The Starbucks Customer Service Experience: A Market Plan - Research Paper Example

THE STARBUCKS SERVICE EXPERIENCE: A MARKET RESEARCH PLAN and or Table of Contents Cover Page Tableof Contents 2 Executive Summary 3 1. Background 4 a. Industry Setting 4 b. Organizational Setting 5 c. Business Objectives 6 d. Problem Statement 7 e. Industry Setting 7 f. Research Objectives 7 2. Research Methodology 7 a. Secondary Data 7 b. Primary Data 8 i. Qualitative/Quantitative 8 ii. Data Collection Method 8 iii. Sampling Criteria 8 iv. Data Analysis Method 9 3. Results 9 4. Recommendations 10 5. Conclusions 10 References 11 Appendix A: The Survey Questions 13 Appendix B: The Survey Returns 13 EXECUTIVE SUMMARY Starbucks is an international food and beverage company which offers specialty coffee beverages, made with any combination of ingredients, of which nearly every customer would find one that makes him or her happy to make a purchase of, on a regular basis. Retaining a customer is essential to any business in remaining solvent and obtaining profits over a period of time (Starbucks, 2014a). Therefore, customer service is a large portion of Starbuck’s success, even when moving into the global arena and different cultures. How employees present themselves to the customer, including how they dress, and how the products satisfy the customer, is a huge part of making or breaking any business anywhere in the world. A recent issue came up when it was announced that baristas could no longer wear engagement rings while serving customers. Tattoos on the neck and face, unnatural hair colours are now forbidden, along with nearly every other piece of jewellery. What is allowed? Small nose studs and ear gauges no bigger than 10mm. Even nail polish is forbidden (Baker, 2014). While this issue only affects Starbucks employees directly, what did impact the customers directly was when Starbucks recently removed their eggnog latte and, before that, the gingerbread latte. When the ‘no engagement rings’ protocol for baristas recently went public, there was a Starbucks boycott born amongst the customers. This market research plan looks at whether customers see Starbucks as listening to its stakeholders in terms of what they like, would like to see, and how they are treated in the store by the employees. A small online survey was done which asked several questions on customer service and how the Starbucks Company is perceived as listening to the customer, including how customer service is conducted within its coffee shops. 1. Background Starbucks began with its first store in 1971, in Seattle, Washington’s (USA) Pike Place Market (Starbucks, 2014). Initially, Starbucks also provided coffee to fine restaurants and espresso bar. The first few years were spent in Seattle, but then it expanded to 11,457 stores in the United States, with over 19,000 stores worldwide by 2013 (Statista, 2014). Of the 11,457 U.S. stores, 7,049 are operated by Starbucks directly, with 4,408 operating as franchises. The U.S. market share in 2013 was 32.6% and 74% of revenue is obtained from beverage sales, with 20% in food sales, 3% from single serve coffee sales and packaged goods, and finally, 3% from all other sales in coffee making equipment and Starbuck merchandise (Statista, 2014). Starbuck’s made $14.89 billion in overall worldwide sales in 2013. a. Industry Setting The largest competitors for Starbucks is Dunkin’ Donuts, Krispy Kreme (U.S. favourite), the Canadian chain Tim Hortons, and the bakery chain Panera Bread (Statista, 2014). In the U.S., Krispy Kreme was followed by Tropical Smoothie Café and Caibou Coffee. In the United Kingdom and Ireland, Costa was named the most favourite coffee shop at 48%, as well as being considered the most ethical, according to the research group, Allegra Strategies (Whitbread, 2013). In the United States, there are 51,436 coffee and snack shops overall, with Starbucks as cornering one-fifth of the U.S. industry market place. Starbuck’s has 19,767 stores worldwide, with Dunin’ Donuts coming in at 10,858 worldwide, Tim Hortons at 4,740 worldwide, and Costa Coffee, with 2,861 stores worldwide (Statista, 2014). As the rankings show, Starbuck’s retains the highest open store presence in the coffee and snacks industry worldwide, but does have some serious competitors moving up behind the company. Revenue Projection of the Coffee and Snacks Industry from 2002 to 