Free «Customer Royalty Card at star Bucks» Essay Sample

Introduction

The question of whether providing customers with royalty cards is a necessity has been an issue that star bucks is no longer able to ignore. The increase in the number of consumers in other businesses has gone to show that this form of promotion has been successful where applied but the question still remains whether it will be the same case scenario with this coffee franchise. The main point of introducing customer royalty cards is to increase sales in the long run as well as promote consumer loyalty. The thought process in this business activity is that showing the consumer that they are appreciated will result in them reciprocating the appreciation by bringing in more business. Though the star bucks franchise may have a large following, there is always room for more customers as is the case with any business.

The question is whether the introduction of these customer royalty cards will serve to do just that and if so, will the level of success be worth the time and effort placed in this endeavor.

Data Collection

To determine the answers to these questions, relevant information needs to be collected and analyzed before an informed decision is made. The data collected will consist of both primary and secondary data to ensure that all needed information is efficiently retrieved.

The primary data will be collected mainly via the use of questionnaires and personal one on one interview sessions with current and potential customers of the star bucks franchise. The questionnaires will be distributed within the various coffee shops owned by the company, a location which will also prove useful in the interview practice.

Some individuals may not be willing to offer their time for such interviews and to counter this; an incentive such as the introduction of free coffee for every individual who agrees to an interview can be included in the package. Drop off points in the various coffee shops around the region can be set up to allow those who fill them in to return them with ease. Past records concerning the company’s sales can also be used to evaluate the consumer growth rate of the franchise to determine whether there is a need for such an introduction to improve the consumer base.

The collection of secondary data can be done more easily via the use of library resources as well as information available on the internet. Results of other companies that have use the royalty card method before can be studied to analyze the difference in sales and whether this introduction had a significant impact on the overall performances of the business.

Survey methods

Longitudinal surveys will be the method used to collect information from the consumers. This method is chosen due to the fact that a Cross sectional survey will not serve to accurately represent all the consumers affiliated with star bucks. A longer period of time is needed to ensure that a larger number of people are accessed during the collection of information to give a better view of the customer’s in general. To increase the accuracy of the data collection, more than one type of this survey method will be applied. Though this may take longer than using just one type of surveying the results will be more dependable and provide more information required to arrive to a conclusion. A time frame of 12 months has been allocated to conduct this particular study. In this case scenario, two methods shall be used, namely:

Trend studies – This will collect information from a particular population repeatedly over the stated period of time. The population may not comprise of the same group of people each time but will always comprise of star bucks customers found in the shops and will be conducted on a monthly basis. The reason behind this is that the assumption is made that different people will patron the star bucks coffee shops on different days thus this will ensure that most of these consumers will be included in the survey.

Cohort studies – This will consist of the same group of people sampled more than once in order to note any change in attitude that may arise during the study. The target group will consist of star bucks patrons who frequent the franchise on a regular basis and are willing to leave the researchers with their contact information to allow them to follow up on them. This can be done less frequently and information can be collected once every 3 months. This is because the main point of this second survey is to examine if the patrons may have changed their opinion in the topic over the period of time and it is assumed that an individual will not frequently change their frame of thought all that often.

Below is a sample of then questionnaire that will be used to collect the data

Name:

Sex:

Occupation:

1. How many times do you visit Star bucks in a week?
2. Do you find the pricing of the goods offered a fair reflection of their value?
3. Are you aware of customer royalty cards?
4. If yes would like Star bucks to introduce these royalty cards to their customers?
5. If yes, how soon would you want the introduction of these cards to be implemented? (Please tick next to your preferred time)

• In the next 2 months
• In the next 6 months
• Before the end of the year

6. Does the lack of customer royalty cards affect the number of times you frequent star bucks?

7. Would the introduction of customer royalty cards increase the number of times you frequent star bucks?
8. In your opinion, would the introduction of customer royalty cards influence your view of the star bucks franchise?
9. If yes, how so?
10. What should be the level of availability of these star bucks customer royalty cards to consumers if made available? (Please tick next to your preferred option)

• To every customer
• To loyal/frequent customers only
• On application only

Data Analysis

 Collection of the information from the questionnaires revealed that a vast majority – up to 90% of the sampled group were of the opinion that star bucks should indeed introduce customer royalty cards to their consumers. Among these 60% stated that their patronage would increase with the introduction of these cards into the market. The 10% mostly consisted of consumers who were not aware of customer royalty cards and their purpose in the consumer service industry.

A large percentage of the population also found the pricing of star bucks goods to be fair and 80% of those who advocated for the introduction of the customer royalty cards wanted the introduction done as soon as possible with 2 months being the popular time frame for most of the surveyed patrons followed by 6 months and a small group willing to wait until the end of the year to have these cards applied.

Though a large group of those interviewed stated that the absence of customer royalty cards did not directly influence the number of times that they visited star bucks, a huge majority were in agreement that the introduction of these cards would serve to increase the number of times they visit a star bucks as well as encourage brand loyalty.

