Customer Service for any business organization is the foundation on how profitable and successful the brand will be in the marketplace. Starbucks has made a critical mission to make customer service its top priority to ensure brand growth and sales of merchandise. “Today, Starbucks not only sells coffee or food, but also tea, coffee-related accessories and equipment in more than 37 different countries” (Lam, 2013). Starbucks must use a cautious approach toward creating an initiative in customer service that is cost-effective and provides sales of merchandise so that it can obtain its dominance in a global environment.
How the initiative affects financial planning?
When implementing a new initiative a company has the burden of creating a financial budget that includes additional costs associated with the new initiative. Pleasing the customer is essential for a company to retain existing business as well as attracting new customers. Starbuck’s customer service initiative is aimed at pleasing customers as well as creating a unique experience that will enhance customer’s visits to the stores. Through the new initiative Starbuck’s plans to entice customers taste buds by:
* Reinventing how coffee is brewed in the stores with a new Clover in-store brewing system that will deliver the best cup of coffee available.
* The introduction of an advanced espresso system that produces a great shot of espresso.
* A customer rewards system that rewards card holders with exclusive benefits when making purchases.
* Introducing mystarbucksidea.com a new online community for customers to share suggestions and help shape the company’s future.
* Starbuck’s plans to extend their relationship with Conservation International to maintain their commitment to deliver the best coffee available and sustain their position on climate preservation and sourcing (Starbucks).
With the implementation of these new initiatives Starbuck’s will incur additional costs concerning training and development. A new training policy has to be developed for new and existing baristas to operate the new machinery as well as safety precautions associated with operation. Employees will need training on the new rewards program to successfully keep customers up-to-date on his or her points, and how to redeem the points. Starbuck’s shows commitment to the social and ethical responsibility the company has to customers as well as the environment. New policies will have to be implemented and carried out to encompass relationships with Starbuck’s partners and their partner’s standards. Starbuck’s will have to take into consideration the additional costs to implement these new initiatives and how it will impact the company.
How will the initiative affect costs?
Starbucks is a company that continues to look for the future when it comes to improving their brand. Starbucks understands that without their customers, there is no brand of coffee for consumers. Starbucks is constantly trying to improve their company in any way possible with the focus not on making money, but improving customer relations and staying diligently focused on the customer’s needs. Starbucks is currently divided into two regions and have a hard time meeting the needs of their growing customer base.
The company wants to accommodate each individual need of the customer and to do that will result in dividing the two current regions into four sections. Starbucks will have a Western/Pacific, Northwest/Mountain, Southeast/Plains, and Northeast/Atlantic. With this new approach to improve customer service, Starbucks will make their product and brand more profitable. Starbucks general cost will go up for a short time period with dividing their company up into four separate regions. Starbucks has an unrelenting focus on the individual customer and meeting those needs no matter what the cost. They want the customer’s experience to be so good that he or she will become a repeat customer for life.
How will the initiative affect sales?
Inevitably every Starbucks initiative is about improving the customer experience so that the customer will return, purchase more, and thus generate sales. In 2008, Chief Executive Officer Howard Schultz launched the Starbucks initiative to improve the customer service experience with the hopes that enhancing the customer experience would result in gaining loyal customers. What better way to ensure that a customer will return than by improving his or her experience with exceptional customer service (traditional and nontraditional), in store amenities, and a superior cup of coffee.
Starbucks strategic move to divide their two regions into four: Western/Pacific, Northwest/Mountain, Southeast/Plains, and Northeast/Atlantic will allow each region to better service its partners offering a more rapid response time due to the smaller partner to executive ratio. Thus, faster decision-making results in implementation at the store level improving the customer service experience and increased sales potential. Starbucks knows the importance of the customer experience. Whether it be the early morning friendly greeting from a Starbucks partner, the social and personal involvement felt by the customer when using the “my Starbucks ideas,” their free Wi-Fi and in store amenities, or their dedication to having a menu that offers something for everyone. Starbucks knows that in order to obtain and please its customers resulting in sales, it must continue to offer exceptional customer service by making each experience memorable.
Risks associated with the initiative
Starbucks risk associated with the customer service experience initiative has some advantage and disadvantages. In February 2008, Starbucks closed down 7,100 stores to retrain them on customer service experience. The shutdown was for three hours at every store they owned. They average store has about 20 employees making up 426,000 man hours, which was more than three million dollars in wages and 21,300 hours lost in customer revenue. So the question Starbucks wanted to know did this training help with their customer service. Though it did cost millions of dollars to shut down their stores the training their employees received was valuable to the customers going to Starbucks day in and day out. It has been shown with secret shoppers that the customer service he or she received ensures Starbucks that he or she will return.
Even though people know where to find cheaper coffee the quality of the experience, they get brings them to buy the higher price coffee drinks. Another risk associated that they may have to close store dues to a restructure of the company because of the numerous attempts that failed. Also, including the closing of the stores they will have to eliminate existing positions costing employees job. Even though this may help the customer service experience it will hurt the employee experience, which supplies the customer service experience.
Financial effects of risks on the initiative
Customer loyalty is one of the biggest financial effects when it comes to Starbucks creating a relationship with consumers. This is the biggest financial risk factor that is out there for companies because it is reoccurring revenue. When a person speaks about reoccurring revenue, he or she has to consider that customers will not leave Starbucks based on a negative experience. Due to Starbucks operating hours, the first human interaction for most customers is with a Starbucks employee. It is important to maintain a high level customer service experience built on trust and loyalty. The customer’s experience is crucial to the start of their day; a bad experience starting out can literally be the cause for an entire day that is ruined. Therefore this is a huge financial effect of risks associated with the customer service experience initiative. When speaking of customer service experiences there have been a significant amount of free marketing ideas by word of mouth than any other network. This is also a leading factor or risk of why customer service experience is such an important process.
Starbucks has invested a large amount of time and effort into making its initiative in customer service more effective throughout its global franchises. Starbucks has implemented changes in customer service that will result in a positive outcome on cost and sales. These changes included personnel and more divisions within Starbucks. As with any initiative, there are many risks associated with Starbucks and customer service. Starbucks has managed to minimalize the risks and focus on the customer experience that raises profit for the company worldwide. Providing an excellence in customer service will produce financial gains for Starbucks which will result in company growth and sales.