Starbucks CX Point-of-Sale Blooper: Intro
Even if you are not in love with Starbucks coffee or with its customer experience model, chances are that you go to Starbucks every now and then – to use the free internet, to buy a bottle of water, or just because your friends decided to meet there before going to a concert. What can go wrong at a Starbucks in terms of customer experience? Or for that matter, how could you improve Starbucks point-of-sale systems to improve its overall CX? The problem at hand is this: it is odd that every time you order a frozen Starbucks item such as a sandwich or a wrap or quiche, the main way to find out if what you want is in stock is to get the clerk to yell across the room to ask someone else or to leave the register, walk over to the refrigerator, open the door, let some warm air inside, dig through several shelves of items to see if your item is physically present and, finally, come back and complete the order. Funny?! How does this affect Starbucks customer experience? And how will Startbucks need to change this if it is serious about selling you a great lunch or dinner? And for that matter, is Starbucks really competing with Mickey D’s for your burger dollars? And, CX aside, can we financially justify making tweaks to Starbucks point-of-sale systems to improve inventory tracking? Let’s talk about these fun things.
Really? Starbucks v. McDonalds: a New Perspective
Let’s get the obvious question out of the way: whether Starbucks strategic business executives are willing to admit it or not, Starbucks is slowly but surely moving into the fast-food business – perhaps the fancy end of the spectrum thereof, but still – and is competing with the others in this domain. Let’s face it: the introduction of Starbucks food items beyond their traditional pastries is a strategic move intended to get more customers to spend more money at Starbucks – money that they otherwise would spend on a Big Mac or on a Spicy Chicken Sandwich and some Curly Fries from Jack in the Box. This may sound blunt, but in marketing and economics, Starbucks would be called a “substitute good” for McDonalds, for example.
With that in mind, notice what happens when you order a sandwich or a pie that’s not in stock the next time you are at the intercom of a McDonalds or Sonic or Burger King or another established drive-through food joint: within a second or two, the point-of-sale clerk will tell you if the sandwich is out of stock. And if they fail, they will certainly tell you at some point before they actually take your money at the pickup window. Logical? You bet it is. The same thing happens if you are inside the store. It is easy and simple – because the McDonalds point-of-sale user interface, for example, tells the clerk how many sandwiches they have in stock (whoa, you can track that?); and the only time the clerk needs to physically go back to the kitchen to check stock is when the stock quantity on the screen is 3 or less. That’s how Starbucks competition does it. Enough said. Now, back to the topic.
Starbucks Customer Experience: Worst Case Scenario
From the customer experience perspective, there is only one thing worse inside a Starbucks store (much worse, actually) than having an item on the menu but not having it in stock: that “thing is” having the item on the menu, processing the customer’s order, taking the money from the customer, making him or her wait for a minute or two, and then telling that customer that the item is out of stock and having to issue a refund or to get the customer to change his/her order to another item (which, by the way, is known as ‘Bait and Switch’ and is illegal in the USA, per DTPA of 1968). This is how we did it in the 20th century, and I can’t think of any other major food retailer that would be so far behind – i.e., hello Starbucks people, it is 2016!
Starbucks Customer Experience (CX) Problem Defined
Clearly, this discussion is not about basic issues that can affect just-about any coffee shop – e.g., a broken espresso machine, a clerk who forgets to write ‘decaf’ on your cup or to wash hands after using the bathroom. We are talking about a Starbucks point-of-sale clerk who takes your money for a refrigerated item that is stored away from the clerk’s counter, gives you a receipt, tells you to have a nice day, and then (or I should say “and only then”), a minute or two later, another person from behind the counter proclaims that the item you ordered is not in stock and offers you a refund or a substitute item. Apart from all practical inferences, you feel awkward; the people standing in line and observing this also feel awkward; likely (and hopefully), at least one person behind the counter also feels awkward. Are you OK with this customer experience? I am not. But wait – let’s be reasonable: Starbucks has been selling sandwiches and wraps for less than 10 years, so, it must be OK that they still haven’t polished their routine!
Let’s rephrase: Starbucks employs hundreds of business analysts, engineers, as well as customer experience and user experience specialists working day and night to make sure that its point-of-sale systems are usable and to make sure that your next Starbucks visit is nothing short of awesome, but none of these people understands the devastating effects of poor customer experience on the company’s performance. Already then. Am I missing something?
Starbucks CX, Man-hours… and My Own Story
I have been buying the Starbucks Artisan Sandwiches since their debut circa 2008 until current time. They used to be small 300-to-400-calorie sandwiches but are now becoming exceedingly bigger (350-500 calories), as Starbucks is taking strides toward competing in the fast-food market (more about that below); to me these sandwiches represent a quick, light lunch, which is what you need when you travel a lot. So, during nine months in 2013 and 2014, I tracked my Starbucks visits all-over the United States (with an average of 7.5 Starbucks visits per month). My statistics show that, on average, 24% of the time the sandwich I ordered was out of stock.
