Starbucks - Delivering Customer Service

After evaluating each alternative (Exhibit 2), we recommend that Starbucks invest $40 million per year to increase labor hours per store in order to solve the problem with the quality of service. Starbucks should also set up an internal strategic marketing team. This will allow Starbucks to have a proactive feedback of customer satisfaction and hence faster improvement. We also noticed that labor cost is high for Starbucks' North American operations. To keep labor cost at reasonable level, Starbucks should reduce waste in making drinks, keep consistency in drinks, and improving productivity. We recommend the company invest more money in automated espresso machines. Currently, sales of coffee beverages account for 77% of total sales, and therefore, we recommend Starbucks increase its sales on food items and whole-bean coffees, and develop non-retail sale channels, which do not require as much special training as making coffee beverages. We also suggest Starbucks capture the new customer base to be its second permanent loyal segment.

Rationale for the Proposed Actions

Due to an increase in number of Starbucks' customers and highly customized drink demand, the workload per worker is very high. This fact results in a decrease in service time and conversation between Starbucks baristas and the customer, and more stress on baristas. Moreover, the research found that a large number of customers emphasize that "treated as a valuable customer", "friendly staff" and "fast service" are the most important factors in creating customer satisfaction. Investing $40 million annually will help eliminate the problems of service time and customer satisfaction by reducing the bottleneck of labor time and increasing customer satisfaction at all levels.