Starbucks Stock Price Down Due To Poor Customer Experience
Published August 9th, 2006 in Customer ExperienceUpdate Feb 9 2010: I wrote the below post nearly three years ago. Since then, Starbucks has really turned things around from a customer experience perspective. Read my new post: Four Lesson From Starbucks: A Brand on a Mission.
Original Post: Starbucks’ stock has taken a beating over the last three months. Why? You can chalk it up to three words: poor customer experience.
Poor customer experience is responsible for a 22% drop in Starbucks’ stock price over the last three months. Of course, there are many factors that influence a company’s stock price, but I’m most interested in this notion of poor customer experience being a culprit.
Apparently, the popularity of Frappucinno’s as a morning drink has caused long line-ups due to the amount of time it takes to create one. This, in turn, has resulted in espresso lovers turning away from Starbucks altogether. In terms of hard numbers for Starbucks, overall revenues are up, but sales were down during the month of July, growing only by 4% as opposed to the predicted 6%.
Here’s what CEO, Jim Donald has to say about it (c/o Guardian):
“We have recognised the opportunity to refine and improve our cold beverage station to make drink preparation more efficient and improve service over time but, in retrospect, we did not move aggressively enough.”
In a completely unrelated entry, Bruce Nussbaum explains why Starbucks is losing him:
“I have a favorite Starbucks near where I work and I stop in many times a week to get my caffeine. Lately, they changed the line process. Instead of two lines or three lines, there is now one long line. Way too long for me as I race to work. They’re losing me. And in this heat, I like my iced coffee. In the past, I got it pretty fast. Now, I wait in the same line behind people ordering some pretty complex, fancy stuff. That means waiting even longer. So, now I poke my head into the Starbucks–and walk away. Not a great consumer experience.”
I’ll say it again, it’s the customer experience, stupid! That being said, here’s wishing Starbucks the best of luck in resolving these customer experience challenges.
Big tip of the hat: Sun.com Design, Usability & Other Stuff
23 Responses to “Starbucks Stock Price Down Due To Poor Customer Experience”
- 1 Trackback on Aug 10th, 2006 at 4:48 am
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Great post Scott! I saw Bruce’s post as well. That was almost prophetic. Then again, he does work for Businessweek.
This is such a great reminder that we need to focus on the products/experiences we provide. Innovation Execution. You need both.
Starbucks innovated early on, but if the keep up the crappy service then they will see more of this. Look what happened to Apple during the “beige days”.
I will probably link to this today. Thanks for putting this together.
Thanks for the shout-out at L E.
Starbucks needs to scale back the number of new store openings, consolidate to trim management expenses and buy back a bit of stock. THE WORLD DOESN’T NEED A STARBUCKS ON EVERY SINGLE CORNER AT THIS POINT, at least we stock holders don’t. What we desperately need is better stock performance.
I am not sure about the consumer experience, I am so hooked to Starbucks that its a joke. I work out of home office, for us folks who work out of a home office Starbukcs is a nice change to get out our home office. Two coffee trips are a must for me and the crowd is the same, always busy. There are just no other good alternatives and please I will never go to mcdonalds for my coffee, it just doesn’t have the atmosphere.
I belive that the reson starbucks is getting bad feedback about it’s cutomer service is soley the customer. Starbucks has become so popular with it “just say yes” system, that every person in front of you in line belives he or she has every right to be as picky and selfish as possible. I belive that is what is taking the cutomer service level down. How long do you think it takes to make your latte? Example: A Half caff,med, 5 shot, 3 pump, 182 degrees , no foam,lite whip,……
With 37 Starbucks ALL over the Paris area… I have had really nothing but good service… and it’s always a pleasure to go in to feel a little bit of “home” here in France… I was actually more of a Peets (West Coast Cafe’) regular than Starbucks… in San Diego… but we don’t have Peets Coffee shop here in Paris so it’s STARUCKS ALL THE WAY for me, baby!!!
Excellent views from all of you, and I wish to share mine also. I am a four year partner with Starbucks in Oregon, as well as a share holder. Stock is doing terrible at the moment. Why? Let me share my opinion with you. Here at Starbucks, everything is customer oriented. Our customers love us. They buy us Christmas presents, share daily laughs, hugs, and smiles, and even angry customers leave smiling as I pat them on the back and wish them well! Lines. Ah yes, the lines. Let me shed light on the lines by beginning with a simple question…Have you ever stood behind a bar with twenty or thirty cups lined up on the counter as you are slinging beans and steaming 2%, whole, nonfat, 1%, soy, and organic milk as fast as you can, keeping a smile and also trying to actively listen to betty as she tells you about her daughter that is having problems in school, and the dog they just had to put down, as well as her icy trip from seattle where she nearly died?….All while having twenty people standing in the crowded lobby looking at nobody but YOU. Ah yes, the lines. The partners at Starbucks love their jobs due to the happy and understanding customers as well as how great the company treats us as partners. Our number one priority is you guys, and listen: There will be lines. We are only people. People can only move so fast. We try our best everytime. Some days there will be one line. Some days there will be two lines. That depends on floor coverage within that particular time. Starbucks Coffee is spectacular. Starbucks partners are spectacular. If we are too popular at the time you stop in with 2 minutes before you have to be at work, we understand if you have to leave. No, I will not help a lobby full of coffee hungry folk and then sling out your latte in 2 minutes. That is unrealistic. It would be appreciated if we would not be the blame for your lack of time when you pay us a visit. Again, we love all of our customers and do whatever is HUMANLY POSSIBLE to please each one of them. Starbucks stock is doing terrible. Why? Who knows, although I do know this: It is not poor customer service. Thank you for listening.
