Putting your ‘Bucks where your mouth is

Putting your ‘Bucks where your mouth is

Becky Sarniak

Apr 30, 2015

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Starbucks reported a record revenue of $16.4 billion for fiscal year 2014. While many companies make an effort to impact the customer experience, I decided to look at one company that seems to be getting it right (most of the time). Starbucks has never been a company that has neglected its customers, however, in the past few years Starbucks has made several major changes that have served to elevate the brand overall as well as customer experiences in improvements to their product offerings, commitment to service, and treatment of employees.

Many of the changes in product offerings line up with Starbucks decision to drop the word “coffee” from its logo in 2011, indicating the desire to go beyond coffee and reach new customers and markets. Starbucks’ acquisitions and partnerships were also aimed at consumers who wanted to experience easy access to high quality products. The acquisition of Evolution Fresh not only represented recognition of a shift in consumers’ desire for fresh, natural, and “healthy” juices that are free of preservatives, but also Starbucks’ efforts to expand its current beverage market share beyond coffee. Teavana is a premium loose-leaf tea company that replaced Tazo as Starbucks’ tea offering. Fizzio is Starbucks’ line of high-end, made-to-order, caffeine free carbonated beverages that contain no high-fructose corn syrup, artificial flavors or preservatives. The inclusion of La Boulange, a San Francisco-based bakery, positions Starbucks as a one-stop food and drink shop.

Starbucks has also worked to elevate itself as a brand in the eyes of consumers through their commitment to social responsibility.  The brand helps consumers feel like they are making a socially responsible choice by purchasing items at Starbucks. For example, stores offer Ethos Water, where $.05 of every bottle is contributed to the Ethos Water Fund, which helps support programs (water, sanitation, and hygiene education) in water-stressed countries. A portion of the proceeds from each sale of Teavana Oprah Chai Tea goes towards educational opportunities for young people. Starbucks has also made a public commitment to ethically sourcing its coffee. This gives consumers peace of mind knowing that the coffee they’re purchasing at Starbucks was grown in a sustainable way that protects nature as well as protects the farmers’ livelihood.

This commitment to social responsibility extends beyond the products that Starbucks offers in-store. The brand has many programs, such as youth outreach and programs that help build job skills in disadvantaged communities and support for veterans and active military service members. For example, Starbucks in the Denver area recently participated in an event in which employees and customers volunteered to revitalize parks through painting, clean-up, and maintenance during Starbucks’ global month of service. As a former employee who had participated in this event in years past, I felt like this experience not only helped Starbucks contribute to the local community, but served to bond employees and patrons alike.

The importance of quality employees to providing a superior customer service has not gone unnoticed by Starbucks. Working at Starbucks is hard. It’s mentally and physically grueling and all the while employees have smiles on their faces in an effort to make Starbucks the “third place” (not home, not work, but the third place you go) for customers. However, Starbucks lets employees know the value of their contributions, and makes it clear that they see them as more than just “employees,” they even call them “partners.” They have provided employees with a way to get a free bachelor’s degree by recently expanding its program to pay for four years of schooling. In addition to granting partners a pound of coffee per week and a food item every shift, Starbucks has also (for years) provided employees with a benefit program that includes retail part-time hourly employees working as little as 20 hours per week. These benefits include health coverage, 401(k) with company match, and a stock equity reward program where they grant partners Starbuck stock, regardless of position in the company.

All of these efforts add up to impacting the customer experience. Not only has Starbucks made an effort to create products that reach consumers, but they have created an environment customers can feel good about visiting and supporting. Customers can feel that they support a company that is impacting the lives of its employees as well as the community on an international, national and local level. I’ve outlined only a few of the efforts Starbucks is making to put their “bucks” where their mouth is. Starbucks seems to truly believe in their mission statement: “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” As a result, they are reaching customers from many different angles.

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Becky Sarniak

Manager, Moderating Services

What I love about research is learning about people and what they think. Discovering the reasoning behind behavior and what motivates people to move from a plan of action to action itself.

The results we received from the iModerate one-on-one, in-depth conversations were much more enlightening than what we typically garner from open-ended verbatim responses. The live moderator offers us the ability and flexibility to probe deeper on certain points, enabling us to get stronger, less vague information. That unique capability has proved extremely valuable to us, and has made this IM-based platform an integral part of our research toolbox.

Colleen Hepner, VP, C&R Research