Free Merchandise: Is It Just A Bandaid On The Bullet Wound of Poor Customer Service?
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As much as consumers dislike customer service failures, companies dislike losing clients. But in the Hail Mary moments of working to salvage missteps and keep customer satisfaction up, there has always been a plan that is all but fullproof in terms of saving face: free stuff.
Regardless of what goods, services or experiences consumers might purchase, in 2022 they can rest easy knowing that if nothing else goes right in finding customer solutions, there is always the last-ditch effort of a free item, ticket, or opportunity.
Inc.com recently published a story suggesting that in the case of Starbucks, offering free products to mend client-company relationships is a “low-cost strategy where everyone wins.”
Author Kelly Main recounts how she herself was the recipient of a make-good free $4 coffee, writing:
“In the grand scheme, a free coffee from a multinational chain may not seem like a huge gesture. But it's these little details that make a world of difference--and what makes Starbucks an $87.5 billion company. This not only keeps customers coming back, but staff too. Amid America's labor shortage, it's vital to employ symbiotic strategies that make both groups happy.”
To contextualize Main’s individual experience, approximately 37.8 million Americans have visited a Starbucks in the last month. An individual store can service nearly 750 of those 37.8 million customers a day. Between in-store purchases, drive-thru orders and mobile pick-ups, there are plenty of opportunities for things to go wrong.
In the world of customer experience, it’s crucial to remember that customer service isn’t just about mitigating risks and finding solutions—it’s about empathizing with the problem and finding the right solution. But in the Starbucks universe, is a free beverage the right solution on both sides of the service counter?
To find out CCW spoke with Fernanda Adams, who requested she go by a pseudonym to protect her identity and job status, as she is currently the manager of a San Francisco area Starbucks location. According to Adams, “Starbucks has a slogan we use, and it’s ‘making the moment right,’ which basically means it’s up to us to decide if we give them the remake for free, or really anything that might help make the customer happy.”
While the coffee chain likely has a policy as to how many beverages store locations can comp in a given day, Adams admits that she does not have that policy committed to memory. “There isn’t a set number,” she explains. “At least at my store, mistakes don’t happen that often. We may get like one or two customers who will call back later and say it was wrong, and we’ll offer to remake it for free the next time they're in the store.”
Even if Adams did recall a cut-off number for offering complimentary products to dissatisfied customers, it seems the means by which Starbucks locations amend customer service issues is left to the discretion of each individual manager. Nicole Haase, a Milwaukee-based Starbucks barista from 2003-2007 and 2014-2019, has seen the customer service landscape transform over the years. When it came to management during her periods of employment,“Mine was supportive,” she says. “‘Make it right.’ I wouldn’t have given freebies without his support.” Olivia DiAgostino, a fellow former employee, echoes this sentiment: “The Starbucks motto is ‘Love your order or let us know, we’ll always make it right.’ My manager was always happy for us to go above and beyond for customers–even if it meant giving away product.”
Yet, over time, those freebies add up. Suppose Adams’ earlier claim is true: on a given day two in every 750 orders at one Starbucks location are incorrectly fulfilled. One grande vanilla sweet cream cold brew from Starbucks averages $4.25—let’s say each customer receives that $4.25 cold brew for their troubles. That’s $9.50 worth of free coffee given away per day. Multiply that by 30 for a month's worth of orders at said chain, now it’s $285 worth of free coffee a month. Take that and then consider the 15,000 stores that exist in the U.S. alone. Now it’s $427,500 of free coffee in one month, nation-wide. In a year, that’s $5,130,000 in free coffee, provided that only two orders a day result in a customer service issue.
Starbucks, a global company, made $29.061B in revenue in 2021 with 33,830 stores worldwide. Lost revenue in customer service do-goodery in the states alone accounts for around half or the coffee chain’s business. If every chain in the world has to rectify two orders a day year-round, the company could lose over $10,260,000 a year in potential profits. While that barely scratches the surface of the company’s overall revenue from a bird’s eye view, the optics on the ground are much more concerning.
