The Reasons Behind Starbucks’ Great Customer Experience (2024)

By Tricia McKinnon

Long before it became trendy Starbucks focused on the customer experience.For anyone who has tried to create a compelling experience for their customers, one that makes them continually come back for more, they know it’s not easy. But Starbucks has managed to do this across thousands of stores around the world.

You may be wondering why your local Starbucks barista smiles so brightly every time they see you. It’s on purpose. She is working for an employer that cares about her and it shows. If you are curious about how Starbucks provides such a great customer experience consider these five reasons.

1. A progressive investment in its employees. Back in the early1990s Starbucks became the first private employer in the United States to offer both full and part time eligible employees stock options.That means the happier the customer the fatter the employee’s wallet.To put this in perspective, if you had invested $10,000 in Starbuck’s IPO in 1992 that investment would be worth$4 millionby 2021. Even Warren Buffett would be impressed with those returns.

Stock options are not the only employee perk. Since 1988,health care has been offered to all full time and part time Starbucks’ employees including coverage for their partners.In2014Starbucks introduced a complete tuition reimbursem*nt program for employees located in the United States who worked at least an average of 20 hours per week. A champion of diversity, in 2018Starbucks achievedgender and race pay equityfor all staff in the United States. This is a feat that not many companies can say they have achieved.

Part of Starbucks’ focus on its employees stems from the fact that the father of Howard Schultz, the former CEO of Starbucks, was injured badly while working at his blue-collar job.Schultz’s dad received no health care or worker’s compensation and it ruined his ability to achieve the American dream.That “scarred” Schultz and then motivated him to create a workplace his dad would be proud to work in.

Speaking about a difficult time in Starbucks’ history in the mid to late 2000s Schultz had this tosayabout investing in Starbucks’ employees: “our health care costs over the past 12 months were approximately $300 million. [Starbucks offers health care benefits to any eligible employee who works at least 20 hours a week.] The thought that we would cut that benefit—I couldn’t do it. Within this past year I got a call from one of our institutional shareholders. He said, ‘you’ve never had more cover to cut health care than you do now. No one will criticize you.’ And I just said,‘I could cut $300 million out of a lot of things, but do you want to kill the company, and kill the trust in what this company stands for?There is no way I will do it, and if that is what you want us to do, you should sell your stock.’ What I stand for is not just to make money; it’s to preserve the integrity of what we have built for 39 years—to look in the mirror and feel like I’ve done something that has meaning and relevancy and is something people are going to respect. You have to be willing to fight for what you believe in.”

When you make meaningful investments in your employees they invest in you. Starbucks has lower employee turnover than many of its competitors allowing it to develop relationships with its customers that have a deeper degree of intimacy.

2. A personalized experience.One of the details you may not think about but is quite powerful is thateach and every time you go to Starbucks the Barista greets you, asks for your name and then writes your name on your order. For a large retailer like Starbucks, which serves more than100 million customersper week, that’s an impressive feat, the ability to greet each and every customer by name.

Details matter and at a time where communication is often more generic than personal Starbucks provides a personalized level of service each and every time.That effect is compounded when the Baristas get to know you and greet you without even having to ask you for your name.While personalization is a buzz word for many for Starbucks its old news.While it sounds fairly basic to greet a customer by name, over the next week as you go into various retail establishments take stock of how many times someone asks you for your name. The ability for Starbucks to do this should not be understated.It’s not a mom and pop store or your local bookstore. It is one of the largest retailers in the world and it has figured out a way to take a personal level of service to the masses.

Personalized experiences are not only found offline but online as well. Starbucks’ popular mobile appprovides customers with personalized recommendations for additional products they may want to purchase based on their purchase history.Starbucks' chief technology officersaysthe company uses “a data-driven AI algorithm based on your own preferences, your own behavior as well as behaviors that [Starbucks is] trying to drive”.Starbucks has said that its personalization initiative “is the single biggest driver” of improved spend per customer it has seen.

3. A community like atmosphere. Walk into any Starbucks in your city or around the world and there is a sense of community. The Baristas are smiling. They ask for your name. There’s a place where you can sit and stay a while without the pressure to buy anything. Free WiFi, which has been available long before it was common place to do so invites you to stay even longer.

Even the music which sometimes sounds good and other times leaves you impatient for the next song feels familiar. Starbucks likes to call its stores a “third place” between work and home. All of these details when taken together provide a world class customer experience.