2016 ($billions) (Fig. 1, Statista, 2014) b. Organizational Setting Starbucks is moving to a new design of leadership, which will be implemented by September, 2014. As part of the acceleration in global growth goals, Howard Schultz, chairman, president and chief executive officer, will move the company into a three-region infrastructure of organization (Starbucks, 2014b). Within the 54 markets outside the U.S.A., three divisions will be put into place: China and Asia Pacific (all Asia Pacific markets, along with China); the Americas (U.S., Canada, Mexico, and Latin America); and the EMEA (Europe, U.K., Middle East and Africa) (Starbuck, 2014b). There will be a president installed for each division, responsible for overseeing all aspects of the business in those areas, who will work closely with licensing, and joint ventures with governments and international companies. Those presidents will also help to build the Starbucks brand awareness through available channels in each of these regions (Starbuck, 2014b). As part of this expansion, Starbucks also will continue building on associated brand opportunities, such as the Seattle’s Best Coffee (SBC) and the Tazo Tea, which was purchased in 1999. Tea has become a large profitable business, particularly in countries which prefer tea to coffee, such as in India and the Asian block. c. Business Objectives The business objectives of Starbucks has always been the commitment to grow and provide the highest quality Arabica coffee bean on a global level. One of the main Starbucks goal is to ensure that the Arabica coffee bean reaches a 100% threshold for being ethically grown and traded on the global market place by 2015 (Starbucks, 2014c). 2013 Report Update (Fig. 2, Starbucks, 2014c) The Coffee and Farmer Equity (C.A.F.E.) Practices, is a program, developed with Conservation International (CI), that partners with thousands of coffee farms on a global basis, using over one million workers, who grow and provide the bean for the Starbucks coffee. The program is also heavily invested in providing methods for improving these farms for sustainability over a long term, and to work with CI in measuring the impact of assistance for these farms, including the purchasing programs (Starbucks, 2014c). d. Problem Statement The largest issue, as with any large company, is how customer service is handled. For Starbucks, much of the customer service will occur in the coffee shop directly. Customers can also get the Starbucks Card which records their purchases on the card when presented at checkout. This provides ways to get free drinks and other products after an accumulation of purchases (Soper, 2014). In a recent news article, the Starbucks Gold Card received very negative comments when a number of loyal customers lost their accounts because of issues about verifying customers’ birthdays, even if they had been with the company for several years. It was not clear just why they suddenly cancelled numerous accounts, even when they had the customers’ birthdays on file (Soper, 2014). Other issues in customer service are: how well the coffee shop is maintained, how the baristas look and dress, and how the products are provided to the customers. Some of these issues have already been discussed, such as the ban on wearing jewellery for the baristas, which appears to be more of a health concern, whereby food particles could get caught in the ring settings. e. Research Objectives The objectives in this research plan were to review what scholarly research papers may have been done recently on customer service at Starbucks, as well as reviewing news articles that referred to negative problems in customer service at Starbucks. Accordingly, based on the research, a solution would be provided that would help Starbucks avoid future issues in customer service and customer relationships. 