Starbucks final ppt
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The document discusses Starbucks' business growth, branding, and challenges from its founding in 1971 to 2002, highlighting its focus on customer experience and product quality. It examines the decline in customer satisfaction due to perceived service issues and brand image changes, noting that the ideal customer visits frequently, generates significant revenue, and values satisfaction. Key strategies for improving satisfaction include enhancing service speed, staff engagement, and customer incentives.
Starbucks final ppt
- 1. Starbucks : Delivering Customer Service Group 7 Divnay Bhutra S 14020841036 Apoorva Namjoshi 14020841124 Yashika Atre 14020841172 Amit Chaturvedi 14020841004 Zaid Shaikh 14020841114 N.Supreeth 14020841146
- 2. Summary of Case • Starbucks, a leading specialty-coffee brand and coffee store chain based in the US was founded in 1971 by Gerald Baldwin, Gordon Bowker, and Ziev Siegl. • In 2002, Starbucks had achieved a CAGR of 40% since its IPO and owned approx 5000 stores • Its competitors range from small-scale specialty coffee chains to independent specialty coffee shops, and donut and bagel chains. • Further growth in untapped national and international markets and unreached saturation levels.
- 3. Continued… • Starbucks used company-operated stores in areas with high traffic and high visibility. • Additionally, Starbucks sold coffee products through retail channels. • Joint-venture partnerships to distribute certain products, e.g. bottled Frappuccino through Pepsi-Cola. • Starbucks was able to reach customers “where they work, travel, shop, and dine”.
- 4. Continued… • When a partner was hired, he/she had to undergo two types of training i.e. hard skills and soft skills. • They tracked service performance using mystery shopper program called the “customer snapshot”. • They followed aggressive growth strategy and in 2002 the two biggest drivers of company growth were retail expansion and product innovation. • In 2002, company had gathered evidence that customer satisfaction is on the decline, its brand image is showing some rough edges and its customer base has also significantly changed.
- 5. What factors accounted for the extraordinary success of Starbucks in early 1990s? What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period?
- 6. Why Starbucks succeeded in early years • 3 components of experimental branding – High quality coffee: it monitored process of roasting to distribution around the world. – Service: practicing customer intimacy regularly and providing lively experience each time. – Atmosphere: lounge experience with universal appeal. • Other factors contributing to early success of Starbucks – Attractive market: unexploited by competitors – Partner satisfaction: low turnover rate and high satisfaction rate (80%-90%) – Store location: high customer traffic and high visibility areas.
- 7. Core Value Proposition • Focus on intangibles associated with coffee drinking. • Focus on overall experience of coffee at a Starbucks store rather than only taste and quality. Customer intimacy Ambience Coffee
- 8. 54% 43% 42% 41% 39% 0% 10% 20% 30% 40% 50% 60% Known for speciality/gourmet coffee Widely available Corporate Trendy Always feel welcome at starbucks Top five attributes consumers associate with Starbucks Brand
- 9. Starbucks changing brand image • OLD Image – The best quality coffee available – A third place – A sanctuary from the world • NEW Image – Good coffee on the run – Place to meet and move on – Convenient, accessible and consistent
- 10. Why have Starbucks customer satisfaction score declined? Has the company service declined or is it simply measuring satisfaction the wrong way?
- 11. Fall in Customer Satisfaction Customer Snapshot: The imperfect tool •Mystery shopper program: 3 times in a quarter. •Criteria for ratings: service quality, product quality, cleanliness & speed of service. •Legendary services: that behaviour which made the experience memorable for customer. Outcomes based on research •Primarily making money and building more stores created a rough brand image. •Less differentiation perceived between Starbucks and other. •Comparatively less trendy. •Unsatisfactory service of partners. •Due to drink customisation, speed of service was reduced.
- 12. 0% 10% 20% 30% 40% 50% 60% 70% High quality brand Brand I trust For someone like me worth paying more for known for speciality coffee known as the coffee expert best-tasting coffee highest-qualtiy coffee Overall Opinion of starbucks 34% 30% 15% 8% 44% 31% 20% 26% 25% 51% 50% 40% 32% 60% 45% 31% 41% 44% Attitude Towards Starbucks New customers (first visited in past year) Established customers(first visited 5+ years ago)
- 13. Starbucks Service Deterioration Too little experienced labor Baristas have no time to chat Grumpy employees Grumpy Customers Employee turnover Lots of new customer acquisitions Desire for customization Long lines Baristas have no time to chat Leave before ordering Don’t come back (as often) Less of a ‘third place’ attachment Order simple than complex (lower ticket value) Complex Orders
- 14. How does the Starbucks of 2002 differ from the Starbucks of 1992?
