Esprit Rock

In today’s competitive marketplace

In today’s competitive marketplace, the buying experience is often detached and impersonal. Businesses have resorted to staff sparsely to reduce overall costs. Customers can now walk into stores and not ask for assistance and it is completely feasible to make a purchase with no human interaction. We are unfortunately used to this, which is sad because the art of personal selling has become lost.

Part of Starbucks’ success was driven by its customer service. They are not the only place that consumers can buy a cup of coffee, but they are one of the few that can get away with charging 8 bucks for it. Starbucks manages this by creating an atmosphere and an experience worth paying for. One of the crucial elements of this is how their partners interact with their customers. The level of service partially justifies the price of their product, and helps reinforce the experience. Coming to the question of whether $40 million in additional labour would be beneficial to the company has a more complex answer than a mere yes or no. There are certain major assumptions that are being made in this case. The first assumption is that the speed of service is the number one influencer of satisfaction and that the additional labour will result in an increase of speed of service. However, this is not true since the rankings of the key attributes by Starbucks customers suggest that fast service ranks number 6 in importance. A second assumption is that all stores are equal in size, number of customers they attend, prices, and that all the stores need this additional investment.  A final assumption is that satisfaction is correlated with loyalty and that if a satisfied customer becomes highly satisfied, the number of visits per month to the store will increase substantially, thereby augmenting the sales revenue for the company.

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Investment Analysis
Assumption Each store is equally important
Investment per Annum $40,000,000
Total No of Stores 4,500
Invesment in one store 8888,88889
1 year 52 Weeks
1 week investment 170.9401709
1 Week 20 hour additional plan
1 Hour 8.54700Based on the company’s research, it is evident that only 10% of Starbucks’ customers have asked for a faster, more efficient service. Even if the $40 million investment is made and customers get a faster service, there is a big risk in losing value in some of the other perceptions. Having more partners in a specified work area might lead to the risk of less friendly, less attentive staff and might also risk the loss of the personal treatment. It even appears impractical and inefficient to allocate the $40 million investment equally to all the stores. It would make sense to allocate the money based on size of store, number of customers, location and need for additional labour. Hence, Starbucks could invest in additional labour but only after conducting further research about the actual necessity of such an investment. In addition, there would be no need to invest in a store where all customers are highly satisfied and there would be higher need to invest in a store where there is a high percentage of less satisfied customers. The goal of this investment would be to increase customer satisfaction and in turn generate profits for the company.

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