CMO Interview: How McDonald's is putting customer centricity back on the menu
- 04 March, 2015 15:11
Mark Lollback, CMO, McDonald's Australia and New Zealand
McDonald’s A/NZ CMO, Mark Lollback, isn’t someone who backs away from a challenge or the need to change.
“Every job I’ve had has been going into a problem,” he tells CMO. “I love change and solving big corporate problems or businesses that are flat-lining; it’s just my mindset. I also consider myself a bit of a maverick.”
So when he was offered the opportunity to help McDonald's turn its go-to-market strategy around and find a way to deliver stronger long-term value to its customers to drive sustainable business growth, Lollback jumped at it.
“Strategy is definitely more important than it has even been for marketers: Not just marketing strategy, but building a business strategy where the role of marketing and CMO is taking a real leadership position around where the business should be going,” Lollback comments.
Over the past year, Lollback has spearheaded a transformation program at McDonald's which has seen the organisation overhaul how every department looks at its customer value proposition.
One of the cornerstones of this approach is introducing “consumer noticeable branded platforms”, or longer-term growth initiatives aimed at providing more value to McDonald’s customers. Examples include the ‘create your taste’ customisable burger menu and extending McCafé into drive through.
“We’ve also moved away from limited time offers to new platforms such as ‘real choices’ lighter choice range,” Lollback says. “That’s a platform, and that’s what we’re focused on building. If we lay down the business plan correctly and genuinely deliver to the consumer, we’ll see growth.
“So it’s really about changing our thinking from delivering next month’s sales, to laying down plans that have a longer-term impact.”
Time to change
Lollback says the catalyst for change at McDonald's was necessity. In 2013, the fast food chain experienced a tough year and was facing heavy, price-led competition. “We probably didn’t react as strongly as we should have at the time,” he says.
“I think I nearly blew this joint up, because the way we solved that is by throwing everything at it. We did more one-time offers, launched more new products, made more TV commercials and ran 200 campaigns. It nearly broke the restaurants in terms of complexity, stress and the crew. But even on the back of that, we didn’t get the results we needed.”
This forced the organisation to take a step back and start looking at the fundamentals. “Whenever a business is going through ‘difficult times’, it’s always good to look at what has been really powerful historically, and what built the business into what it is today,” Lollback says.
“The answer was simple: It was these consumer noticeable platforms that had longevity and were truly valued by the consumer. It wasn’t noise, it wasn’t short-term innovation, it was fundamental platforms. “When we did that review and shared it with the board, it became very easy for all of us is see that our responsibility was to find out what those platforms would be.”
The group also realised it had stopped truly putting customers at the centre of the business. “We had become internal, chasing internal targets, and forgot what our business was about, which was being a fantastic place for customers and being very customer centric,” Lollback says.
To regain this focus, McDonald's investigated every touchpoint, from menu and marketing to restaurants, the service model and platforms. It also took a brutal look at what consumers were saying about the business.
“Internally, we created these ‘consumer tensions’,” Lollback explains. These included value, food experience, convenience, and the brand. “Across every function, we then tried to address those tensions.
“There was lots of brand tracking and consumer insights to filter down a small number of disruptive tensions, and these made us feel a bit uncomfortable. But it was through those that we could galvanise the business and operators behind a real desire to change.”
Since executing on this strategy, the business has turned around and is growing.
“We’re very strong and we’re very happy with the results,” Lollback adds.
Up next: How McDonald's is planning to personalise experiences through new digital innovations
Making experience personal
The next priority for Lollback is to create more personalised customer experiences by utilising technology. These include building a CRM platform and launching a ‘My Maccas’ club and app. The group is also testing kiosks with lifesize iPads that will be connected back to the CRM.
“This is so we can recognise customers in the future when they walk in – they will be able to scan in with their phones, have pre-built buyer profiles, have their name appear on-screen and we’ll treat them as an individual,” Lollback says.
