Lastly multiply this number times the average ticket

This preview shows 5 out of 8 pages.

customer. Lastly, multiply this number times the average ticket size per visit of highly satisfied customer, which is $4.42, and you get $3,169.67. That is how valuable each highly satisfied customer is to Starbucks. It is my belief that Starbucks should make the $40 million investment in labor in the stores. From Exhibit 2, we can see that in 2002 Starbucks owned 5,886 stores. From Exhibit 3, we can see the average daily customer count is 570 customers per store. This equals to approximately 3,355,020 total customers visiting Starbucks stores daily. Unfortunately, we do not know the percentages of how many customers are unsatisfied versus satisfied versus highly satisfied, but if we assume that 30% of customers are unsatisfied, and after implementing the labor investment we are able to convert 80% of them to highly satisfied customers, we could make an additional $1,434,878 per month off of these customers alone in the first year of this investment (See Exhibit A).
Image of page 5

Subscribe to view the full document.

Looking at Exhibit 8, we see that 27% of all Starbucks customers began visiting the store within the past year. This is 905,855 customers of the daily total customer count. We could assume based on historical data that in the next year at least 20% more new customers will try Starbucks. If we can make these customers into highly satisfied customers the rewards would be huge. Exhibit 11 asks customers how Starbucks could make them feel more like a valued customer, and the highest percentage of people responded with improvements in service, specifically friendlier staff and faster more efficient service. The extra labor investment would help to solve both of these issues and convert unsatisfied or new customers into highly satisfied customers, giving Starbucks a positive return on investment and more profitability in the future.
Image of page 6
Exhibit A Profitability of Converting Unsatisfied Customers to Highly Satisfied Customers 7.2 visits per month – 3.9 visits per month = 3.3 more visits $4.42 - $3.88 = $0.54 more spent each visit 3,355,020 customers x .3 unsatisfied = 1,006,506 unsatisfied customers 1,006,506 unsatisfied customers x .8 unsatisfied converted to satisfied = 805,204 highly satisfied customers
Image of page 7

Subscribe to view the full document.

805,204 highly satisfied customers x 3.3 more visits per month x $0.54 more each visit = $1,434,874.95 more money per month
Image of page 8
You've reached the end of this preview.
  • Spring '10
  • hora
  • Management, highly satisfied customer

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern