Problem Statement
In the given case study, Starbucks is encountering the problem of failing in meeting the customers’ expectation and delivering customer satisfaction and therefore, continuously losing customer loyalty. In this regards, the senior management of Starbucks is confused in undertaking a proposal of increasing number of labors in their store. This investment tends to potentially increase the service speed at their store and consequentially increasing customer satisfaction, as well as, loyalty. The proposal requires an investment of $40 million, which makes it questionable for the Starbucks’ management as the bottom line regarding the potential profitability and sales is unclear.
Analysis
In the given case study, it is analyzed that the senior management of Starbucks is confused while undertaking a proposal of increasing the amount of labor in its each store in order to improve its service speed. That is because services speed is highly crucial for the business as it is directly affecting the satisfaction level of customer and therefore, the loyalty of customers that are unsatisfied with the service is diminishing. It is also analyzed that former experiential branding approach of Starbucks turned out to be more successful as it incorporates components like high product quality, service speed, atmosphere, high levels of satisfaction between partners, high brand visibility, and high customer traffic. However, the declining customer satisfaction petrifies the Starbucks’ management to undertake initiatives that potentially increase the level of customer satisfaction and loyalty. Furthermore, it is also analyzed that the declining customer satisfaction is a resultant of an inappropriate tool ‘Snapshot’ that is employed by the company to measure the level of customer satisfaction.
The tool mistakenly painted the picture that Starbucks’ stores are operating efficiently in the locations where they feel to drive satisfaction among customers. However, a survey revealed that the actual level of customer satisfaction is actually deviating from the expected level. Moreover, the outcomes of the research also discovered that the perceived level of differentiation is also insignificant between other brand and Starbucks (Moon & Quelch, 2003). A survey of partners also showed that the delivery of customized drinks is consistently straining the operational activities and therefore, slowing down the delivery process. Lastly, it was also discovered that the brand is also less stylish and trendy as compared to its competitors. Hence, it is analyzed from the provided case that the major factors affecting the customer satisfaction include the low service speed, the reputation of being monetarily obsessed, and inadequate partner conduct of treating customers.
Alternatives
Recommendations
Starbucks is highly recommended to primarily endeavor to convert its satisfied customers into loyal customers. In order to do so, Starbucks is required to employ an efficient and inclusive process of customer relationship management. They are also suggested to improve their relationship with partners to develop innovative and efficient methods that can potentially improve the services time. Most importantly, Starbuck is recommended to undertake the proposal of $40 million investment to increase labor in its stores as this tends to drastically improve its service time. It means that they will be capable of serving more customers in defined period of time. This will consequentially increase the customers’ satisfaction and customer loyalty. Moreover, the proposal of investing $40 million is also proven out to be cost-effective in a way that it will only cost around $8,889 for each store if the total investment is divided across all 4500 stores. Moreover, the difference between the incomes of highly satisfied customers i.e. $381.88 and satisfied customer i.e. $209.49 is only $172.39, which shows that it requires only 46.5 customers (out of 570 customers i.e. average number of visitors in a Starbucks store) to attain the breakeven (Moon & Quelch, 2003). Therefore, this proposal would win the cost-benefits analysis and undertaking it would not only improve the service speed of Starbucks but it will also facilitate in improving its profitability and sales profile.
References
Moon. Y & Quelch. J. A. (2003). Starbucks: Delivering Customer Service. Retrieved on April 06, 2016