Hey guys I am actually a new employee of starbucks.. And in the past month or 2 we have had a few meetings about this.. We do often have surges of fraps.. but we still get our regulars as well.. Patients is a virtue if there is a large line then it is not because no one is working (at least in my store) its because we make each individual drink and put time into it to make it as good as possible.. our motto is to make enthusiastically satisfied customers… Also our old owner the one who started the company howard shults (that was a bad spelling i am sure…) is taking starbucks back to its roots and eliminating the starbucks on every corner.. Now hopefully it will just be every other corner.. well thats my 2 cents.. keep investing in our company and we will keep turning out the best coffee products in the world…
thanks..
I was a supervisor for starbucks…The best partner by far at my particular location. And because a new manager took over, who didn’t like that I knew more than her about the company as a whole, let alone she couldn’t even make a drink to save her life, I ended up being terminated for *not following beverage policy* and had never even been warned or written up in the past. I do enjoy their drinks, and I enjoyed my job more than any other I have ever had. I am one of the few customer concerned people left. I loved the feeling of making my customers happy, and seeing them smile. You better believe the district manager got calls for months about my termination, FROM MY CUSTOMERS!!!
Historically, I was a frequent flier at Starbucks. However, with the recent increase in gas prices, groceries and other necessities I felt compelled to cut corners somewhere and I could not justify spending $4.00 on a latte. Now, I stay away from Starbucks except on a few rare occasions when I feel like indulging with a cup of coffee. Perhaps others feel this way too.
There seems to be a huge turnaround in personnel at the Starbucks near me. I have been a daily customer for a few years (what’s a mom to do) and I have definetely noticed a significant decline in customer service. (i.e. being rushed through and given a poorly made cup of coffee). When it’s done right, I cannot resist a Starbucks, now I am rethinking the trip.
Today I HAD it . I spend about 1000 a month at Starbucks its the ONLY place in the area aside from Popeyes, Macdonalds. or Burger King. TODAY the moron behind the counter didn’t even acknowledge me.. even though I’m the most frequent customer.. He was a new person, and was more focussed on pinching the fellow employees ass and flirting with one of the other girls than doing his job. When I told the manager what had happened he said “he’s from another store” I said “what are you talking about? right now he’s working in YOUR store….”" Quality control is a massive problem. The coffee is sometimes served before the brewing cycle is finished…. so its strong as molasses…. rather a pint of espresso. When they started those new Viviano shake drinks… the first one i had was WEIRD.. but I thought that was “the healthy nutritious taste”?? The second on I tried was GREAT… when I asked why the first one was so awful… they said ” oh maybe the guy didnt know how to make it??” Such a response is not encouraging. In an ideal world the response might have been “Oh I’m sorry Nick, maybe the guy made an error, its a new recipe… let us give you this one on the house to make up for the mistake…”
The toilets are disgusting, full of crackheads shooting-up and people selling drugs and cigarettes outside the doors… I decided today…. life is too short to be treated like this. We bought a Nespresso machine for the office…. we’ll use that. I refuse to go back!! Hey a loss of more than 12k per year may not be a lot to them… but it at least paid part of one perso’ns salary. I’ve been a loyal customer for 13 yrs… but today I have HAD it (at least with this particular store on 125th St in Harlem).
If I owned Starbucks stock I’d be trying to dump it now be the “rot” spreads… ‘cus what was once a fantastic customer experience is now approaching rock bottom….. I don’t think that the company has a serious plan to address it. Getting a Starbucks beverage should NOT be on par with dealing with an ignorant NYC MTA token booth clerk.
I have been a stockholder of Starbucks since the 1980’s..sorry to see it tumble…here’s my suggestion to Starbucks…have you ever been to a hamburger restaurant called ‘IN AND OUT BURGERS’? They have a menu of about 6 items…folks place their order (many people are repeat customers) without studying the menu for 5 minutes; the wait staff places their orders immediately and the customer is served in few minutes…I think Starbucks has erred by increasing their menu to such a degree it creates the long lines…just my thoughts..review your menus with emphasis on eliminating some of the “frill”
I think the problem in your case, Nick, is the location. I’ve never, EVER seen any crackheads shooting up in the bathroom, drugs or cigarettes being sold at any of the Starbucks in my area. The bathrooms are always clean at the 3 locations that I frequent. I agree that the Viviano situation wasn’t handled correctly, but it isn’t the end of the world. Maybe you should move … if you can spend $1K/month at Sbux, why are you in Harlem???
