It takes more than good coffee beans!
The company’s growth is bolstered by a low turnover of its stores. Only 443 Starbucks stores have closed throughout the company’s history: 240 stores in 2009, the year of the global financial crisis; 42, in 2010; and 161 in 2011. As of 2018, Starbucks’ profit was $4.5 billion, and it had a market value of $70.9 billion. Based on the company’s positive, sustained operating results, it is ranked among Forbes’ Top-500 world’s biggest public companies.
Starbucks management depended basically on their Servicescape. This different concept has delivered a lot of success to the huge chain, and since then, rivals are trying to imitate or adapt to the concept that Starbucks has adopted along the years.
The Influence of Servicescape on customer loyalty has always been questioned till “Booms and Bitner” defined a Servicescape as “the environment in which the service is assembled and in which the seller and customer interact, combined with tangible commodities that facilitate performance or communication of the service”. In other words, the Servicescape refers to the non-human elements of the environment in which service encounters occur.
The Servicescape does not include: processes (e.g. methods of payment, billing, cooking, cleaning); external promotions (e.g. advertising, PR, social media, web-sites) or back-of-house (kitchen, cellars, store-rooms, housekeeping, staff change rooms), that is; spaces where customers do not normally visit.
The Servicescape includes the appearance, equipment, signage, and layout of a service outlet.
The Servicescape includes the facility’s exterior (landscape, exterior design, signage, parking, surrounding environment) and interior (interior design and decor, equipment, signage, layout) and ambient conditions (air quality, temperature, and lighting). In addition to its effects on customer’s individual behaviors, the Servicescape influences the nature and quality of customer and employee interactions, most directly in interpersonal services. Companies design their Servicescape to add an atmosphere that enhances the customer experience and that will affect buyers’ behavior during the service encounter.
In order to keep their prices in the range of what customers are used to buying; Starbucks use “fixed-price and price-to-be-fixed commitments”.
Starbucks have also included their employees in the service strategy that they have created. They also depend on the quality, environmental practices, and work ethics. Employees of Starbucks undergo a lot of intensive trainings, in order to be able to deliver the customers the wonderful experiment of drinking coffee at Starbucks.
The experience of Starbucks depends highly on providing a comfortable atmosphere to the customers. The goal in this case is to make the customers feel they are at home. They use comfortable chairs and couches, which means that the customers are welcomed to stay for long. They also use a lot of round tables, which also means that the customers can sit there alone, maybe studying, reading a book, or just enjoying a high-quality coffee; unlike the cornered tables, which mean that more than one person should be sitting at these tables. Starbucks can also be a good place to do business meetings.
The merchandise at Starbucks is definitely one of the best in the world.
Starbucks use in store merchandising in an extraordinary way. It starts with the coffee smell when entering the shop, a smell that makes customers crave more coffee. Beside the posters for the drinks they have, especially if they are promoting a new drink. Starbucks also write stories about coffee hanged around the walls, and name their drinks with Italian names, all these are part of the in-store merchandising for Starbucks which make the customer visit again.
Despite the atmosphere created, the introduction of drive-thru service had been a huge success.
Although Starbucks have worked on their Servicescape to create an in-store experience for the customers, many customers were also happy about the drive-thru service.
Branches with drive-thru service had 50% more business than that of branches with no drive-thru.
However, even with this remote service, Starbucks wanted to maintain their “Home away from home” concept, they created an interaction between the customers and the barista, with a video that the customers are watching with the barista preparing their drinks. Even when they use technology and on other aspects of their operations, Starbucks still conduct under social responsibility measures.
When it comes to sustainability, Starbucks always try their best to be at the highest levels of social responsibility. They believe they have duty to maintain in the society, thus, the coffee beans they buy are 100% from ethical sources. They also make sure that their branches also are being green shops, that is, they use recyclable tissues, save water, save energy by installing LED lights, recyclable tables and chairs and also the employees are trained to know more about the green issues and how to maintain the green environment in the shops. That is one of the ways to maintain customer loyalty, other effective way that Starbucks use, is rewarding programs.
