Starbucks From A CRM Perspective

Andrew Hodowanec, Suneil Kamath, Albert Lee, Seong Jae Justin Kim, and Izmir Vodinaj

Customer Relationship Management 311Fall 2015 Prof. Rakesh Niraj

Outlining Our TalkIndustry & Target Markets

Customer Profiles & Performance

Customer InteractionsService Blueprint

Promotional and Sales EffortsCRM Systems

Customer PortfolioCustomer Equity

SummaryRecommendation

Questions

1

2

3

4

5

6

Industry, Markets, Customers, and Company Performance

THE INDUSTRY

The Big Picture

TARGET MARKETS & CUSTOMER PORTFOLIO

CUSTOMERS CHARACTERSTICSWOMEN Age 18 – 40, high income; Live in wealthy areas

YOUNG ADULTS Age 18 – 30, dine out a lot

BABY BOOMERS High level of disposable income available

THIRD WAVE COFFEE health conscious, snack, meal buyers

40% of customers make up approximately 60% of Starbucks revenue

STARBUCKS PERFORMANCE

Value Preposition, Customer Portfolio, Customer Equity

Starbucks VS Dunkin Donuts

CUSTOMER SEGMENTS

MillennialAbove average income

MomsSlightly lower incomes

STAR

BUCK

S

DUN

KUN

DON

UTS

VALUE PREPOSITION

STARBUCKS

High quality of coffeeInviting AtmosphereCustomer Intimacy

DUNKIN DONUTS

Quality CoffeeAffordable Prices

Fast and Friendly Environment

CUSTOMER EQUITY – CLV ANALYSIS

• Both companies prefer customers that order high margin, low cost products

• Customer Life Value favors Starbucks with $1,280 higher value

Social Media & One-to-One Marketing

Promotional Efforts

YouTube

Instagram

Facebook Google +

Pinterest

My Starbucks

Idea

SOCIAL MEDIA

Communicate > AdvertiseFriendly atmosphere

ONE-TO-ONE MARKETING

• Largely based on My Starbucks Rewards• Welcome Level, Green Level, Gold Level• Customized Loyalty Program• Depending on the data stored by Starbucks, different

people may receive different offers/promotions on different days

Attracting and Cultivating Customers

Sales Efforts

Employees are treated well and

offered full benefits

Training emphasizes soft

skills

Baristas Work HardCustomer Centric

Culture

Customer Attraction

Everything starts with employees! Give them what they want!

Works as an open forum where customers can voice their opinions

Popular ideas are voted on so others can see Starbucks employees actually contribute to these

forums Popular ideas are actually implemented

My Starbucks Ideas

Managing Relationships Through Technology

CRM & Salesforce Automation

Data Channels• Starbucks Rewards

Loyalty Program• My Starbucks Idea• Third Party Websites• Mobile Application Tools• In-Store Feedback• Calling Center

Types of Data• Contact Information• Location, Age, Gender• Product Preferences• Customer Thoughts,

Experience and New Ideas• GSM Location• Buying Patterns• Store Experience• Recommendations• Customer Satisfaction

Data Analysis• Rewards Card

Information Processing Division

• Salesforce.com• Codelink• Starbucks Calling Center• Store Manager

Business Decisions• Starbucks Seattle

Customer Relations Department

• Starbucks Seattle Headquarters

Our Visit to StarbucksCustomer Interactions

• Visited Village Starbucks• Licensed to Bon Appetite

• Observed 20 customers over 45 minutes

Main ObservationsWait times not too badCrowding near waiting areaNo names on cupsStaff was pleasant but not smiling or excitedBags placed in spills at sugar/milk table

Physical Evidence

Exterior StarbucksCompany SignParking on the Street Outdoor Furniture

MenuEmployee dressFoods and drinks

Community Board

Pick Up Station

A Typical Starbucks Customer Experience

Customer Actions

On Stage

Visible Employee Actions

Back Stage Invisible Employee Actions

Other Products to sell like cds, coffee machines etc.

Sugar Station

Arrive at Starbucks

Ask questions and order the drink. Pay with the loyalty card or cash

Look for interesting products

Pick up the drink

Look if there something interesting going on in the community

Tables, Chairs, Couches

Put sugar into the drink

Find a table to sit or leave

Answering questions, Taking the Order, Processing the Payment

Prepare the coffee and building customer relationship

Refill Sugarstation if needed

Clean tables if needed

Average Timing 00:00 min 3:00 min

Deliver the coffee Thanking the customer

Greeting the customer

Keeping up with inventory

Talking to the manager

Stocking and prepping

POS System, Cell phone app, Rewards Card

Coffee MachinesSupport Processes

Customer Actions

Employee Actions

Customer – Employee Interactions

1 2 3 4 5 6 7

A B

EDC

I II III IV

Service Blueprint

Diverse Customer SegmentHigh Lifetime Customer ValueIntegrated Social MediaGood Employee TrainingComplex CRM Systems

Key Highlights Recommendation

Some IssuesAverage Customer ExperienceRewards Loyalty Program CrashesCustomers are not rewarded according to the amount of money spentRewards expire soon

So, What Do You Think About Starbucks?

Rewards Program Adjustment• Award customers with stars for every $10 spent

Benefits• Increased Customer Retention for customers who spend more

money

• Ability to give more promotions to those who spend more

Steps for Action• Redesign the rewards program and the mobile app

• Advertise the change

• Educate the employees

Starbucks - Customer Lifetime Value Highly Satisfied w/o Rec Highly Satisfied w/ Rec.Avg Customer Expenditure per Visit $6.00 $9.00Avg Number of Visits per Week 5 6Avg Customer Value per Week $30.00 $54.00Profit Margin per Customer 21.30% 21.30%Avg Customer Lifespan 9 11Customer Lifetime Value $2,990.52 $6,579.14HS-US Difference $3,588.62

Summary & Final Recommendation

QUESTIONS?