STARBUCKS

INTRODUCTION:

Starbucks is an international coffee company operating in 58 countries with more than 19,000 coffeehouses. Based in Seattle, Starbucks is the largest coffeehouse chain in the world that sells drip brewed coffee, espresso-based and other hot drinks as well as quick snacks.

Since 1971 when the first Starbucks coffeehouse was opened, the company never stopped concerning about its customers and how create a chain of stores with a perfect atmosphere that would satisfy every one, no matter whether it is a loyal customer or a first-time visitor.

ORGANISATION CHART AND CUSTOMER SERVICE RESPONSIBILITIES:

Starbucks Organisational Chart:

Starbucks is one of the largest organisations that successfully developed the matrix structure with the same keeps supporting their focused strategy. Such structure combines functional and product based divisions where employees are reporting to one head ( Chart 1: Board of Directors  www.theofficialboard.com ). By creating a team spirit Starbucks empowers employees to make their own decisions and trains them to develop all kind of skills.

On analysing the organisational chart it was observed that there is a moderate degree of specialisation of tasks. Financial and Legal affairs are kept as separate departments even though both overlap with each other significantly. An additional sub-division like Talent Management was established within Human resources department and developed at the end of 2009. Also, because technology development affects the entire Starbucks organisations, digital ventures were developed as a specialised function.

Starbucks Corporation is believed to be a rational organisation. For example the operations throughout the Americas were grouped under one single department called “Starbucks Coffee Americas”. And within this department a work was grouped according to regions’ operations (Southwestern, Northwestern, Southeastern and Northeastern).

Using the same strategy, Starbucks organised its international operations into separate department, within which the operations is divided further on, concerning the counties where Starbucks operates (Europe, Middle East, France, China Asia-Pacific region, etc). Such clever organisation of the departments allows focusing on national and international businesses separately and developing them according to their particular needs.

On analysing the board of directors it was observed that the functions are controlled by executive vice presidents, senior vice presidents and presidents, where each is empowered to set goals and control performance of their employees. All these departments report to the Chief Executive Officer (CEO). Howard Schultz (current CEO) has more than ten departments that report to him. This increases his reach of control to a greater extent ( Chart 2: Starbucks Organisational Chart  www.theofficialboard.com ).

Starbucks is structured along departments where every lower sub-division reports to only one superior. Thus there is a consistency and improvement of the employees’ confidence with relation to achieving their performance goals. No overlapping between different departments (for exception of Financial and Legal Affairs departments) prevents confusion and miscommunication. Matrix structure of the organisation enables instant communication within as well as implementation and development of responses whenever changed happen.

Customer Service Responsibilities:

Starbucks organisation trains its employees in two different directions. First is giving lesson on procedures of making different drinks, working at the counter and mastering other staff positions within a coffeehouse. Second direction is teaching all employees about customer satisfaction as well as creating customer intimacy.

According to its official website, Starbucks wants all employees to remember the loyal or frequent customers’ names and orders; have conversations with customers; smile and be helpful in solving any query of the customer (starbucks.com). The idea behind all of this is to make customers to feel special and welcome when they return to a store. Starbucks believes once a customer intimacy is created, loyal customers keep returning to a coffeehouse and bring more friends with them. Hence the sales go up.

The Crew Member of every coffeehouse is responsible for performing a variety of duties, which may include cleaning the food or stock areas, operating fryers & microwaves, assisting in the kitchen area, maintaining inventory and performing all other responsibilities as directed by the business or as assigned by management.

HMS Host, the world’s largest provider of food, beverage and retail service, set a list of responsibilities every crew member of Starbuck must carry out once on duty. Based on this list every member of staff is expected to:

·         clean and stock customer eating area;

·         clean a working station and equipment;

·         follow all policies and procedures;

·         maintain a knowledge of product and services provided by a coffeehouse;

·         assist with kitchen-related function;

·         receive inventory, move and lift food and other beverage products and supplies ;

·         transfer supplies and equipment between storage and work areas by hand or cart.

And Starbucks standard policy expanded a list by adding few more points. For instance following a line of changes at the end of 2008, every barista must greet all visitors with a smile and refer by a name to a most frequent and loyal customer, as well as be able to interact with public and co-workers in a friendly and enthusiastic manner. Sometimes the coffee houses get busy, depending on the time of a day, and therefore Starbucks policy clearly states that every employee must have an ability to “bend, twist and stand to perform all job functions” (starbucks.com/policies_and_procedures).

