This project analyzed Starbucks from all angles with a narrow focus on CRM strategy.

1. Andrew Hodowanec, Suneil Kamath,
Albert Lee, Seong Jae Justin Kim, and Izmir Vodinaj
Customer Relationship Management 311
Fall 2015 Prof. Rakesh Niraj

2. Industry & Target Markets
Customer Profiles & Performance
Customer Interactions
Service Blueprint
Promotional and Sales Efforts
CRM Systems
Customer Portfolio
Customer Equity
Summary
Recommendation
Questions
1
2
3
4
5
6

3. Industry, Markets, Customers, and Company Performance
THE INDUSTRY
The Big Picture
TARGET MARKETS & CUSTOMER PORTFOLIO
CUSTOMERS CHARACTERSTICS
WOMEN 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

4. Value Preposition, Customer Portfolio, Customer Equity
Starbucks VS Dunkin Donuts
CUSTOMER SEGMENTS
Millennial
Above
average
income
Moms
Slightly
lower
incomes
STARBUCKS
DUNKUNDONUTS
VALUE PREPOSITION
STARBUCKS
High quality of coffee
Inviting Atmosphere
Customer Intimacy
DUNKIN DONUTS
Quality Coffee
Affordable 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

5. Social Media & One-to-One Marketing
Promotional Efforts
YouTube
Instagram
Facebook Google +
Pinterest
My
Starbucks
Idea
SOCIAL MEDIA
Communicate > Advertise
Friendly 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

6. Attracting and Cultivating Customers
Sales Efforts
Employees are
treated well and
offered full benefits
Training emphasizes
soft skills
Baristas Work Hard
Customer 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

7. 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

8. Our Visit to Starbucks
Customer Interactions
• Visited Village Starbucks
• Licensed to Bon Appetite
• Observed 20 customers over 45 minutes
Main Observations
Wait times not too bad
Crowding near waiting area
No names on cups
Staff was pleasant but not smiling or excited
Bags placed in spills at sugar/milk table

9. Physical
Evidence
Exterior Starbucks
Company Sign
Parking on the Street
Outdoor Furniture
Menu
Employee dress
Foods 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
Sugar
station
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
E
DC
I II III IV
Service Blueprint

10. Diverse Customer Segment
High Lifetime Customer Value
Integrated Social Media
Good Employee Training
Complex CRM Systems
Key Highlights Recommendation
Some Issues
Average Customer Experience
Rewards Loyalty Program Crashes
Customers are not rewarded
according to the amount of
money spent
Rewards 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 $9.00
Avg Number of Visits per Week 5 6
Avg Customer Value per Week $30.00 $54.00
Profit Margin per Customer 21.30% 21.30%
Avg Customer Lifespan 9 11
Customer Lifetime Value $2,990.52 $6,579.14
HS-US Difference $3,588.62
Summary & Final Recommendation

11. QUESTIONS?