Mobile ordering, kiosks, better Wi-Fi in restaurants and delivery via phone or Web are also on the cards. “Even with gaming activities like Monopoly, we’re trying to be mobile first in our approach and try and find ways to recognise and communicate with customers in a way that’s relevant to them,” he says.
“Today, we transact with our customers, but in the future we want to recognise and engage with them.”
Given all this technology enablement, it’s not surprising the perception of IT’s role at McDonald's has also undergone a significant shift. Instead of being an IT-led organisation, Lollback says the fast food group has become a customer-led and digitally led organisation.
“IT today is more of an enabler, rather than historically leading these projects,” he says. “They know that and understand their responsibility is to deliver on our digital and customer vision as fast as possible: To become the most connected brand in Australia with our customer base.”
While the people best placed to determine and decide what is needed to engage customers is the marketing department, Lollback says it’s vital to have a strong, robust and confident IT team to deliver that.
“All our projects have joint teams working more closely together because we recognise we have to work together to deliver those technology platforms,” he says.
McDonald's has also set up a discrete digital marketing team over the last 18 months to ensure it has both the front-end and back-end skills needed to deliver on its customer experience vision.
“While I’m clear on what we need to do to transform this business, clear on the strategy and platforms we need, I don’t always have an idea about the technology or the how to do that, but I will hire people who do,” Lollback says.
“In the next two years, we have clear targets in terms of number of customers connected, people we want to be engaged with, and what the ROI looks like. It’s very structured and mapped out as a program.”
Tackling disruptive change is something Lollback has built his career on.
Keen to be on the front-end of business strategy from a very early age, he gained work experience at Live in Kitchen in category marketing while still at school. This led to a bachelor degree in marketing.
“I knew I’d found the right arena for me as it was that combination of creativity and business,” he says.
Aiming to build up bluechip marketing experience, Lollback joined Unilever with the expectation of staying on for four years, but ended up remaining for 18. He initially built the icecream adult impulse category under Streets and launched Magnum in Australia, before relocating to the UK to become GM of marketing for Unilever’s icecream category.
Lollback then moved to China as marketing and innovation director for the icecream category. “It was one of the most challenge opportunities I had pre-McDonald's,” he recalls. “The business had been going backwards at a rate of US$50 million a year and the more we sold, the more we lost. Our CEO came out after I’d been there six months and asked why we didn’t just shut down. We said we’d turn it around in 2-3 years, and we did.”
Lollback returned to Australia as the first VP of marketing for the food business for A/NZ before being offered his first true CMO role in Unilever’s joint global venture with Pepsi for Lipton ice teas based in New York.
“In four-and-a-half years we went from 10 countries to 45 countries and from losing money to a billion-dollar business,” he says.
It was then he came back to Australia and took six months off to be with his kids. A short 15-month stint as CMO at ANZ Bank was then followed by the CMO role at McDonald's three years ago.
“Being a CMO is a huge privilege, but it’s also hugely challenging,” he says. “My span of control goes from brand marketing to digital marketing, consumer business and analytics and innovation and menu and across Australia and New Zealand, so the scale of business and impact, it’s huge.
“I joke that I have 300 bosses – we are a franchise business and what we do has a direct impact on hundreds of families and businesses across the country. So how do you keep the business growing, the teams happy, keep things being developed and upskilled and keeping momentum going? It’s a huge responsibility.”
As a result, Lollback puts mental fitness as one of his top attributes for modern marketing leaders, and says it’s something he works hard on. Resilience is also critical as a CMO, he says.
“Staying calm in a storm, genuinely showing leadership and focusing on what truly is going to make a difference is key,” he says.
Lollback’s third top skill is spotting big ideas at a very big picture level and translating that into a simple, motivating message. “At the same time it’s about supporting teams to be brave,” he says.
“It’s about talent but also resilience as a character – you will get hugely challenged by everybody as a CMO these days.”
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