Inc.com columnist Kelly Main writes that “by putting its short-term profits aside, and the losses that would come from giving away orders, the store gave customers a tremendous amount of value, and an even greater amount of goodwill.” Although free goods and services from a multimillion dollar company are a sign of goodwill in theory, in application the strategy speaks to much larger customer experience industry issues of consumer loyalty and employee satisfaction. While some employees are encouraged by leadership to rectify a wrong order regardless of the cost, it doesn’t relieve the pressure to perform in the way Main might be hoping.
“I always got away with it, but it was definitely frowned upon,” Avry Ott, who worked in the Chesapeake Bay area from 2013-2015, tells CCW. “People love free stuff, basically always smoothed it over. Managers would always try and correct the mistake without free stuff at first, but honestly they weren't on the floor often enough to affect us doing it.”
As a barista, Sera Phenix has also seen the company’s show of good will go the other way. “They encourage it for messed up orders. But we kept track of people who would specifically mess things up to get extra drinks for free,” she says. Between creating the right orders, cataloging the wrong ones, and even keeping track of who might be abusing the Starbucks customer service honor system, that’s a lot for a small team of people to do in so little shift time.
“I would say there is some pressure to offer perfect customer service,” notes Adams. “We have customer connection scores, and they definitely put some pressure on each score to do well.” Having the support of your manager at work is luck of the draw, and even if you have it, it’s not enough for some employees–or customers–to stay loyal to Starbucks. As the company kisses $10,260,000 or more a year goodbye, it’s not just losing out on product or revenue, it’s also losing out on boosting employee numbers wages amid an inflation and tumultuous job market. “Pay wise, it could be better,” admits Adams, who recently got married and became a new mother. “Starbucks expects a lot out of us and they offer amazing benefits, but the pay is only slightly above minimum wage for starting baristas.”
A larger work force that receives better pay would allow employees to fulfill orders in a less hectic, less stressful environment that enables them to better connect with their customers. That connection and reliability are aspects of CX that all consumers are looking for, beyond the guarantee of a free product. “Knowing my drink is ‘guaranteed’ to come out the same way every time or they’ll remake it is the best thing,” Fatima Mausoleum, a Starbucks customer in New York City, tells CCW. “Dunkin’ for example doesn’t really follow the same recipes throughout all branches, so you’re getting a different drink everytime you order, which is annoying if you’re into consistency.” Vidushi Dali, another customer, says a company’s willingness to rectify orders is only just a part of what keeps her coming back: “If a place is annoying about fixing a mistake, I wouldn’t go back. Unless it was that good, which is unlikely.”
As Kelly Main notes on Inc.com, “Businesses are understaffed, and employees are under pressure and overworked. The effects are often felt by customers, who get slow service, unhappy faces, and high prices.” Even when—or if—an organization sacrifices revenue, employee earnings, or hiring potential for free products, coupons or services as a catchall solution to a customer experience concern, there’s no promise that such a risk will keep consumers coming back. Some will find the loopholes, and others will find that a free frappuccino does not amount to the level of frustration, emotional distress, or communication confusion they experienced at the drive-thru or mobile pick-up station.
Consumers are not just looking for a product, they are looking for an appropriate solution-oriented experience that speaks to their unique needs. Meeting those needs requires a scalable workforce that is equally appreciated for their contributions to the company’s success and compensated properly. Allocating funds to freebies, instead of equitable wages, may not be the answer corporate companies are looking for. (And in the case of local mom and pop shops, this answer is, quite literally, not even a luxury they can afford.)
Even so, free merchandise remains a get-out-of-jail-free bastidon of the customer experience:
“Starbucks tries to come out with ways to help us by simplifying our menu or giving us better equipment to make beverages but making drinks wrong is kinda just expected to happen here and there,” says Adams. “There’s really no solution, I think, to not getting beverages wrong,”
As the customer experience industry expands, we too must prepare ourselves for the expansion of our own roles–as agents, as technology manufacturers and as CEOs—to move beyond the idea of one-size-fits-all customer solutions. The time is already here: the 50% off coupon is losing its shine, the free caffeine is losing its buzz, and employees are ready to walk out if they have to. We’re not waiting for the future of CX to come our way—we’re already in it. So let’s start getting creative with our problem solving.