2. Research Methodology a. Secondary Data Some secondary data has been provided in the previous sections, as pertains to the company’s standing on a global basis and as relates to customer service issues. Therefore, primary data was gathered for a short survey to observe customer service with Starbucks in general. b. Primary Data Collection A short survey was done, using a basic criteria of being a customer at Starbucks sometime within the last year. All respondents were full-time university students, who were between 18 and 21 years of age. The survey was done at SurveyMonkey.co.uk and only 10 questions regarding customer service were asked. There were 17 responses obtained, a reasonable number considering the short time period to get this done (Zikmund & Babin, 2009). i. Qualitative/Quantitative The qualitative aspect of the survey had to do with the degree of experience, based on a Likert Scale, of (1) Strongly Agree, (2) Agree, (3) Neutral, (4) Disagree, and (5) Strongly Disagree. The Quantitative aspect had to do with how many respondents responded to which of the selections in order to get a percentage of the overall returns (Zikmund & Babin, 2009). ii. Data Collection Method After the survey was closed, the data was downloaded as a comma-separated values (CSV) file, which is raw data, separated either by a comma or space. It was then imported into Microsoft Excel and cleaned up for analysis (Jelen & Alexander, 2013). iii. Sampling Criteria The sampling criteria required that the respondents would have made a purchase at Starbucks within the last year. If yes, then they were provided with the link to go to the survey. iv. Data Analysis Method The data was analysed in Microsoft Excel, using the Pivot Table Tool, which provides a method of tying different variables together to get a more in-depth picture of what connections can be made within a customer base. Customer descriptions were limited because the amount of questions available and for the time period allowed (Jelen & Alexander, 2013). 3. Results About 59% bought between 1 and 4 drinks on a monthly basis, and 29% bought between 5 to 8 drinks monthly. For those who bought 9 to 12 drinks, and more than 13 monthly, the percentage was 6%. Nearly 70% either Agreed or Strongly Agreed that they loved the coffee smells in the shop, while 29% were Neutral. A majority of respondents (59%) liked ordering a variety of different coffee drinks, while 12% were loyal to one or two drinks. The rest did not have an opinion or were neutral. The majority of respondents (77%) used the Starbucks Card, while 12% were neutral and 12% did not have one. When asked about the barista, 84% said the barista was always helpful, while 12% disagreed, and 6% had no opinion. This meant that for 18%, the barista service was not remarkable or was not good. There was also 58% who said that the barista was always dressed cleanly and professionally, but others (24%) had a negative opinion, while 18% had no opinion. The majority (77%) agreed that Starbucks provided a high quality of service, while 24% had no real opinion. Having a favourite drink removed from the menu made a majority of respondents (65%) unhappy, while 24% did not notice, or had no experience with this issue. There were 12% who Disagreed, but this may reference the Neutral response instead. When asked if Starbucks listened to their demands to bring their favourite drink back, 71% said that Starbucks did listen. The rest, 29%, did not have an opinion of this. Finally, the majority (71%) said that Starbucks, overall, provides great customer service, while 18% were neutral. However, 18% Disagreed that Starbucks provided good service, indicating that some had very unhappy experiences at their store at one time or another (Survey, 2014). 4. Recommendations The best recommendation for Starbucks is to poll its customer base before ever removing a drink. Providing the opportunity to win points on the Starbucks Card if people took surveys once or twice a month, would provide Starbucks with a continuous base of information about what their customers wanted, or did not want at their coffee stores. It would also be an excellent way to keep up with how customer service is conducted at each of the cafes, so that if there are problems, the company can take steps to correct it early on, and as quickly as possible. 