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STARBUCKS DELIVERING CUSTOMER SERVICE A Case Study INTRODUCTION Starbucks is a dominant brand name in North America as the provider of gourmet coffee beans coffee-based drinks and non-caffeinated beverages It is also becoming a well known brand in many countries around the globe Starbucks value proposition is to create an experience around the consumption of coffee that its consumers could weave into the fabric of their everyday lives The company currently serves over 20 million customers in over 5000 company-operated and licensed stores throughout the world Another interesting fact is that Starbucks has achieved this level of success without much advertising Recent market research has shown that Starbucks is not meeting its customers expectations in terms of customer satisfaction KEY DECISION ISSUE The main issue is whether the company should invest 40 million to add an equivalent of 20 labour-hours per week to its 4500 company-operated stores The proposal is based on the assumption that increasing labour hours at stores will result in faster service which will improve customer satisfaction Since studies have shown that there is a direct relationship between customer satisfaction and customer behavior this increase in customer satisfaction is expected to result in higher sales growth and profitability Exhibit 1 illustrates this relationship showing that greater customer satisfaction directly results in higher potential sales STRATEGIC ISSUE Given that there is a strong positive relationship between customer satisfaction and future potential sales achieving high customer satisfaction is a key factor to Starbucks sales growth In fact it can be shown that by transforming dissatisfied customers to satisfied and highly satisfied revenues can be increased by 361 and 1478 respectively Exhibit 2 shows how these results were obtained Once it has been established that customer satisfaction is the key underlying issue in question a quick glance at Starbucks recent customer satisfaction reveals that customers did in fact express dissatisfaction with the efficiency and speed of service Then the question is to what extend will
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