Starbucks: Delivering Value to Customers

1550 Words7 Pages
The Problem Starbucks is an international chain of exclusive coffee stores with the long term objective of becoming the ‘most recognized and respected brand in the world’. Their sales have been growing at a rate of 40% annually with over 5000 stores globally. However, their latest market surveys had indicated that their customer satisfaction level was below what Starbucks had expected. Customers had started associating Starbucks with a faceless, growth oriented, corporate entity. The challenge before the Starbucks management was to bridge the gap in the customer satisfaction levels. Christine Day, Senior Vice President of Starbucks, was considering a proposal to invest $40 million annually in manpower, which would allow them to add 20 man hours of labour to each store, weekly. In the course of this analyzing this proposal, we will answer the following questions: a) Is increasing 20 man-hours of labour per store per week the best possible solution for increasing customer satisfaction levels? b) Is the increase in customer satisfaction levels through increase in manpower worth $40 million annually to Starbucks? The Ideal Starbucks Customer We can compare a ‘Highly Satisfied’, ‘Satisfied’ and ‘Unsatisfied’ Starbucks customer by consolidating the data of the market survey as per Appendix A. We can see that the ‘Highly Satisfied’ customer is worth nearly 16 times more than an unsatisfied customer to Starbucks. Also, only 21% (approx) of the customers could be categorized as Highly Satisfied and these accounted for nearly 62% of all the transactions. The ‘Highly satisfied’ customer visits a Starbucks store more than 7 times a month with an average ticket value of $4.42 per visit. He is therefore the most profitable customer for Starbucks and any steps taken to increase satisfaction levels should increase the proportion of customers who visit a Starbucks store more

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