However it should be noted that though a large majority of consumers would be pleased with the introduction of customer royalty cards, a majority (68%) also claimed that this would not serve to actually change their view of the star bucks franchise. Those who did say that it would change their outlook of the franchise stated that it would serve to portray star bucks as a more consumer friendly business.

90% of the surveyed group felt that the royalty cards should be made available to every consumer with the least percentage of the entire survey (0.5%) preferring them to be available to frequent patrons only.

Business Report

The results of this survey clearly show that a vast majority of consumers are for the introduction of customer royalty cards in the star bucks franchise as soon as possible. The results also show that most of these consumers would want the application of these cards to be done as soon as possible and should be made available to every consumer who may wish to possess it. The consumers’ lack of a change in perspective of the franchise as a whole due to the introduction of these cards was attributed to the fact that though favorable, the introduction is not a major enough difference to change or influence one’s mentality as well as the presence of an already positive view that has been cultivated among most star bucks patrons. Many of the individuals who responded to this survey frequented a star bucks on an average of at least once daily on work days placing them in the category of frequent customers.

These results show that an average of about 90% of star buck consumers are for the idea of introducing consumer royalty cards to the public in general. The 0.5% who think the cards should only be introduced to loyal patrons only, leaves a staggering difference of 99.5% who think otherwise and as the saying goes, majority rules. Since the 10% recorded as anti royalty cards are mostly placed in the group of people who were not aware of these type of cards, it is safe to say that almost every consumer would like the introduction of these cards. Those surveyed repeatedly over this period of time showed to have no change in their attitude towards this opinion up to the end of the survey (Peter, 1998).

Project plan

The results of the survey clearly show that the majority of the star bucks patrons are for the idea of the introduction of the customer royalty cards. It is essential for the company to heed this request if star bucks wish to remain relevant in what is quickly becoming a highly competitive market, as the old business saying goes, the customer is always right. Though the introduction of these customer royalty cards will require additional funds that were not previously included in the company’s financial budget, the end result promises to be a positive one as it will serve to reinforce star bucks’ position as an established force in the coffee industry and further remove another angle that competing companies may choose to use to prey on their consumers. The increased patronage that will result from this business activity means that the cost of introducing these customer royalty cards into the market will serve to reimburse the company for the funds used towards its application (John, 1998).

The project should be the introduction of these customer royalty cards as soon as possible as the research has indicated that the application of this business practice holds the potential of increasing sales in star bucks shops where applicable as well as maintaining current patrons more efficiently.

This can be seen in the fact that a large number of people admitted to having their brand loyalty strengthened with the introduction of these cards as well as being encouraged to visit star bucks more often. The retaining of such customers will ensure a steady cash flow and the increase of the number of visits will serve to increase the daily revenue acquired by the business (Quinn, 2003).

As a result, the introduction of these cards will lead to a rise in the profits made by the star bucks enterprise as well as increase its stronghold on the market giving it an edge over its other competitors. The introduction of the cards can be done by region but should take a long time to complete as the sooner the better (Gostic and Elton, 2006).

The introduction of these customer royalty cards however should be done in phase to allow the business to accurately study the response that they receive in the market to determine the level of success that has been reached. The implementation in phases will also serve to allow the company to handle the financial demands that such a project will no doubt require more comfortably. Rushing into the project may result in poor quality of cards that may serve to undermine the growth and popularity of the royalty cards among consumers and put the long term plans of the project in jeopardy. The timing will also allow the star bucks franchise adequate opportunity to set up a reliable system that will work with the cards to ensure that the introduction of these cards do not mean that the company are operating at a loss. Like any other business venture concerning consumers, an adequate time must be put in place to allow the company to create a significant amount of awareness among the targeted consumer base so as to avoid a minimal reaction to the product once it is in the market. Apart from the business end, the technological aspect of the project must be examined as well to ensure that the system put in place to handle this new application is capable enough of functioning without the risk of a break down in the middle of operations and its design is simple enough to be understood by all with minimal explanation.

The importance of these preparations are to avoid any risk of having to start over from scratch if something goes wrong which may prove to be a very costly endeavor to the company in the end increasing the time required for the project to break even and move into profitability. The increase of consumers will be one of the main sources that the company will rely on for returns from this project meaning that the customer royalty cards should be made available in as many franchise shops as possible increasing the reach and availability to its consumers. The material of the cards though of good quality should not be too costly in manufacturing as this will only serve to raise the expenditure of the project (Gitomer and Jeffery, 2007).

If successful, the project will serve to increase the profitability of the company in the long run ensuring the continuity of the business and allowing for an increased spread of its presence on the European market. The maintaining of star bucks’ current consumers coupled with the introduction of new customers attracted by the new addition to the star bucks offers will serve to raise the status of the franchise in the industry. The awareness movement should also be coupled with an education segment to reach the 10% that were found to have not been aware of the use of customer royalty cards in the survey. This will serve to further increase the consumer base and as a result the potential profit to be made. The awareness and education campaign can be based mainly in the star bucks coffee shops to reduce advertising costs as well as ensure that the information reaches the relevant target market.