5. Conclusions Starbucks is very popular across the world, but size does not mean that it provides the best service. Staying in touch with the customer, is the most important aspect of customer service, and in keeping its customer base happy by knowing what the customers want and do not want. While the survey provided with this paper is a preliminary view on the subject of customer service and customer experience at the Starbucks store, it does show that a majority of people more than just like the brand and the products made. With more in-depth analysis using the pivot table, if added criteria were added, such as age, monthly salary, gender and level of education (Bachelors, Masters), that information tied to two or more of the survey questions, would provide more information about trends under certain variables. For example, it would be good to know if certain ages and gender, determines how many times a month coffee purchases are made, and if they are different kinds of coffee drinks. The majority in this group tend to purchase between 1 and 8 coffees per month, with nearly half of the sample group purchasing different types of coffee drinks. This shows that the sample group most likely has a staple of two three beverages that they alternate in purchasing. The majority of the sample group also has a Starbucks Card where the purchases are recorded, indicating that they like adding points in an effort to win free drinks and other products from Starbucks. For the student population, which tends to not have that much money, getting free products is a big plus for them. The Starbucks Card is also a significant method for the company to stay in touch with its customers, to engage them in surveys about the products while adding more points to the accounts just for taking the survey. It is an excellent way to also find out if certain drinks are unpopular and need revamping or removal, or if there is something that the customers wish to see on the menu that has not been there, or was removed. Therefore, market research is the most valuable tool for businesses to understand their customer base, what they like and do not like, and finding out what products they want to see in the future, which will also add to the company’s bottom line. When products are developed without customer feedback, there is a big chance that a lot of money will be spent unnecessarily in creating a product that may not sell well. That is why market research is important. It helps save money in the long run. References Baker, D. (2014). New Starbucks Dress Code a Tall Order for Baristas? U~T San Diego Online. (6 November 2014). Retrieved from http://www.utsandiego.com/news/2014/nov/06/starbucks-boycott-dress-code-eggnog-latte/. [8 November 2014]. Jelen, B., & Alexander, M. (2013). Excel 2013 Pivot Table Data Crunching (MrExcel Library). (Kindle). Indianapolis, IN: Que Publishing. Soper, T. (2014). Starbucks Cancels Thousands of Gold Accounts Over Issues with Birthday Information. GeekWire Online. Retrieved from http://www.geekwire.com/2014/starbucks-cancels-thousands-gold-accounts-birthday-issue/. [8 November 2014]. Starbucks. (2014a). Starbucks Time Line. Starbucks Online. Retrieved from http://globalassets.starbucks.com/assets/5deaa36b7f454011a8597d271f552106.pdf. [6 November 2014]. Starbucks. (2014b). Financial Release. Starbucks Investor Relations Online. Retrieved from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-newsArticle&ID=1584009. [9 November 2014]. Starbucks. (2014c). Coffee-Ethically Sourced Coffee Goals and Progress. Starbucks Online. Retrieved from http://www.starbucks.com/responsibility/sourcing/coffee. [8 November 2014]. Statista. (2014). Statistics and Facts on Starbucks. Statista-The Statistics Portal Online. Retrieved from http://www.statista.com/topics/1246/starbucks/. [8 November 2014]. Survey. (2014). Survey Monkey Online. Retrieved from http://urlm.co.uk/www.surveymonkey.co.uk. [10 November 2014]. Whitbread. (2013). Nations Favourite Coffee Shop Four Years Running. Whitbread Online. Retrieved from https://www.whitbread.co.uk/media/news-press-releases/costa-nations-favourite-coffee-shop.html. [9 November 2014]. Zikmund, W.G., & Babin, B.J. (2009). Business Research Methods (8th ed.). Thousand Oaks, CA: Cengage Learning. Appendix Appendix A: The Survey Questions Survey (1) Strongly Agree (2) Agree (3) Neutral (4) Disagree (5) Strongly Disagree ID # Survey Entry Number 1-17 (1) Monthly Purchase 1-4, 5-8, 9-12, 13+ (2) Love the Coffee Smells 1,2,3,4,5 (3) Order a Variety of Coffee Drinks 1,2,3,4,5 (4) I Always Use the Starbucks Card 1,2,3,4,5 (5) The Barista is Always Helpful 1,2,3,4,5 (6) The Barista is Always Clean and Dressed Professionally 1,2,3,4,5 (7) Starbucks provides High Quality Service 1,2,3,4,5 (8) I Hate Having my Favourite Drink Removed 1,2,3,4,5 (9) Starbucks Listens When I Demand my Favourite Drink Back 1,2,3,4,5 (10 ) Starbucks Always Provides Great Customer Service 1,2,3,4,5 Appendix B: The Survey Returns in Charts Read More