Role of Customer Services Excellence for Sustaining the Competitive Advantage - Starbucks - Case Study Example

Introduction With increasing competition there has been a growing pressure on the organizations to deliver excellent services. The current generation of the customers has become sophisticated in the sense that takes into consideration a diversified range of factors when deciding whether to buy or not to buy. With increasing competition, it has become imperative for the organizations to actually continue to deliver high quality customer excellence. The overall standards of delivering service and quality have become significantly important for the overall survival of the organizations. Over the period of time, customer services excellence has been transformed into one of the sources of the sustainable competitive advantage for the firms. (Bonomo, 2002) Over the period of time, service excellence has proved as one of the important and essential element of winning over the customer loyalty. Organizations which are successful at improving their customer service excellence seem to deliver consistent value and retain the customers for longer period of time. Starbucks is the leading coffee company which operates coffeehouses all over the world with excellent record in customer services. Starbucks not only offers high quality coffee through its stores but is also one of the innovators in customer services. Right from delivering a unique experience to its customers through aesthetically designed stores, well-trained service staff, Starbucks also facilitates its customers through swift payments. This paper will discuss and identify the role of customer services excellence for sustaining the competitive advantage for the organizations besides evaluating how delivering a unique experience to customers can help achieve the same. This paper will also discuss about how poor customer services can have an impact on the organization and what can be done to improve it. Customer Services and Starbucks The current generation of the consumers is relatively more sophisticated as compared to the previous generation of customers. With ever increasing information and social reviews available online, consumers have relatively larger choices and are difficult to be manipulated. Customer services therefore play an important role in distinguishing the excellent companies from the ordinary or average organizations working in the same industry. The recent trends suggest that technology has empowered customers to be more aware of their consumer rights. The emergence of social reviews creates strong word of mouth regarding the service and quality of any organization. In such scenario, it has become relatively easier for the customers to switch easily based upon the word of mouth and recommendations/reviews of their friends and peers. (Enquist and Edvardsson et al., 2007) Customer excellence is also important due to the fact that product offerings are relatively standardized now. Firms are offering relatively standard products across the whole range of target markets however, what distinguishes them from others is the focus on the customer excellence has become a distinguishing factor. In order to generate customer loyalty and maintain the same, it has become important for the organizations to actually focus on delivering customer excellence to sustain their competitive advantage. The new trends suggest that companies are focusing on delivering one to one services with relatively low focus on serving the mass markets. Unique and customized customer services solutions are becoming the key to sustain the competitive advantage wherein firms often have to design and develop marketing and promoting campaigns focused upon delivering value to the customers on the individual level. In order to create and sustain the competitive advantage through customer excellence, it is therefore critically important that the organizations must focus upon creating an environment as well as an experience which can create value for the customers. Achieving customer loyalty and retention can only be possible if organizations can focus upon delivering customized value for the customers at the individual level. (Cook, 2011) Starbucks Corporation Starbucks Corporation is the leading Coffeehouse in the world and is operating around the world with over 20,000 stores. The main product of the firm is serving hot and cold coffee however; it also offers other beverages and food items at its selected stores. Started in Seattle as a local coffee chain, it soon spread across the whole nation and other parts of the world with major presence in developed countries such as Canada, UK and Japan. The average customer visits approximately 18 times a month to a typical Starbucks store suggesting that the customer retention ratio of the firm is relatively high as compared to other competitors. Such high level of customer retention therefore clearly suggests that Starbucks has been able to deliver excellent customer services to its customers. CRM System at Starbucks Starbucks Customer Relationship Management System is an integrated system which is based upon different but related components. Currently, it is a combination of factors which deliver a unique and different experience to customers in terms of their overall experience. Loyalty Card Scheme Starbucks operates a reward card system as a part of its overall CRM efforts to reward loyal customers. Through the loyalty card, firm provides different rewards including free refills, birthday discounts, free food and extra drinks at the selected stores provided customers actually earn certain number of stars on their loyalty card. Store Designs Design has been one of the key elements of delivering excellent customer services since its inception. Over the period of time, the firm has been able to blend together its design strategy with its overall brand image and used design as an aid to deliver high level customer services. Starbucks stores offer a distinctive look and feel to the customers thus adding to the overall experience enjoyed by the customers. Starbucks has a separate team of designers who are responsible for creating and deploying excellent designs which can add to the overall brand image of the Starbucks. (Konda, 2002) It is also critical to note that Starbucks has been focusing on re-designing its stores according to the overall local environment. By combining its global designs with that of the local culture to offer its customers unique local experience. Consistent Coffee Experience One of the key elements of Starbucks customer excellence strategy is its focus on