Since there is a link between customer satisfaction

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Unformatted text preview: rom the rankings of the key attributes by Starbucks customers, fast service ranks #6 in importance. A second assumption is that all stores are equal in size, number of people they serve, location and prices and that all the stores need this additional investment. A final assumption is that satisfaction is correlated with loyalty and that if a satisfied customer becomes highly satisfied then the number of visits per month to the store will increase along with his ticket size. If customer satisfaction does not increase, an alternative break‐even venue for Starbucks would be to acquire new customers. In this case, an additional 7 customers should come to each store every day as a result of this investment. This translates to an additional 32,000 customers per year for all stores. Alternatively, if the number of customers remains the same, $0.05 additional should be spent by each customer in each visit in order to break even (see Exhibit 4). Since there is a link between customer satisfaction, loyalty and average ticket size, then if the investment will increase the customer satisfaction it would make sense. There is no question that increased customer satisfaction will translate to more sales. The big question however is will the investment lead to increased customer satisfaction? Based on the company’s research, it is evident that only 10% of the Starbucks customers have asked for a faster, more efficient service. Even if the $40 million investment is made and customers get a faster service, there is a big risk in losing value in some of the other perceptions. Having more partners in a specified work area might lead to the risk of less friendlier, less attentive staff and might also risk the loss of the personal treatment. It even appears impractical and inefficient to allocate the $40 million investment equally to the 4574 stores. It would make sense to allocate the money based on size of store, number of customers, location and need for additional labor. There would be no need to invest in a store where all customers are...
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This document was uploaded on 04/02/2014 for the course ECON 101 at Sant'Anna School of Advanced Studies.

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