Starbucks: Delivering Customer Service

Case Report

Starbucks: Delivering Customer Service

1. How did Starbucks measure their service performance?

Over the past decades Starbucks has evolved from being a “small coffee shop in Seattle’s Pike Place Market” to becoming one of the world’s most acknowledged brands in control of an immense number of coffee stores spread around the world. The success of the company is highly based on three pillars: its coffee, the atmosphere inside the store, as well as a unique customer service. In fact, customer service has to be tracked constantly in order to maintain the customer base.

“Our goal is to create an uplifting experience every time you walk through our door”.

In order to measure their service performance, Starbucks primarily makes use of a tool called the “Customer Snapshot” which aims at monitoring every store and evaluating it according to formalized criteria. Every coffee store is visited by a “mysterious shopper” who is not known by the stores employees and who rates the store based on the following aspects:

1. “Service” basically reflects the interaction of the Starbucks partner with his customers. Starbucks has equipped all of its partners with certain soft as well as hard skills which serve as a benchmark for evaluation.
2. “Cleanliness” generally refers to the state of the facilities such as counters, toilets etc.
3. Product quality: As Starbuck’s product portfolio consist of a variety of different beverages as well as food, it is not only the taste but also factors such as whether the coffee was prepared in a proper way that are taken into account.
4. “Speed of service” refers to the time customers have to wait for their order. Starbucks has defined a certain benchmark based on market research activities which targets a maximum of three minutes from back-of-the-line to drink-in-hand.

In fact, the “Customer Snapshot” enables Starbucks to look at an isolated rating of a store at a certain point in time and detect major weaknesses as well as strength in their service performance. This implies that an individual coffee store could achieve different levels of service such as “excellent” or even “legendary”. The latter is defined as not only operating flawless but also creating a memorable experience for the individual customer. In addition to the more static evaluation of an individual store at a certain point in time, the tool creates opportunities such as tracking service performance over the course of a quarter or several years and to thus detect and track trends.

Besides the most prominent/obvious means of performance measurement, service can also be tracked in a more indirect way. By means of the “Starbucks Stores Value Card” (SVC), the company is able to compare transaction times of card vs. non-car users and by simultaneously measuring the number of visits which are a lot higher for card users it becomes evident that service performance has increased substantially with the introduction of the SVC. Another way to assess the service performance is by looking at employee satisfaction. Making the assumption that there is a positive correlation between satisfaction of Starbucks partners and the service they offer to their customer’s, changes in figures such as employee turnover as well as employee satisfaction rates might be possible indicators for changes in service performance.  

1. Based on your opinion, what are the key differences between their established customers and new customers? Would these two types evaluate the same service experience similarly or differently?

Over the course of Starbuck’s growth, it was not only their beverages, food or facilities that have constantly undergone changes, but one can also observe significant changes in their customer base. The historic customer base mostly comprised a female, “affluent and well educated” upper-class clientele between 24 and 44 keen on experiencing the relaxing atmosphere in combination with a high quality coffee. The immense rise of Starbucks and the expansion to many more locations resulted in potential leads and customers which have to be characterized differently compared to the historic customer. The new customers are often part of the younger generations, education is not a main determinant of going to Starbucks anymore and thus, the average customer is part of a lower income bracket. Besides factors such as the coffee quality or innovation, new customers nowadays also value aspects concerning the price level such as reduced prices or other types of promotions.

The general change of the customer base as well as Starbucks expansion have also changed their customer’s way of thinking of the brand as well as their expectations towards service and products. Starbucks nowadays is less perceived to be a high quality brand worth paying the extra money, neither do customers think it sells the best tasting coffee and the percentage of people associating the company with specialty coffee - one of Starbuck’s former competitive advantages - is declining.

Comparing the historic with the new customer group shows that the same service offering to those groups would most probably be evaluated differently. Historic customers would highly value high quality coffee while prices might not be a major aspect in the purchasing decision. The new, much younger generation on the other hand might be rather interested in better prices, the last bit of quality of their coffee is would most likely be neglect able.