delivering unique and consistent coffee experience across all its stores. Though, Starbucks coffee has been rated low in quality as compared to the one offered by the likes of McDonalds however, Starbucks has been able to attract new customers and retain old one due to the consistent coffee experience being delivered. Across all the stores, Starbucks offers same taste and quality of coffee to its customers delivered under approximately same store designs and aesthetics. The level of customer services, preparation of coffee in front of the customers and use of high quality beans combined together to offer great coffee taste to the customers across the whole range of markets served by Starbucks across the whole world. Use of Technology Starbucks is using technology to its benefit by leveraging the power of social media as well as improving its overall positive image. It has a specific section in its website through which it solicits the recommendations, views and complaints of its customers directly. Apart from this, the payment system installed at the stores help customers to swiftly pay without actually swiping their credit cards. This has resulted into the further facilitation of the customers at the stores and reduces the checkout time at the cash tills. Starbucks is using mystarbucksidea.com as a part of its overall CRM system to get the direct feedback from the customers. The website is directly maintained by the salesforce.com – a cloud based customer relationship management website to help organization to maintain their CRM portals. Starbucks also implemented CONSONA, one of the leading customer relationship management software which is a centralized software offering a 360 degree view of the overall customer relationship management. Deployment of CONSONA at Starbucks is being made at the food service business of the firm. Poor Customer Services and its Impact A critical look at the history of Starbucks would suggest that the firm has gone through a period where its sales were declining and overall standards of customers services declined to a great length. Over the period of last few years, there have been controversies regarding the overall actions of Starbucks in terms of serving its customers and the resulting bad reputation created by the same. Customer excellence is an integrated concept which requires organizations to manage multiple factors at the same time to deliver unique value and meet overall expectations of the customers. One of the key criticisms in recent past regarding the overall conduct and customer excellence of Starbucks has been gun controversy. Though Starbucks offer a comprehensive and unique experience to its customers within its stores however, it created significant customer rage and annoyance on its stance on the gun control issue. Many States within the US allow the open or concealed carry of the arms however, Starbucks, however, allowed the carrying of guns within its stores in States where it was allowed. However, this resulted into bad reputation as other customers felt threatened while remaining within the Starbucks stores. Later on, Starbucks however, disallowed the carrying of guns within its stores after significant boycott calls by different consumer groups. There has been relatively diversified range of incidences which created adverse PR for the Starbucks in recent past. Mostly, it has been done on the basis of the political stance of Starbucks on different issues. It is also critical to note that cultivating long lasting relationships with the customers is one of the keys to achieving and maintaining customer excellence. However, Starbucks actually attempted to favor certain groups of customers while ignoring other group of customers. It is also therefore clear that in order to maintain customer excellence, organizations have to manage customer services at integrated level. By managing inter-connected activities together, organizations can successfully deal with the poor customer services. In absence of such integrated management, organizations like Starbucks can even fail to achieve the required level of customer acceptability and maintain customer loyalty over a sustained period of time. (Snow and Yanovitch, 2013) Conclusion & Recommendations In order to further strengthen its competitive advantage and ensure seamless customer excellence services, Starbucks may be recommended following: 1. Starbucks need to ensure the logical extensions of its customer excellence i.e. rather than insisting upon the novelty of its existing customer services, firm need to focus on finding logical extensions of its customer services. This means that Starbucks need to ensure that customer services excellence is established at the company wide level on consistent basis. 2. Starbucks need to market its services strategy consistently across to all employees. Since employees will be directly facing the customers, it is therefore important to actually sell the changes to the employees serving the customers in stores. Since Starbucks have standard customer services across all the stores, therefore, in order to create a more local experience, it is critical for Starbucks to actually focus upon selling its new strategy to its employees to implement and test the same. 3. Considering the integrated nature of customer excellence and the past reaction of customers towards some of the announcement and news about Starbucks, it is important that the firm may maintain an impartial stance on different issues. Since different customers have different political, religious, social and personal beliefs therefore aligning with select few of the customer groups, Starbucks may lose its competitive advantage not because of its overall customer services and product quality but due to its overall political and other beliefs which may not resonate with all consumer groups. (Mukerjee, 2013) Bibliography 1. Bonomo, T. P. 2002. Customer service. Victoria, B.C.: Trafford. 2. Cook, S. 2011. Customer care excellence. London: Kogan Page. 3. Enquist, B., Edvardsson, B. and Sebhatu, S. P. 2007. Values-based service quality for sustainable business. Managing Service Quality, 17 (4), pp. 385--403. 4. Faulkner, M. 2003. Customer management excellence. Chichester: Wiley 5. Konda, Y. 2002. Quality-Sustainable Way to Business Excellence. Asian Journal on Quality, 3 (2), pp. 1--12. 6. Mukerjee, K. 2013. Customer-oriented organizations: a framework for innovation. Journal of Business Strategy, 34 (3), pp. 49—56 7. Snow, D. and Yanovitch, T. 2013. Unleashing excellence. Hoboken, N.J.: Wiley. 8. Wallace, T. F. 1992. Customer-driven strategy. New York: John Wiley. Read More