IMPACT OF CUSTOMER SERVICE POLICY ON THE ORGANISATION STRATEGY:

Before the big changes, one of the policies of Starbucks was - the company mandated two days of paid education. At that time the company believed it was enough to explain every crew member what is required from him. However as it appeared later there had to be more than just that.  

Although, overall customers were pleased with the atmosphere, product quality and cleanliness, the Starbucks’ customer satisfaction scores began to decline. More customers were starting to agree the Starbucks Company cared mainly about making money and expanding further on by building more stores. An immediate research carried out by the Starbucks analytics made them to believe that there was a “service gap between Starbucks scores on key attributes and customer satisfaction” (laurenmjacobson.wordpress.com).

The very first step the board made in a reply to a satisfaction decline rate was to consider $40 million investment into labour in the stores. However recession made it impossible and in the Starbucks began closing the stores.

As the company reacted to the changes of the tastes and tighter family budgets, Starbucks brought another service standard to an attention of all consumers: smart changes in menu (for instance healthy food and more meal choices) and new prices. But these changes did not make the key difference.

Following the questionnaire the Starbucks implemented, asking almost every customer to fill in, it became clear that one of the obstacles the company had to face was speed of the service, as in a section “improvements to service,” particularly “speed of service” was most mentioned by the customers. While some people visit Starbucks coffeehouse for the experience, the majority getting their order are straight out the door. Therefore wait time was very important. But because Starbucks didn’t have it, that is where the satisfaction began to reduce.

In order to fix this problem and stop loosing the loyalty of its customers Starbucks made a huge sacrifice. And that was a great example of customer service commitment ever. In February 2008, Starbucks management got the attention of the world business by closing 7,100 of the stores for three hours with one mission only – retrain its baristas in order to create a perfect customer service experience. According to one of the critical articles of retailindustry.com such “bold” decision of Starbucks, having in average 20 employees per store from all 7100 stores, had brought the company to a waste of about $3 million in wages and 21,300 hours of lost customer revenue (retailindustry.com).

Nobody ever expected that this would work out for the Starbucks. As a result with a line of new customer service responsibilities (refer to Customer Service Responsibilities above) established by the management of the company the number of the coffee lovers visiting Starbucks’ houses increased and a customer satisfaction rate almost doubled.

“I’m so proud of our dedicated partners (employees) who work hard every day to deliver the unique Starbucks experience”, said Howard Schultz, chairman, president and CEO of Starbucks Company after the customer satisfaction rates were released. “The top ACSI rating underscores the relentless focus we have on our customers and our brand promise to deliver on their expectations” was another of his quotes following a success.

Hence, Starbucks became the only specialty coffee retailer in the American Customer Satisfaction Index (ACSI) Limited Service Restaurants industry and the one that has consistently received top ratings.

PRIMARY RESEARCH:

Following the big changes when in 2008 Starbucks had closed its stores for three hours to create a solid base for superb customer service, this begged a couple of questions. Can customer satisfaction really impact the sales? And can A-class service experience actually create a loyal customer base? As it appeared the answer is “yes” to both of the above questions. For instance a single phrase can make a customer not just return back to a same store but bring more of his/her friends next time.

I have recently visited the Starbucks coffeehouse at College Green in Dublin where one customer interaction proved the Starbucks corporations does care about its customer service reputation.

I was in small queue when a woman ahead of me approached to the front of the ordering line. Before she could even make an order, Starbucks’ barista immediately greeted her with a huge smile on her face. “Hello there! Haven’t seen you for a long time!” was a warm welcome line. After a customer lady began explaining giving a series of reasons of her recent whereabouts, barista girl nodded smiling and listened politely to quite a long explanation. When the customer lady finally finished, barista girl asked again: “Are you still having Hot Chocolate? When customer lady barely managed to node in a reply, the girl asked again: “Venti, right?”

Replying “Yes, exactly” the woman smiled with a surprise on her face. It was clear at that point that the lady didn’t expect the girl to remember her order. When the lady paid for her drink and started waiting to pick a “Venti Hot Chocolate” I could hear how she made a couple of whispers to a friend next to her: “I can’t believe she remembered me. I haven’t been here for ages” was something of that content.