Now, about 74% of all times I tried to buy a sandwich, the point-of-sale clerk either personally walked to the fridge to check the sandwich inventory or yelled across the room and asked someone else to do so prior to taking my money; naturally, the other 26% of the time I paid for my sandwich just to find out a minute or two later that it was out of stock.
During the same nine months, the same thing happened across over 20 thousand USA Starbucks stores, each of which sells an average of 50 or more different sandwiches per day. Every time a sandwich is ordered, someone is supposed to yell and/or walk over to the fridge to let some warm air inside and to check the sandwich inventory. That should be 270 MILLION screams and/or 270 MILLION walks to the fridge prior to taking sandwich orders in nine months… but it’s not – because only 74% of these were completed, which means that the other 26% of the time the point-of-sale clerk thoughtlessly processed the order, took the customer’s money, and then – in roughly one out of every four orders – had to apologize and/or issue a refund and/or slam a different sandwich on the frustrated customer.
Let me put this in perspective: if every scream and every walk to the fridge costs Starbucks just five pennies, we are talking about $13.5 million dollars in nine months. Now, combine that with the bad experience for the aggravated customers 24% of the time. How about the credit card transaction fees, time it takes to talk with the customer, to process the refund and in some cases to give the customer a pricier sandwich in exchange for the one he/she ordered? Should Starbucks care? Should Starbucks shareholders care? Should Starbucks fans care? Enough said.
Customer Experience: a Function of the Critical Path
Critical Path in the business process is the shortest possible path for completing a process, operation or a transaction. For instance, the length of the Critical Path for processing an order for a sandwich can be represented by a timeline, where over 80% of all single-item sandwich orders take from 40-55 seconds. From the standpoint of Business Process Management, Customer Experience, and Point-of-Sale System Usability, an important question to ask would be this: “How can we increase the percentage and/or reduce the time?”
So, the Critical Path is clearly not a constant: depending on how flexible and how intelligent the business process is, the critical path can improve or get worse. For example, what should happen when it is the peak hour of 8am on a Tuesday, the store is full of people, the line to the counter is long, and one of the three baristas didn’t show up for work and another one of the remaining two went to the bathroom? Will the point-of-sale clerk be more likely or less likely to do the let-me-go-to-the-refrigerator-and-check-if-we-have-your-sadwitch routine to keep the customer happy? Or will he/she follow the path of least resistance, disclaim any liability for checking inventory, take your order in sincerest hopes that your item is in stock and assume that his/her job is done with you? The answer is obvious: in critical situations, human beings always follow the path of least resistance – the path that should never be mistaken for the critical path; and the company that fails to recognize this sucks at customer experience, simply put. There goes your Critical Path – down the pipe. But there is light at the end of the tunnel!
Why People Go to Starbucks: More on CX
Statistics show that a whopping 90% of all people in the USA visit a Starbucks at least once a month. Why do people go to Starbucks? Quality of their coffee can be debated endlessly, but their service level and their product variety and quality are all extraordinarily consistent, and they are just-about everywhere. In turn, chances are that even if you don’t regularly consume the products Starbucks sells, you probably go there quite a bit to use their free internet, to meet a business associate on a neutral ground, or simply to hook up with a friend for a quick handshake – just because their big sign out front serves as an easy street landmark, and because they have free bathrooms. Every time you visit, you are more likely to spend money there – yes, even if you don’t drink their coffee. In fact, a 2014 survey shows that over 70% of those who never buy food or drink at Starbucks still go there at least once a year to buy a gift card or a trinket for someone they care about. In other words, Starbucks is more than a retail store: it is a fully integrated social hub. This brings me to my next point: it is no accident that Starbucks is selling more and more food items.
Starbucks Customer Experience Wake-Up Call
The level of user research needed to define the requirements for a point-of-sale system that will track inventory of the items you sell every day requires no special skills beyond high school education. The level of secondary customer experience research needed to understand how others in the retail industry track inventories is rudimentary. Also rudimentary is the level of competitor research required to understand how other people selling reheated sandwiches track their inventories. So then, what are those hundreds of business analysts, engineers, customer experience specialists and point-of-sale user experience analysts and UI designers at Starbucks working on day and night? Beats me.
Customer Experience is certainly a science, but its goal, in any context, is quite common-sense and straightforward – i.e., provide a usable point-of-sale system and a practical customer-employee interaction protocol so as to maximize process efficiency and customer satisfaction. From the standpoint of selling sandwiches, this means one simple thing that Starbucks for some reason doesn’t do as of the date this article is published – tracking your inventory and establishing a policy that would not require a point-of-sale clerk to yell, dance, jump, roll, crawl, run or open the fridge door to check inventory before taking money from a customer for a sandwich that has a 76% probability of being out of stock.
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