high employee satisfaction rate. It would be safe to assume that employee stayed at their positions for longer time and were more experienced in treating the customers and could provide a faster service.

Weaknesses:

1. For decades, the company managed to meet its standards. The following strategies strengthen the Starbucks brand. But then their strengths somewhat became their weaknesses. The following took a toll on the coffee quality, service and atmosphere. In turn, these lead to the declining effects of customer satisfaction. a. Its retail expansion made Starbucks available to everybody. They also built small stores that did not have enough seating or lounging place. The coffee experience became an ordinary thing to its customers. b. The product innovation strategy and beverage customization led to an increase of product sales. The product innovation strategy had an effect in sacrificing at least some of the qualities that the Starbucks brand provide the customer. The increase of product sales could also mean that the probability of a low-quality product is at its highest.The beverage customization slowed the process of delivering the products to their customers and added tension to the partners, making them lose their soft skills. A lot of service value was also lost on the inconsistency.

Alternative Courses of Action:

1. Examine their expansion strategy:Starbucks expansion strategy resulted to smaller Starbucks store that have limited lounging areas. The beverage customization and product innovation should also be examined and re-evaluated as a part of their expansion strategy. Careful planning and not losing sight of their value propositions should also be considered. As their customer base grows it would also be wise to increase their human resources to cater the growing needs of their loyal customers. Starbucks should always ensure that its stores are kept clean all the time. This can be done by engaging partners into cleaning the stores and even helping clean the table of a customer when they have available time. Starbucks should also place more emphasis in its partners utilizing their soft skills to treat the customers as valuable.

2. Create new ways of satisfying the customer:

a. Creating more ready-made products. Customer purchases either readymade products or easy to make beverages so that it does not take much time for partners to get him out of the service line. Since there is a direct link between customer satisfaction and loyalty which eventually leads to higher profits, then Starbucks should work on raising the satisfaction levels of its current customer base or making them visit its stores more frequently.

b. Promoting the Stored-Value Card. The stored value card helped reduced the transaction time which translates to faster service and therefore higher satisfaction. This card also motivates the customer to visit more often due to its accompanying freebies.

c. Creating events that encourages customer to visit the store more often. Lately, events had been promoted at Starbucks such as poetry night, coffee club regular acoustic nights, and book/music enthusiasts club gatherings.

d. New innovations. Offering office party packages would be a great addition to the Starbucks coffee experience. Bringing Starbucks to the customers office would be throwing them an extra special treatment.

Conclusion:

Customer satisfaction is the measurement of how well a business is doing. Careful evaluation and deliberation should be made to ensure that the standards set by the company is met or even succeeded.

An investment in adding more labor to stores might help the company increase the satisfaction level and maybe even get a good return out of it. It is highly recommended that the company re-evaluate their value proposition, examine their expansion strategy and create new ways to satisfy their customers.