I think this moment is very important in a retail business as it makes an impact on every person within observing range. The customer as a result of such customer service experience was impressed. And I am sure that the rest of those who stood in a queue (including me) and sat about, hearing a story of the woman were impressers too.

As I have already mentioned, according to the standards of Starbucks customer service every crew member, independently whether it is a completely new visitor or a loyal customer, must do his best to make a perfect coffeehouse experience for a consumer. And I think Starbucks staff members make it great with relation to fulfilling this standard’s requirements.

For instance, following my further stay in the Starbucks coffeehouse I witnessed how a barista boy delivered excellent customer service within a minute. And his knowledge of the products offered by Starbucks, which was absolutely shocking, proved the fact that by providing compulsory four-day training for the crew members Starbucks deserves a top rating in providing superb customer service. 

For instance, the customer lady, who most likely never visited any of the Starbucks coffeehouses before or perhaps once few years ago, approached the order counter and asked for a Tall Cappuccino. The barista lad with a pleasant smile asked to specify the order: “Would you like one shot or two shots Cappuccino”. I would never be able to answer without an explanation myself, because did not know the recent changes of a menu too. And this lady who had no clue of what he’s being saying just kept staring onto a menu board, trying to find an explanation somewhere above.

Barista lad, already reading confusion on her face started his explanation, as usually with a smile on his face. It appeared that according to a questionnaire of 2011 the analytics had discovered that for years the majority of people added extra shot into their hot drinks in order to make it stronger. And in response to this Starbucks began adding extra shot of 100% to all Venti and Tall sized milk-based espresso drinks (as standard). In other words if the customer wants the drink stronger he gets two shots of espresso into a Tall and 3 shots of espresso in a Venti. And there is no extra charge.

The customer lady, feeling more comfortable agreed on the two-shots Tall Cappuccino after which ordered a sandwich. Her next question was “Do you know by any chance what’s in it?” Giving no second thought the barista lad gave a list of six ingredients straight away and then added: “You can also have it with brown or white bread”. The customer woman at the counter was shocked, just like a couple of business men behind her back, who only a moment ago were busy discussing something. The barista lad became a target of attention of at least six people now.

Following my one day visit to College Green Starbucks coffeehouse, I can say that Starbucks is devoted to making a perfect experience for all customers around the world.

EVALUATION & ANALYSIS OF CUSTOMER SATISFACTION:

Starbucks stepped into the international market with opening its first coffee house in Tokyo, Japan in 1995. Howard Schultz was initially drawn to the Japanese market because of its' large population and consumers' high disposable income. At start the founder of the company ignored the cultural segment and implemented U.S. menus for Japanese locations  However following an intensive research, Starbucks had to change its business model to adapt to the Japanese culture by catering to 40 year-old business people and providing smoking areas for customers to enjoy their coffee drinks. “This approach was a great success due to the strong affinity the Japanese have for Western brands” (cordiconsulting.com).

Researching U.S. market it became clear the busiest hours of the day required extra fast but at the same time excellent service. Because of the rush hours the queues were stretching outdoor and hence the customers were lost by the company as not many wished waist their lunch time standing for half an hour only to get a cup of a hot drink. That’s where the idea with the mobile stands occurred. Investment into a labour and hiring more people as well as bringing out onto the streets the small mobile counters increased the overall customer satisfaction as well as prevented a further loss of customer revenue, and on a contrary brought more income.

To ensure the customers are satisfied with every element of the Starbucks’ experience, the company set a few key factors, aside from the coffee itself that the Starbuck’s stores and its employees must provide. For instance, based on a Starbuck’s survey of 2002, a clean store was the number one factor leading to a global customer satisfaction, with 83%. It appeared that when a store was clean and had a high sanitation rate, customers were assured that what they were consuming was made from and kept in a clean environment.

Convenience was the next factor leading to a global customer satisfaction, with 77%. Because customers are more than happy to have a Starbucks’ point on their normal route and not being driven out of their way for a cup of coffee, the mobile counters implemented in the countries all around the world became a success that had a positive impact onto the convenience factor.

After the big changes of 2008, other factors that ranked highly for customer satisfaction were being treated as a valuable customer (75%) and friendly staff (73%) (starbucks.com/abouts/international).