Also being able to customize your own drink was a big success in getting people to purchase the product. A high quality coffee was one key component to Starbucks value proposition. Another was service and getting to know your customer. Finally, the last key component was atmosphere. They wanted to create an ambience in their stores. When Starbucks started out, their key target market was female clients between the ages of 25 and 44. These female customers were well-educated, white collar patrons. They brought on patterns of purchasing specialty coffees and other drinks.
Anything from cappuccino type drinks to frozen coffee drinks. Starbucks needed to provide a broad but unique type of product. During this period Starbucks didn’t really have a brand image. They didn’t really differentiate themselves from the smaller scale competition. In the customers eye Starbucks wasn’t really any different from these other coffee shops except that it was a big brand name. The competition they faced included small scale coffee shops such as Caribou Coffee. They also faced competition on a big coffee distributors such as Maxwell Coffee. So What is the Problem?
Even though Starbucks is the biggest coffee distributor out there they still face problems of declining customer satisfaction. They face the problem of brand image in society. A lot of people think Starbucks is just another big corporate bigwig trying to make more money to pay their executives more. Another problem they are facing is customers not being satisfied with the service. They have lost sight of the customer and has worried about other things too much. A lot of customers say the service time is too slow and making it more difficult to stop there and get to work on time.
They would like faster service. Starbucks views customer service as “an uplifting experience every time you walk through our door. ” They want you to feel like it’s another part of your everyday life. They do this by providing the customer with very happy employees. There outlook is a happy employee means a happy customer. They provide their employees with good benefits and high advancement opportunities. Also they strive to create customer satisfaction by remembering what a certain customer drinks and their name.
Starbucks measures its customer satisfaction using a “Customer Snapshot” where a representative being a mystery shopper to measure certain criteria. However these don’t always measure properly because they only visit three times a quarter and bad things could be going on different days. Customer Satisfaction is one of the most important aspects to Starbucks because they are what drives their company. They strive off of mouth to mouth advertising so they need their customers to be highly satisfied so they tell their friends to go there.
A highly satisfied customer is the difference between telling a friend to go there and just being happy. How Could this Happen? Starbucks, one of the most successful consumer brands of the past decade lost its focus on customer satisfaction because it did not have a proper marketing department. They did not have anyone to do proper research and analysts to know that customers were not as satisfied as they thought they were. Their marketing teams only did things for the company and did not properly keep up with customer satisfaction.
One of the things that has changed over the past decade is the type of customers. Starbucks did not realize they had expanded to other ethnic target markets or that younger people with less money was another big revenue intake. Starbucks had achieved its extraordinary growth by taking over the market by building a lot of sights which had a drawback of businesses cannibalizing each other. They also didn’t spend much money on advertising or marketing which had the drawback of no product differentiation. Finally, they created a good experience for customers with complex customized drinks which had the rawback of slower service time. I believe that it is possible for a mega-brand to deliver customer intimacy. What does Starbucks’ Customer Base look like Today? The customer base is different than when Starbucks started up. The newer customers are younger, less well-educated lower income people. Also the target market has got more ethnic with more types of females. The customer service should still be the same because the newer customers behaved in the same way. They acquire customers by expanding their product market and creating new products.
Customer satisfaction usually is the deterministic factor if someone is to come back to the store or not. Also the quality of the product usually determines that also. The profitability of a customer is based on the amount of times they return to the store in a month. They should put a lot of emphasis on its regular customers for they provide 67% of the sales. However they need to make sure they make all of their customers happy because that is still 38% of the sales and can definitely help in the long run for profit margins. So How to Fix the Problem?
Starbucks does have the capability of delivering “the best of both worlds. ” They can do this by two different ways. First they do need to address the customer service problem. Polled Starbucks customers have said they would like a speedier service. This can be done with more labor hours and maybe some more extensive training of its employees. Also keep its employees happy like they are because it definitely helps to have happy employees. Another way to provide this is to create a better marketing department. They need to be able to collect data and analyze it to make a better customer experience.
I believe that Starbucks needs to invest the $40 million, however not all of it in labor investments. I think they need to take some of that money and invest it in the marketing department. They should hire new people that are more qualified to analyze data collected. They should invest the rest into labor such as more workers during busier times and better training. Starbucks has a potential to be bigger than it is now but they need to make some changes and invest some money internally in order for it to be more effective externally.