- 15. Physical Environment Consumption Pattern Tendency to linger, Ritualistic consumption, Looking to self-indulge Target Customer Sophisticated, affluent coffee lover, embracing the ‘live coffee’ lifestyle Brand Perception Best coffee, classy, upscale, a “third place” Starbucks in 1992
- 16. Physical Environment Different Consumption Patterns Different Brand Perception Established Customers Sophisticated, affluent coffee lover, embracing the ‘live coffee’ lifestyle New Acquisitions Less sophisticated, In a hurry, more pragmatic Starbucks in 2002
- 17. Starbucks over the years : Comparison 1992 2002 Sales 50% sales from sale of whole bean coffees 77% sales from beverages Menu Whole bean coffee Addition of new items- Food and new beverages Ambience Lounge with an Italian coffee culture Smaller coffee store without lounging Target audience Mid to upper class Professionals Younger and lower income demographic profile Drink Combinations Fewer beverages Too many beverages Reason: Addition of a new beverage every holiday season Process Simple Complex Delivery time Faster service Slower service Company norm Customers going to the Starbucks Starbucks going to the customers Company Image Best quality coffee where one can relax Just good coffee, meeting people and move on
- 18. Describe an ideal Starbucks customer from a profitability standpoint. What would it take to ensure that this customer is highly satisfied? How valuable is highly satisfied customer to Starbucks?
- 19. • The most ideal customer of Starbucks will be the one who will visit the store most frequently on an average 18 visits a month. • Also the ideal customer will be the one who will be highly satisfied. Thus, he/she will spend $4.42 per visit. • The ideal customer will have an average customer life of 8.3 years. THE MOST IDEAL CUSTOMER
- 20. Differences in revenue of a highly satisfied customer with a satisfied customer Unsatisfied Customers Satisfied customers Highly Satisfied Customer Ideal Custome rs Number of Starbucks Visits/Month 3.9 4.3 7.2 18 Average Ticket Size/Visit $ 3.88 $ 4.06 $ 4.42 $ 4.42 Average Customer life(years) 1.1 4.4 8.3 8.3 Revenue generated per month $ 15.13 $ 17.46 $ 31.82 $ 79.56 Revenue generated per year $ 181.58 $ 209.50 $ 381.89 $ 954.72 Revenue generated over avg customer life $ 199.74 $ 921.78 $ 3,169.67 $ 7,924.1 8 The total lifetime value of a highly satisfied customer is around $ 3170 while that of satisfied customer is around $ 922 and unsatisfied customer is around $ 200 Thus, the difference of lifetime value between highly satisfied and satisfied customer is: $(3170-922)= $ 2248 Also, the difference of lifetime value of highly satisfied and unsatisfied customer is: $ (3170-200)= $ 2970 Thus, it is of utmost importance for Starbucks to raise its customer satisfaction scores.
- 21. Factors affecting “Valued Customers” Perceptions 34% 31% 21% 28% Improvement to Service Offer Better Prices/ Incentive Program Other Already Satisfied Improvement to service Offer Better Prices/ Incentive Program 9% 8% 2% 2% 0% 2% 4% 6% 8% 10% Better quality/variety of products Improve atmosphere Community outreach/Charity More stores/More convenient loactions Series1 Others 19% 11% 3% 0% 5% 10% 15% 20% Free cup after x number of visits Reduce Prices Offer Promotions, specials 19% 10% 4% 4% 2% 0% 5% 10% 15% 20% Friendlier,more attentive staff Faster.more efficient service Personal treatment More knowledge staff Better Service
- 22. To make customer highly satisfy: • Speed up the service • Focus on friendlier and more attentive staff • Improving efficiency on services by investing in new machines • Focus on better incentives for customers after a particular number of visits • Improve efficiency in cleanliness
- 23. Thank you