I am a Starbucks partner and I have had some bad customer experiences in other Starbucks in the U.S. When this happens, I appreciate even more the way our store strives to deliver the Starbucks Experience to every individual that enters our store. However, I would think the drop in stock may be related more to the economy rather than a sudden drop in customer service over a three month period. Frappacinos take no longer to make than an espresso beverage and some take less time so I’m not sure where that comes from, in all reality. But I do agree with the partner that answered this blog previously. When we are being all we are committed to being, it is going to take time. Which is why our customers that actually plan time in their day for their visit to us, do so. They are there for the experience, not just a drink. That means we are doing our job.
Dear Fellow Coffee Drinkers, and that includes espresso and frap consumers:
Come to Starbucks 2nd largest market, Vancouver, BC and our lines go very smoothly all day long. My favorite Starbucks always has two tills open and service is great! Sure, it takes some drinks longer to make, especially if you order a custom order with 3 or 4 special instructions, but then…aren’t we supposed to savor our drinks? If you want a quicky drink that is mundane, sure, try Rotten Ronnie’s cheapo drinks. You get what you pay for. After all is said and done with your ecomomy in the tank in the USA, I can see everyone of Starbuck’s previous clientel that switched to that cheap imitation at the Golden Arches, rushing back to get the REAL THING. To show you that our acceptance of Starbucks in Vancouver, only two (2) locations have been closed down; one in an Asian shopping mall in a suburb and the other in a kiosk in a car dealership. We still boast of having two Starbucks kitty corner to each other on Robson Street and they are both doing well. Starbucks still has my wife and myself as loyal customers and if our drink is not to our specs, they will gladly make the drink over and make the next drink on the house…which we have never taken advantage of. Glad to see Howard Schlutz back in the reigns. My only suggestion is that when we go into a Starbucks, it should smell more like a coffee house not a hot sandeich shop! Thanks, Howard!!!!
wow. so many of you had such good things to say and then there were others of you who just posted to vent at Starbucks. Starbucks is a company that has a unique perspective on customer service and product quality. Their goal is to give each customer who comes through the door of their stores the best in service, quality, and experience. I know that as a company it is responsible for it’s image but those who work for the company are trained and told what the company expects. I too hate going to a Starbucks and getting anything less that what I have been trained by the company to give, but alas, those behind the counter are people and those people do make mistakes. For those of you who do have a complaint against a certain store/aka manager Starbucks provides many ways for you to express your complaint and make a difference in the company service. “Nick” I don’t know why you didn’t take advantage of those resources if you are such a loyal customer to the company. I love my store, the company, and my customers. If there is something that I see that is not in line with what the company believes in, I would try to bring that to the company’s attention. If you really wanted a solution to your problem, Starbucks does provide a way to get your answer. I wish that you would have taken that instead of left with such a bad experience. As a fellow partner I apologize to you. As to lines and waiting for coffee, Starbucks seeks to offer the best products to their customers. Coffee at Starbucks is considered an art and a passion. I agree with the other partner who posted, poor customer service is not necessarily the problem with low stock value. Starbucks coffee is not a necessity like gasoline or groceries. I feel strongly that Starbucks is working on continuing to be the best that it can be and to offer the best, but in this economy that is not what is going to raise the stock value. Sure it’s not at 22 or 23 dollars a stock anymore, but it is around 14 or 15 and that is better than 7. I am pretty excited to work a company that does not put the dollar as it’s main focus, it’s people. “Jennie” I am sorry that you were fired. It sounds very unfair that that happened. But as a shift supervisor myself, I know that we have a place in the line of management and it is below our manager. I appreciate your hard work and your love for the store, but I also know that as shifts we are under the manager, even if we don’t agree with them or we know more than they do. I don’t know all that happened, but a manager is a manager and as such I am sure that there things you could have changed to show her how to be better without stepping out of your position. Wish you were back with the company!
Maybe Starbucks should rethink some of the ways they treat their managers if they want to see improved customer experience. Are you aware that the managers are required to work 40 hours a week on the floor and do their paperwork on their own time? Are you aware that many of their long time managers that made them what they are today have been “forced out” by district managers that are still wet behind the ears? My husband had been with Starbucks for 10 years. He had won “Manager of the Quarter”, had assisted in opening every new store in his district and trained all the new managers for the district. He hung in despite his manager time being drastically cut and quite honestly harrassment from his District Manager. When they finally realized they couldn’t force him out like they had several other managers in the district, he was FIRED WHILE ON MEDICAL LEAVE! The reason given was that he was behind on his employee’s reviews. Funny thing … his District Manager did his review 2 MONTHS LATE! She wasn’t fired.
I love the product. But really ….. stop forcing out your experienced people!