Many customers would like to be offered free products. Starbucks have used this trait to create rewarding systems, of which, it will allow the customers to feel appreciated and they associate themselves with the brand. On the other hand, it also allows the brand to maintain their customers and also gain new ones through these programs. The brand also uses seasonal menus and seasonal drinks, this kind of promotion will trigger the sense of urgency for the customers, because they would want to try those drinks before it gets off menu, and when they enter the shop to try those drinks, it is most probably that they will buy another products, moreover, since those drinks are temporary, customers would like to have it more than once along the season. Other than that, Starbucks has great content in their promotional channels.
Starbucks now has a great experience in targeting their market. They know how to use the events and causes to their advantage. This is why, they create content that is related to a trending cause, or a good cause in general, of which it will make existing customers get more associated to the brand, thus, increasing customer loyalty, and also, it will attract new customers who are interested in that cause, in addition to taking Starbucks as a good reference in the cause’s favor, which will most probably associate themselves to the brand, for standing beside what they believe in. this strategy has also enabled the brand to build relationships with customers.
Customer loyalty is driven mainly by the customers associating themselves with the brand. However, the brand should offer reasons for the customers to create that link with the brand.
Usually, marketers do not rely on the conscious of the customers for their marketing strategy, they prefer to target the customers subconscious.
The way the employees remember the drinks of regular customers and write their names on the drinks, sometimes they purposely spell it wrong; it creates a trigger in the subconscious of the customers, it creates a feeling of belonging to the brand, because it is part of the lived experience at the shop. Starbucks has created a brand identity which the competitors want to adapt or even imitate.
According to Peet’s Coffee and Tea Retail Marketing Manager, he used to steal the strategies that Starbucks implement in order to maintain customer loyalty. Starting with remembering customers names, merchandising, promoting, etc.
These features of a strategy have made the brand extremely attractive. Moreover, Starbucks hire their employees not only based on the skills they own in making a good coffee, because these skills are acquired, they rather hire people on the basis of how well they are in dealing with people, because at the end of the day, those employees are a great and basic part of the brand identity, which will induce the customer loyalty.
The brand is keen on making the drink perfect every time, so if the customers did not like the drink, they would ask the employees to change it, this behavior shows that the brand focus is on creating value to the customers.
Starbucks is fully aware that their successful strategies are attractive to the competitors. They tend to create value be creating a convenient atmosphere for the customers to drink coffee and enjoy an experience of “home away from home”. However, they know that this strategy can be copied by other companies, so they created the loyalty and rewards programs, in order to differentiate themselves from the competitors and show the added value that they are delivering to the customers.
This added value is clear when comparing between what Starbucks is offering versus what the other brands are offering. Just like Coca-Cola and McDonalds, Starbucks has created a huge influence on the society they emerge into.
With the success of the marketing strategies and proper implementation of the Servicescape at Starbucks. The brand identity has grown to be one of the strongest in the world, thus, the customers have developed stronger bonds with the brand name, leading to high brand association and high customer loyalty. Customers have a sense of belonging to the brand now. Quoting one of Starbucks customers, Hudson:
“I have to describe my feeling in this picture because I think this is open office. I like this environment, working environment, and coffee … is unique, in the computer, and it is vibrant, and I like this. I think this is my life. I think this is the most attractive thing that Starbucks has for me.”
These emotional ties are the product of years of hard work and strategy implementation from Starbucks. The brand has influenced a change of lifestyle to many of their customers, many customers consider Starbucks as a place to study, to do business, to meet friends and a getaway for peace of mind.
The Servicescape depend mainly on the environment and the on-premises marketing. Starbucks has successfully managed to implement attractive strategies, which were and still are adapted from many competitors. However, the way that Starbucks differentiated themselves and gained the customers loyalty, has first raised the bar higher in the industry, second it has raised the entry barriers to the industry, and third, Starbucks has made their strategy hard and expensive to imitate.
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This article is written by:
Pinnacle Customer Satisfaction Consultant
Lebanon Business Development Manager
Venkatraman, M., & Nelson, T. (2008). From servicescape to consumptionscape: A photo-elicitation study of starbucks in the new china. Journal of International Business Studies, 39(6), 1010-1026. doi:http://dx.doi.org/10.1057/palgrave.jibs.8400353