Starbucks is one U.S. retailer that has clearly been forced to recess with the recession. Despite the reality of its substantial store closings, the world's largest coffee retailer is staying true to its brand, and continues to deliver an experience that is keeping at least some of its customers loyal. It's not obvious to investors, however, if Starbucks' customer satisfaction efforts are paying off for them right now and could be, therefore, possibly misdirected.
In February 2008, Starbucks management captured the attention of the business world when it boldly closed all 7,100 of its stores for three hours so that it could retrain its baristas on creating a Starbucks branded customer service experience. With an average of 20 employees per store, that’s a staggering 426,000 man hours, more than $3 million in wages, and 21,300 hours of lost customer revenue. That’s what I call a customer service commitment!
Since then, Starbucks has permanently closed around 900 of its stores, which puts the value of their radical training effort and the whole customer service equation into question. Does customer staisfaction really drive sales? Can a superior service experience actually create a loyal customer base? Is customer loyalty a real phenomenon or is it an illusion that is abandoned when the next best or next cheaper thing captures a customer's attention?
After watching consumers drastically change their buying patterns in reaction to the recession, these are not easy questions for the retail industry to answer. Either customers abandoned their retail loyalties a little too easily, or their loyalty was never that real or that deep to begin with. When the line for a high-priced cup of coffee was no longer going out the door, was there any combination of customer relationship tricks that would have helped Starbucks regain its magic?
Recently I went into one of the surviving Starbucks locations, and one customer interaction answered a lot of those difficult customer service questions for me.
As the customer ahead of me got to the front of the ordering line, the Starbucks barista immediately said, “Hello there! Long time no see!” Customer lady went into a long explanation about where she’d been. Barista girl smiled, and nodded, and listened politely to a much-too-long explanation of Customer lady’s recent whereabouts. When Customer lady finally took a breath, Barista girl said, “Are you still doing those tall lattes?” Customer lady said, “Yes, exactly!”
Barista girl walked away to make the tall latte, and Customer lady said to her friend, “I can’t believe she remembered that. I haven’t been here in FOREVER!” That was followed by more details about her recent activities, which caused her friend to smile, and nod, and listen politely.
The reason why a customer service moment like this is still important in a retail business is because it makes an impact on every person within observation range. Customer lady was impressed. Customer lady’s friend was impressed. I was impressed. And the 23 people who will undoubtedly hear the story from chatty customer lady will be impressed too.
Any employee in any retail setting can find a way to put a personal touch into their work and make a positive impact on customers. The question most retail managers ask is “How do I motivate my employees to WANT to make a positive impact?”
It took 21,000 hours and several million dollars for Starbucks to prove to its employees that it was serious about the Starbucks-branded customer experience. If the transaction I observed in the Starbucks that day is duplicated even once per day in the 11,000 Starbucks stores that remain open around the world, then I don’t think the company should regret even one minute or one penny of what was spent on its dramatic retraining effort last year.
Customers have always known where they could get a cheaper cup of coffee. But Starbucks has never just been about coffee for the vast majority of its customers. It's about the experience surrounding the cup of coffee, an experience that is still enjoyed by millions of people around the world every day, by the way.
While the fair weather customers have identified themselves by switching brands, the smaller, but still loyal, customer base is still drinking their Starbucks. Now, more than ever, Starbucks needs to continue to be who they are and prove to those customers that their loyalty is well placed. If, in an effort to cut back, retailers cut out their own personality, their identity, their heart, and even their principles, then a different question about loyalty is raised. Who's abandoning who?
So far, despite its challenges, Starbucks has continued to be Starbucks. And customers around the world have proven that Starbucks is still a valuable part of their day. To me, that is a bigger measure of success than the number of storefronts on the quarterly balance sheet.
The value of creating a superior customer experience is not just in what it will get you in return. There is also value in the quality of your creation. By remembering that, retailers will remain loyal to their own essence, which is something that the genuinely loyal customers will recognize and appreciate.
Fickle customers come and go. The most enduring brands and the most admired retailers realize that, and they give more of their focus to keeping the trust of the customers who are truly true blue. Those are the customers who deserve the best a retailer has to offer. And with those people, customer service efforts always pay off.